While it's important to ensure you're living your life to the fullest today, you have to consider how important it is to maintain the lifestyle in the future. Given the high cost of living and rising inflation adequate retirement & Pension Plans provide you with financial security so that when your professional income starts to ebb, you can still live with pride without compromising on your living standards
Pension Plan Benefits
Planning for retirement is a crucial aspect of everybody’s lives. Pension or retirement plans offer the dual benefit of investment and insurance cover. Old age is often associated with increased medical expenses, which can be a strain on financial resources, especially when one is retired. By starting the investment early during the productive years of life, one can build a large corpus with only a small portion of their annual income.Investments with regular Premiums or a lump sum payment makes your money grow well during your work life. On retirement, a part or the whole of this savings can be used to create regular retirement income ensuring that one doesn’t have to make changes in their lifestyle.
Features of pension plans
Pension plans or Retirement Plans are also named as annuities. Annuities help the policy holder to have regular income after retirement during their life time and to their family thereafter. The annuities are either deferred or immediate.
Deferred Annuity: The policy holder has to pay Premium for a certain period, called deferment period and after that when the policy vests the policy holder receives the annuity payments. At the time of vesting, policy holder has option to withdraw 1/3 of the corpus as cash value or commuted value and balance fund is paid as pension. The pension payment can be paid in monthly, quarterly, half-yearly or annually, as per the choice of the policy holder.
Immediate Annuity: policy holder has to invest in lump sum and can receive the pension immediately. The pension payment can be paid in monthly, quarterly, half-yearly or annually, as per the choice of the Policy holder.
TYPES OF PENSION PLANS
There are different types of pension plans, and they offer flexible benefits to customers depending upon their requirements. Customers can choose between Unit linked and endowment type of pension plans and also choose between single and regular Premium payments.
Who should buy the pension plans
Employees who are not covered under any pension must take a pension plan. The present trend is that people want to retire early and diversify their nature of job/ business, and pension plans are the right solutions. One can choose from which age they want to receive the pension, and plan accordingly basing on their requirements/goals.
How to choose the right pension plan
The wide range of pension policies offered by insurance companies in India make it a challenge for an individual to make a decision on the policy that will be the best suited for him/her. Not just selecting a reliable insurance company, individuals also have to make up their mind on a pension plan from the wide array of pension policies being offered by the same Insurer. This makes it important for an individual looking for a pension policy to be aware of the parameters that they should consider, so that they can make a well-informed decision.
There are many ways to opt for pension plan.
(a) Pension throughout the life and then to the family
(b) Pension for guaranteed period and then to the family <
(c) Pension throughout the life and then return of purchase price to the family
(d) Pension throughout the life without purchase price.
(e) Pension only to the policy holder
Pension payments are taxable as per income tax act 1961, Premiums paid towards pension plans are exempted under 80CCC of income tax act 1961