You toil and work hard your entire life to provide you family and loved ones the comfort and all the good things that life has to offer. But all good things are ephemeral so is your age full of vigour and strength, as you age your vitality and income ebb. Would you not like to ensure that the lifestyle you once lived it shall continue even after you have retired?
Pension Plans foresees into your future and financial requirement in your old age. Pension plans are individual plans mostly suited for senior citizens. Pension plans are a must for securing your future so that you never give up on the things that you want most.
What Pension Plan do?
Life Insurance Policies offers various Pension and Retirement Plans which helps you to effectively plan your retirement and provides you with the regular income in your old age. Pension plans are different from life insurance policies that are taken to cover the risk that may arise due to happening of an uncertain event.
Pension Plans helps you build an adequate corpus that will generate a complacent regular income once your salary stops. Pension plans come with an attractive combination of equity participation and a capital guarantee comfort.
How Pension Plan Works
At the policy inception, you need to choose your premium and policy terms. This phase is the accumulation phase and up to 50% of the investments will be in the equity and equity related securities. This fund invests in debts and money markets. Pension Plans have both positive and negative aspects. When you work with the government you are left with little choice to exercise your discretion as to the type of the retirement plan you want.
- Helps in building your retirement corpus in accordance with your risk appetite.
- Assured benefit: protects your savings from market fluctuations and turn them into an assured return.
- At retirement you are given an option to choose from the available annuity options as per your needs and requirements and get a steady income.
- You can invest any amount of money in this policy.
- Avail tax benefits on premiums paid and receive tax-free lump sum as per the prevailing tax laws in the country.
Flaws in Pension Plans
Pension Plans invests Major portion of the premium money in government securities and bonds and therefore the returns on them are quite low. There is another reason for the pension plans not being very popular are that they provide tax benefits only up to Rs. 10,000.
In the Nutshell
It is very important to understand the specific details related to your retirement plans. Putting simply, Pension and Retirement Plans helps you in securing your financial stability when your financial income recedes. Given the high cost of living and increasing inflation retirement plans is the need of the hour as they will help you in living your life with vanity without compromising on your way of life or lifestyle.