Retirement Pension Plan
Retirement plans are commonly known as pension plans and help an individual to build a corpus to fulfil their financial requirements and financial goals post retirement. Retirement plans are a type of life insurance plan and these plans can help an individual to create a regular flow of income post retirement. Most retirement plans offer a maturity benefit at the end of the policy tenure in case the life assured survives the entire policy tenure. On retirement different types of pension plans can help an individual fulfill their post retirement goals such as buying a home, funding your child’s marriage, funding medical emergencies, going on dream vacation etc.
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What is a Retirement Plan?
Retirement plans are also known as pension plans which are curated to help you fulfil your financial requirement post retirement. This type of life insurance plan helps you ensure you have a steady pension flow at regular intervals after your retirement. Some retirement plans give maturity benefits, which are lump sum payments made at the end of the policy term when the plan matures. Because retirement plans are a type of life insurance, they give life insurance and financial help to your family in case of your untimely death within the term of the policy. Different types of pension plans help you grow your corpus through compounding.
Why Do You Need Retirement Plans Today?
The sooner you start the more beneficial it is for you to create a corpus for your retirement. Listed below are some of the reasons why you should need to invest in a retirement plan today:
- Investing in a retirement plan is a steady way to grow your income. With retirement plans, you can grow your money in a manner that you will not need to compromise on your standards of living even after you retire.
- When you invest early, you will boost your savings to a greater extent. Moreover, the money you invest is compounded even more when you start early.
- The life expectancy in today’s time has increased, making it all the more important to plan for your retirement early. When you plan early, you can will have sufficient funds to sustain yourself even after you retire.
- On investing early, you have the flexibility to choose the right investment plan. For instance, if you have sufficient time, you can easily invest in a long-term investment plan.
Types of Retirement Plans
The following are different types of retirement plans:
- Deferred Annuity: In a delayed annuity pension plan, the policyholder can build up a corpus by paying single or daily premiums. As a result, they will save a large amount of money as a pension over the duration of the scheme.
- Immediate Annuity: It is a type of annuity that pays out immediately. You put down a large sum and instantly begin earning annuities as a pension. You have a number of annuity options to choose from, as well as the amount you wish to invest.
- Annuity Certain: When it comes to the finest pension plan in India, the policyholder will receive an annuity for a set number of years. They have the option of choosing the payment period that is most convenient for them. Contributions are made to the pension plan's nominee in the case of the death of the insured.
- The National Pension Scheme (NPS): The Indian government offers a range of pension plans for retirees, including the National Pension Scheme. As an employee, you can contribute to this pension plan and save at regular intervals in the pension account, which will be paid out when you retire.
- With Cover Pension: This is a type of pension plan that provides the benefit of both investment and life insurance cover. In this plan, a larger amount goes towards retirement and a small portion towards life insurance coverage.
- Without Life Cover: As the name implies, this type of life insurance plan does not provide the benefit of life insurance coverage. However, the nominees receive a corpus in case the investor dies during the policy term
- Guaranteed Period Annuity: It is a plan in which annuity is guaranteed irrespective of whether the investor meets an unfortunate event during the policy term or not.
Features Of Pension Plans
Keep these important features of pension plans in mind before you start looking for the best pension plan in India:
- A Consistent Flow of Income: You will receive a stable and consistent income after retirement (deferred plan) or immediately after investing in a pension plan, depending on how you invest (immediate plan). This means you will be financially self-sufficient when you retire. You may use a retirement calculator to estimate how much money you will need when you retire and invest in the top pension plan in India.
- Surrender Value: It is advised that you do not surrender a pension plan before the due date, as this would result in the loss of all benefits. If you still want to abandon the plan for whatever reason, you will still receive the surrender value. The surrender value is only given after you have invested in the plan for the required amount of time. In India, this benefit is usually only available with pension plans that have a life insurance component.
- Payment Timeline: When you start collecting your pension after you retire, this is known as the payment period. If a pension is received between the ages of 60 and 80, for example, the payout duration is 20 years. When looking for the top pension plans in India, you will notice that the majority of them offer separate payment and accumulation periods. Some, on the other hand, allow partial or full withdrawals during the accumulating period.
- Accumulation Period: In India, an investor can pay the premium as a single sum or in monthly instalments through retirement plans. The wealth would grow in lockstep over time, resulting in a substantial sum.
Benefits of Retirement Plans
Following are benefits that come along with a retirement plan -
- Discipline Savings: Retirement plans help you save your wealth for a long term. These plans help you develop a disciplined savings habit that will help you build a corpus that you can use after you retire.You can choose your premium payment term and frequency which will help you generate a corpus for a steady flow of income post your retirement.
- Guaranteed Income Post Retirement: Retirement plans provide guaranteed income in your post-retirement years, which might be in the form of a maturity benefit or regular instalments. When you retire, you may receive a monthly and set income, or you may begin receiving income as soon as you begin investing in a retirement plan.Under retirement plans you get the benefit of guaranteed income post your retirement. This type of plan ensures your financial independence in your post retirement phase.
- Life Cover: Retirement plans are a form of life insurance plan that provides life insurance and financial protection to your family in the event of your untimely death while the policy is in effect.In case of your untimely death during the policy tenure, your family will receive a death benefit.
- Tax Benefits: Under retirement plans you can avail tax benefits as premium paid towards retirement plans qualify for tax exemptions under Section 80C of the Income Tax Ac, 1961. Death and Maturity Benefits payable under retirement plans are also eligible for tax exemptions under the Income Tax Act, 1961.
- Compounding Benefits: Compounding is the process of gaining money from your initial investment. Compounding is a feature of retirement plans that allows you to expand your corpus via compounding.The longer you keep investing in retirement plans, the better your returns will be.
Who Should Buy Pension Plans?
Listed below are different groups of individuals who should buy pension plans:
- Young Professionals: Young individuals who have just started earning must buy pension plans to secure their post-retirement days. When they start early, it becomes easier to create a large corpus for the future.
- Parents: Parents should also invest in retirement plans so that they are financially secure even after they retire. Parents who invest in retirement plans do not need to rely on their children for their needs.
- Newlyweds: Married individuals should buy retirement plans as soon as they have entered this blissful phase. Doing so will help them in creating a corpus for the golden phase of their life.
How Does a Pension Plan Work?
Here is how a pension plan works:
- First, you select a desired pension plan based on your budget and requirements
- Then, you start making contributions toward your pension plan
- Based on market factors, your money will start growing
- You invest for a certain period of time to start getting pension benefits
- Once you retire, you will start getting the pension amount
Things You Should Know About Retirement Plans
The different things that you should know about retirement plans:
- Entry Age: In India, most pension plans have a minimum entry age of 18 years and the maximum age is 70 years.
- Premium: There is a certain amount that you need to pay to keep your investment plan active which is called the premium.
- Vesting Age: It refers to the age at which the policyholder starts receiving the pension amount. The vesting age varies from insurer to insurer while they are buying a retirement plan.
How Much Do You Need to Retire?
If you plan to invest in a retirement plan, it is very important to decide the amount you require. This will help you lead an uncompromised life and meet all your future needs. Here are the different factors that affect the retirement amount:
- You first need to analyse your monthly outgoings as in what are your total expenditures on different things. When you have a clear about your expenses, it becomes easier to estimate the amount you can invest towards a retirement plan.
- You should consider your future goals while buying a retirement plan. For instance, if you have to pay for loans or spend towards your kid’s marriage after you retire, then you should be prepared for that as well.
- Another thing you should consider is the expected expenditure that may incur after you retire.
- Finally, keep in mind how will inflation affect your current costs. It is best to always consider a higher inflation rate so that you are prepared for the worst.
Why Choose InsuranceDekho?
Our team is dedicated to provide you a seamless experience while purchasing a retirement plan, below mentioned are some reasons why you consider InsuranceDekho when you want to purchase a retirement plan:
- Instant Policy Issuance: At InsuranceDekho you can purchase a policy within minutes, you just need to enter your personal information, browse and select a retirement plan, submit documents and the policy shall be issued instantly after the payment.
- Robust Customer Assistance: Customer Assistance team at InsuranceDekho is available 7 days of the week. Our customer care team strives to solve every query and provide you with best available solutions for your doubts.
- Availability of Best Plans: At InsuranceDekho we have collaborated with top life insurance companies in India that offer retirement plans. These companies provide the best retirement plans available in India. You can browse through multiple retirement plans and select a plan that best suits your requirement.
How To Buy Retirement Plans With InsuranceDekho?
You can compare and purchase purchase retirement plans easily at InsuranceDekho by following these simple steps:
- Fill In Your Details: Fill in your personal details such as name, date of birth, gender, mobile number etc. and click on ‘View Instant Quotes’ to browse available quotes.
- Compare Different Retirement Plans: On the basis of the information provided by you, different retirement plans will be displayed, you can compare the available plans and select the one that fulfills your requirement.
- Submit Documents: You must submit documents for policy issuance. The documents can be Photo ID proof, Address proof, passport size photos, salary slips and medical records.
- Make The Payment: After choosing a plan, sum assured and the policy tenure you can proceed to make payment for the premium. You can choose to pay via netbanking, debit/credit card or any e-wallet.
Investment Insurance Companies
- Kotak Life Investment
- Future Generali Investment
- SBI Life Investment
- PNB MetLife Investment
- HDFC Life Investment
- ICICI Prudential Investment
- LIC Investment
- Max Life Investment
- Tata AIA Investment
- Bajaj Allianz Investment
- Aegon Life Investment
- Aditya Birla Sun Life Investment
- Bharti AXA Investment
- Edelweiss Tokio Investment
- Pramerica Life Investment
- Canara HSBC Investment
- Reliance Nippon Investment
- Shriram Life Investment
- India First Life Investment
- Sahara Life Investment
- Aviva Life Investment
- Ageas Federal Life Investment
- Star Union Dai-Ichi Investment
Disclaimer: InsuranceDekho does not endorse, rate or recommend any particular insurance company or insurance plan.
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FAQ About Retirement Pension Plan
What are the different types of annuities under a retirement plan?
Different types of annuities under a retirement plan are Deferred Annuity, Immediate Annuity, Fixed Annuity and Lump Sum Annuity.
What is the minimum and maximum entry age for retirement plans?
The minimum entry age for retirement plans is 18 years and for most retirement plans the maximum entry age is 65 years.
What is meant by Annuity?
Annuity is instalments that you receive at regular intervals post your retirement. Annuity can be availed on a monthly, quarterly, half-yearly or on a yearly basis.
What are the key features of a retirement plan?
Some key features of a retirement plan are availability of different types of annuities, allows risk-free investments, offers compounding benefits, guaranteed income post retirement, and offers tax benefits.
Why should I purchase a retirement plan?
Retirement plans help you grow your corpus for a financial independent post retirement phase of your life. Along with guaranteed income during retirement this plan also offers a death benefit in case of your unfortunate death during the policy tenure.