Pension plans are the essential life insurance plans for the age band between 35 and 45 years. But does this mean that 35-45 years of age is the right time to buy a pension plan? Not exactly! Buy pension plans anytime, that is, as soon as you start receiving your income.
There are numerous benefits to buying a pension plan during the earlier days of your career. Some of these include the ample power of compounding, preparing you for uncertainties, tax relief, and savings for the long-term, covering every financial need post-retirement, and protecting the interest of your loved ones.
Earlier, pension plans in India were limited to investing primarily in long-term government securities like fixed deposits, PPF, or post office. But a changing approach towards pension funds and retirement has resulted in a unique instrument, “Pension Plan” through Life Insurance.
What is the percentage of savings for retirement in India?
As per the PGIM Mutual fund, “Urban Indians are saving and investing less while allocating nearly 59% of their income to current expenses.”1 Also, 69% of people expect to continue working during retirement, and about 54% hope to start a business.
But what most working-age people do not understand is that retirement is likely to have two stages. The first stage is immediately after finishing work when you tend to be busy with commitments and are generally in better health. The second stage is when you are likely to incur more costs; therefore, early planning for this stage is most important. Reports have shown that 68% anticipate funding2 for this stage of their lives through available pension schemes, and only 54% have expressed that they will manage through personal savings.
How does the pension plan work in India?
It is mandatory to visualize the kind of life you want post-retirement. It is also necessary to change the way we look and think about retirement. Post-retirement plans should be forecasted precisely and planned accordingly. It is advisable to plan till the age of 80 years.
With growing expenses, we should also ensure to save bonuses. Post-retirement planning is not just about leaving a legacy for the family or meeting day-to-day expenses but also about getting life covered. All these benefits are possible only through Life Insurance.
There are many options for the customer to choose the right pension plan. Here are a few:
- - Immediate Annuity
- - Deferred Annuity
- - Annuity Certain
- - With Cover
- - Life Annuity
- - National Pension Scheme
- - Pension Plan with Single Premium
- - Pension Plan with Monthly Income
- - Guaranteed Period Annuity Plan
Future Generali Life Insurance Company has some beautiful pension plans, including Future Generali Saral Pension and Future Generali Immediate Annuity Plan.
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- Guarantees annuity for a lifetime.
- Choice of options: 1. Single Life Annuity 2. Joint Life Annuity.
- Flexibility to receive the annuity (Yearly, Half-Yearly, Quarterly, Monthly).
- Benefit of Higher Annuity for Higher Purchase Price.
- This policy offers a fixed income for the rest of your life.
- Flexibility to choose a monthly or yearly payout mode.
- Offers an annuity card that ensures convenience in receiving the annuity amount.
- Option to choose between ‘Life Annuity’ and ‘Life Annuity with Return of Purchase Price.’
Tips for choosing the right retirement plan:
- Estimate your financial goals for the future
- Use HLV (Human Life Value) tool to consider your current income and plan accordingly
- Explore available pension plans available in the industry to choose the most suitable plan
- Before investing, understand the product thoroughly and then decide to invest
Pension plan for parents:
Often in India, earning children live off their parents and move out separately. Around 44%3 of retirees who could not save enough money depend on their children for financial support. But If you want your parents to have a comfortable retired life, ensure that you share their financial burden. Most parents ensure that their children have a sound future by making suitable investments in their early years. So, it is also the responsibility of the children to give them a peaceful retirement.
Life Insurance is the best option when planning retirement. However, we need to ensure that the priority is savings, which will fulfill the current financial requirements and take care of unforeseen events in the future. Go through all the plans mentioned above thoroughly to understand their benefits and how they can help you secure your future.
Check Retirement Plans for the best pension plans to suit your lifestyle.
ARN No: ADVT/Comp/2020-21/October/280