The risks in human life arise out of both dying too early and living too long. The concerns of living too long are acquiring great importance. Longevity is increasing. The number of old persons is increasing considerably in almost all the countries. It is estimated that 8.8% of overall world population is to be over 65 years of age.
Every individual wants to have a tension free and peaceful retired life after years of hard work. However with the rising inflation and people preferring to live in nuclear families one cannot expect to have a tension free life unless one has accumulated great wealth, inherited a huge sum of money or at least have a retirement plan/pension plan. A person investing in a pension plan would receive a corpus amount during retirement which would be useful for paying the annuities to him, thus ensuring that he has the same standard of living as he was having before.
Other than your private home and your car, retirement investment might be the most important fund you’ll ever create. Although retirement funding looks like a problem, especially if your retirement date is not very far off. As retired life normally forms the one-third part of your life, it is essential to plan for it. Even apparently small investments now can make a large difference in your coming life. So, it is never late to begin planning for your retirement and it is well worth spending some time to do your personal research and finding out the related details. In different manners, the pension plan is basically a procedure in which a working person or an employee transfers a part of his /her salary or income towards the retirement benefits. A pension plan is basically a tool that offers complete safety at the time of post-retirement. There are several issues that help in understanding the importance of holding a pension plan, such as rising health care cost, the rise in life expectancy rate and social security system among others. A pension plan completely safeguards your post retirement phase easily.
Retirement Plan Calculator
Pension plan = Investment + Death Benefit + Survival Benefit + Regular Income + Tax Benefits
How does it work?
The working of a pension plan can be explained under the following two phases – Accumulation phase and Distribution Phase.
Accumulation Phase – During the accumulation phase, an individual either invests in a regular retirement plan or in a lump sum so that he could have accumulated wealth in future.
Distribution Phase – This phase may be described as the phase when accumulated wealth is being used for paying the annuities to the policy holder.
The types of pension plans:
There are different types of pension plans available in the market these days. They can be categorized as follows:
Deferred annuity plan: The payment for these plans is deferred till the retirement age as declared by the policy holder when the policy was bought. The accumulated sum of money is used for paying regular payments after the retirement age.
Immediate annuity plan: In this type one does not need to invest monthly instead one can pay a single premium for receiving fixed payments till one is alive. The immediate annuity plan comes in three forms:
Annuity certain: Under this scheme a fixed amount of money is paid for a fixed interval of time.
Guaranteed period return: In case of guaranteed period return scheme one would receive the payment for a fixed period of time and if he/she does not survive the nominee will get the benefit.
Life annuity: In this case the policy holder would get the pension till one survives. After her/his death the nominee would get the sum assured plus bonus amount, if any.
Types Of Pension Plans
A retirement plan is a crucial investment, considering the prevailing inflation rates. Retirement plans vary in terms of their advantages they offer. In India, there are several forms of pension plan available like a deferred annuity, life annuity, immediate annuity, and much more. However, Deferred Annuity Plans and Immediate Annuity Plan are the most common plants that usually people look for. There are some pans also available in which, the funds would be invested in the form of debt or equity by the insurance company. In such type of plans, the return depends on the market situation. Widely, pension plans can be further divided into:
Reasons To Invest
Retirement phase refers to be the new chapter of life. It is basically a conversion from work life towards relaxation. It is a time frame, in which the retired person will be able to enjoy his personal life which was missing during his/her working days. Life begins at retirement”- it is completely a true statement,However, for enjoying your retirement phase to the fullest you might have to rely on someone. It is completely difficult to rely on others for your personal needs. If you don’t want to rely on others for your needs during post-retirement phase, then you must start planning for it from today itself. You have to plan everything in advance to be on the safer side. Retirement planning includes a pension plan, yes retirement planning is incomplete without a pension plan. Pension plan is basically a concept of safeguarding your post retirement phase. You have to put some of your savings in a pension plan to have a secure post retirement life. With it you will be financially strong and ready to deal with different situation of growing age.
Financial security relies on how much a person invest and how efficiently he/she did so. Investments would help in building a corpus that assists in generating a large cash reserve. It helps in providing a financial security to the family.
A medical emergency can cause a financial crisis. An unforeseen medical emergency can disturb you financially and mentally as well. Investment helps you in creating a financial cushion for your family. It will help you in dealing with all the unwanted situations that can leave a bad impact on your financial and emotional status.
Purchasing a house, car, marriage or something thing that requires lots of funds to be done. It is really hard to fulfill all the financial goals in today’s world where the expenses are more than income. With the help of the goal oriented investment plan, you can achieve your financial goals easily.
In order to create wealth you require investment options that act as a factor of growth to your money There are several options that assist you in building your wealth over an investment horizon.
Inflation: Inflation ruins your savings completely. With every passing year, prices keep increasing. Investments assist you in protecting your capital against price rise. A good way to beat inflation is to invest your money efficiently in an option that provides good returns that are higher than the rate of inflation.
Factors That You Must Check While Purchasing Pension Plan
1. Select from among the best pension plans which suit your requirement by comparing various policies or schemes.
2. It is advisable for you to check if the plan provides required coverage or not. In case of death, the insurer will hand over the amount to the beneficiary and nominee as per stated in the policy document. You must check this feature as well. The beneficiary receives only the net amount of due premiums and expenses.
3. Check the reviews of plans offered by your insurance company
4. The traditional pension plan invests some amount of premium in the government securities and bonds hence they yield low returns. Whereas investing in a ULIP pension policy provides high returns.
5. You must invest in a ULIP pension plan after checking the various charges that are included in it in the form of fund management, allocation charges, etc.
6. Check the fees and deductions that may be applicable to the surrendering system. Basically, it takes place when you surrender the plan before the maturity time in case of emergencies.
7. Consider the tax benefits provisions in the pension plan under section 80CCC.
The government has taken some considerable initiatives for promoting old age income security, like New Pension Scheme, Pension Yojana and among others.
It is vital that individuals estimate the benefits of pension plans from the point of view of retirement benefit and should invest in it an early stage. The earlier you buy the pension plan the better will be the benefits at the maturity of the policy.
In India, there are a number of life insurance companies available who have a long list of pension plans. You must compare them properly to get the most suitable plan out of these. From the point of view of better stability, most people go for ULIP plans as they combine basic insurance plan with a pension plan, child plan and much more. A pension plan, when taken at the right time can prove to be your best friend during old age.
How To Choose Pension or Retirement Plan?
Think of the scenario after your retirement. Would you want to be dependent on others for your living at the old age? If not, then you should planfor your retirement today itself. Pension Plans essentially help you invest your savings so that it can be used after your retirement. Government of India has pension schemes for its employees, but there is no such provision in private sectors. If you’re not a government employee then Pension Plans by the insurance companies are designed for you.
There are various companies offering Pension Plans in India and you should choose the plan as per your needs & requirements. We, at PolicyX.com, make you understand your present requirement and enable you to foresee your future needs and provide you a comparison of a number of pension schemes available in India from the leading brands such as Max Life, HDFC Life, Bajaj Allianz, etc.
Importance of Pension Plans
When you stop earning after the retirement, pension plan acts as your source of income
You don’t need to depend on anyone else for your survival when you’ll be getting a fixed income after the retirement.
In case of any unfortunate event, your nominee (dependent) can get the sum assured on maturity
You can avail the tax deduction for contribution to Pension fund to the extent of Rs. 1,00,000 under section 80C of Income tax Act.
Documents Required To Buy Pension Plan
Age proof – Birth Certificate, 10th or 12th mark sheet, Driving License, Passport, Voter ID, etc.(Any one)
Identity proof– Driving License, Passport, Voter ID, PAN Card, Aadhar Card, which proves ones citizenship
Address proof– Electricity Bill, Telephone Bill, Ration Card, Driving License, Passport, should clearly mention the permanent address
Income Proof– income proof specifying the income of the person buying the insurance
Proposal Form– duly filled in proposal form is required
Medical Tests– Some companies may require medical check-up in order to make sure that the insured does not suffer from any chronic illness.
Why Choose PolicyX for Best Retirement Plan in India?
PolicyX.com is an online insurance web aggregator that helps you in finding the best pension plan for yourself. It is an IRDA approved portal thus and hence is reliable. There are several benefits that this portal offers starting from free quotes, comparison charges, videos, cash flow charts and effective information that helps you in choosing the best.
PolicyX.com is an IRDA registered portal and follows the guidelines for accurate and reliable services. Comparison of Pension plan is completely free of cost at PolicyX and it-
1. Offers instant pension plans quotes from leading insurance companies in India
2. Allows you to purchase pension plan in a few minutes by filling up an online form
1. Hassle free place that assist you in buying the desired plan
2. It will save your time and money as well
3. Simple process, just enter some basic requirements and details to find the best insurance plan
4. Compare plans provided by top insurance companies through PolicyX.com
5. Choose a plan that suits your requirements.
6. Fill the proposal form that requires some basic information.
7. Upload your documents online. Make the payment through selected mode