Hello Dear Readers, Warm Greetings Of The Day, We Hope You Have Landed Here Just Because You Are Interested In Securing Your Future through Retirement Plans Or Pension Plans, So Today We Are Sharing A Very Important Article On
∞ Retirement Plan: Comparison & Reason To Buy Retirement Plan ∞
We All Know That In Today’s Internet World All The Tech-Savy Or Computer Friendly People Goto Various Search Engines Available On The Internet Like Goolge, Bing, Rediff, etc. And Many A Times Even We Search On Some Of The Specific Life Insurance Companies Websites Like Policy Bazaar, Bank Bazaar, Cover Fox, Life Insurance Corporation Of India, Max Life Insurance, etc. Whenever They Have To Buy Retirement Insurance Plan Online.
Our Today’s Discussion Is Also Same As We Will Share All The Necessary, Relevant And Needed Information Regarding Retirement Plan It’s Comparison & Reasons To Buy Retirement Plan. So, Let’s Begin.
In flood of responsibility we don’t have time for ourselves we always think for our parent’s health, Child Education, about his settlement and so on. We work hard to maintain all these responsibility but after a certain time period you must think for your retirement Plan or Pension Plan. To maintain the order to sustain your lifestyle the way you’ve always been living. “Retirement Plan” plays a very important role in your financial planning.
Everyone would like to continue the same lifestyle as they have been living during their working life, and to maintain all these things you should go for your Retirement Plan. Now the question is that what is Retirement Plan and how can we avail the benefit of that plan.
What Is Retirement Plan?
Firstly we all must understand that Retirement Plan is also known as Pension Plan so don’t get confuses between these two different names having same meaning. Now let’s understand the pension Plan. A certain amount of your current income is transferred and stored for your future by your employer. This amount is then given to the employee as pension fund on his/her retirement this is called Pension. It is one of the safest and surest ways of a trouble-free retirement life. Some People think that they have enough savings for their retirement but actually it might be not sufficient for your old age and it may get exhausted quickly so for better lifestyle after retirement you can take Retirement Insurance Plan as a safeguard of your golden year.
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All The Retirement Plans Are Divided Into Two Parts:
- The first part is accumulation where you (insured) pays the premium.
- The second part is distribution.
Types Of Retirement Plans:
Following are the different types of Retirement Insurance Plans –
- Deferred Annuity:
Deferred Annuity Pension Scheme allows you to accumulate corpus through normal premiums or through regular charges over a policy term. Once the coverage term is over the pension will begin. There are various benefits of this retirement plan as well as tax benefits. If you will investment in retirement plan there will be no tax policy applicable on that amount which you invest in retirement plan until he/she withdraws it. This Plan can be purchased by one time investment or through regular premium methods. Thus, this plan is good for all types of investors.
- Immediate Annuity:
It works according to its name, means in this plan Pension starts immediately. You only have to pay a lump sum amount and on the basis of that amount Pension will start immediately. Policyholder can choose from a range of annuity options available and invest according to your budget. You can also get the benefits of tax exemptions as per the Income Tax Act, 1961 on premium amount and, in case of death of the policyholder, the nominee/beneficiary will be entitled to get money as per the option selected.
The drawback of this plan is that you can’t withdraw amount in the term period as well as you can’t also withdraw the plan. As per this plan, annuity is given to the life assured for certain periods like 5, 10, 15 or 20 years whether or not he/she survives that duration.
- National Pension Scheme (NPS):
It is started by the Government of India for the people looking to build up the pension amount. You can put your savings in the new pension scheme in debt market as per your preference. Also, you can withdraw 60% of the amount at retirement and rest 40% can be used to purchase the annuity.
- With Cover And Without Cover Pension Plan:
The Retirement Plans With Cover, have a life cover component in the plan. After the death of the policyholder a lump sum amount is paid to the family members. In this plan the cover amount is not high since a major part of premium is diverted towards growing the corpus rather than covering the risk of life
The without Cover Pension Plan have no life cover component. After the unfortunate date of the policyholder the nominee will get the corpus (till the date of the death).
- Guaranteed Annuity:
As in this annuity option, annuity is given to the life insurer at regular time intervals like 5, 10, 15 or 20 years whether or not he/she survives the length.
- Pension Funds:
Pension fund is a great way to build up a corpus amount. As these plans remain in force for a long time and has a better pay out at maturity. The Pension Fund Regulatory and Development Authority (PFRDA), established by the Government allows 6 companies as fund managers.
Benefits of Retirement Plan
Given Below Are Some Of The Following Benefits Of The Retirement Plan –
A pension plan is basically a low liquidity product. But there are some companies which offers pension funds where you can withdraw your pension amount at the time of accumulation period. Even at the time of emergency it allows you to withdraw your funds during the accumulation stage.
- Guaranteed Pension Plan:
After retirement you will get a fixed and steady income or you can get immediately after investing. It completely depends on the plan which you opted for yourself and how much you have invested in your plan. It is even recommended that you use a retirement calculator in order to get a rough estimation of how much money you may need after retirement.
- Accumulation Duration:
In this duration, the investors are allowed to pay the premium once or at regular time intervals during this period. This is the time when your wealth starts accumulating in order to build a corpus which will be a combination of your investment and gains. And this investment will help you to receive your Pension.
- Vesting Age:
At this age when the investor starts receiving monthly pension. Depending on the plan which was brought and the type of premiums. Mostly the minimum vesting age is 40-50 and is flexible up to 70 years. However, there are few companies who allows you vesting age of up to 90 years.
- Tax Rebate:
You will get tax exemption benefits with your Pension Plans under section 80C of the Income Tax Act, 1961. If in case you want to contribute to the pension plans under Chapter VI-A, Section 80C, 80CCC and 80CCD. For example, the NPS (National Pension Scheme) and Atal Pension Yojana (APY) are both subject to a tax deduction under section 80CCD of the Income Tax Act, 1961.
- Surrender Value:
Under Retirement Insurance Plan, surrendering your plan before maturity is not a smart move. Reason being, the investor will eventually lose every benefit of the plan including the assured sum and life insurance cover.
- Payment Method:
As the name suggests it refers to the period in which the investor starts receiving the pension amount. Generally this period is separate if compared with the accumulation stage as in this period investors can increase their overall retirement benefits.
Reasons To Invest In Retirement Plan
As we all know that after retirement a new chapter of life begins and a fast life gets converted into a relaxed life. At this time we enjoy our personal life which we had missed during our working days. So to help you all in order to have this golden time we have a golden plan that will help you to spend relaxed and splendid life.
Following Are The Reasons To Invest In Retirement Plan –
- It is the best plan which gives you a regular income after your retirement.
- It is flexible, you can invest as per your choice either you invest once or invest as regular premiums.
- It is very helpful maintaining a balance in your life after retirement. And you can invest according to your budget because it has options of minimum to maximum. You can start with a premium of Rs. 500.
- Retirement Plan is basically a concept of safeguarding your post retirement phase.
Tips For Selecting Best Retirement Plan
- Know Your Needs:
Firstly, you have to understand your need that how much you need so as to sustain yourself after retirement then according to your budget invest in the plan.
- High Return:
Return is the most important part of this plan. So before investment you should know about the return you will get in that plan. In most of the cases return will be low even if the returns are guaranteed. So wisely select the plan which has High Return.
- Do Research On Plans:
Read about the pension plan on different insurance websites and collect the information from there and try to understand their features, benefits and returns in a proper way. You can also compare your plan online and find out the plan which has additional benefits.
- Don’t Go Only For Tax Benefits:
If you plan for your retirement, considering only the tax benefits you may not be able to build the corpus that you actually need for your retirement. So while doing a retirement planning firstly calculate and invest the amount according to your requirements then take a look on tax benefits you will be getting from the Retirement Insurance Plan.
- Plan Should Be Flexible:
It is advisable to invest at an early age in the pension plans. There are certain pension plans that allows increasing the premiums gradually. You must invest in the ULIP Pension Plan after checking the various points and benefits, it may be in the form of Fund Management, Allocation Charges etc.
Eligibility Criteria For Retirement Plans
- Age Criteria for Retirement Plan –
- Minimum age to enter in the plan is 35 years
- Maximum age is 75 years
Nowadays, most of the Pension Plans come with an add-on rider that enhances your pension plans. Some of the available riders are as follows:
- Critical Illness Rider
- Accidental Death And Dismemberment Rider
- Waiver Of Premium
- Term Rider
Documents Required For Retirement Plan –
- For Identity Proof – Any of the following documents can be used to prove that you are the citizen of your Country:
- Aadhar Card
- Voter ID
- PAN Card
- Driving License
- Age Proof – Any of the following documents can be used by you as your age proof:
- Voter ID
- Birth Certificate
- School Or High School Mark Sheet
- Driving License
- For Address Proof – Any of the following documents can be used as your address proof:
- Ration Card
- Driving License
- Electricity Bill
- Telephone Bill
- Aadhar Card
- Income Proof – Any of the following documents can be used as your Income Proof.
- Salary slip
- IT return file
- Bank Statement slip
- Submit Proposal Form – You must submit your duly filled proposal form in order to apply for the pension plan.
- Medical Reports – Some life insurance companies may ask for a medical check-up before accepting your proposal for the pension plan. Medical reports are required to be submitted if the insurance company requests for it.
It is Important To Have A Retirement Insurance Plan, As Dianne Nahirny Said “Retirement Means Doing Whatever I Want To Do, It Means Choice“.
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