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Thursday, December 3, 2020

Planning a Dream Retirement

Retirement is definitely a rise of a novel life. But, in today’s economic situation, many people tend to earn in their old age also while some become dependent after retirement.

It becomes difficult for them to maintain the same monthly income level, to travel and to support their family. So, to make your post-retirement dreams come true, you must have the best retirement plan.

Investment plans are aimed at growing our income with an emphasis on the security of our money. Term plans are mainly aimed at Risk Coverage benefits. Retirement plans or Pension plans provide support to maintain our lifestyle even after retirement.

Need for a Pension Plan:

Pension plans not only cover the life insurance benefits but also provide the required financial security needed during retirement. In the Pension plan or Retirement plan, the Premium amount is accumulated periodically to form a corpus.

After the accumulation phase is over and the retirement phase starts, our regular monthly pension period starts. The pension can start immediately after the accumulation period or can be deferred depending on the type of retirement plan chosen namely.

  • Immediate Pension Plan: Pension start with immediate effect.
  • Deferred Pension Plan: Pension start after 1 year

Tips For Choosing the Right Retirement Plan

Start retirement planning in advance, since the beginning of the income phase is mainly dependent on the age of the Policyholder, date of retirement opted, and maximum vesting age.

Vesting Age is the time where the investment of the amount for the accumulation of corpus stops and our monthly pension starts.

Choose the right rider option required to meet the uncertain situations in life. Three main rider options available include:

  • Accidental death rider
  • Critical illness rider
  • Permanent disability rider

When the correct choice of rider option is made with the retirement plan, one can avail the benefits of the rider opted, which can be obtained by paying an added premium during the accumulation period.

Additional Benefits of the Pension Plan

A guaranteed addition is provided by the Life insurance companies in addition to the maturity amount at the maturity date. This is to honor the policyholder for paying the premium for a certain period.

Two options are provided for converting the corpus into Annuity in order to provide the policyholder, an option to either withdraw a certain amount needed or to enjoy the monthly pension fully, namely:

Withdraw one third of the corpus at maturity so as to convert the rest of the two-third of the corpus into annuity: By withdrawing one third of the corpus amount, we can obtain a lump sum at maturity that can be used for fulfilling our retirement dreams or our immediate needs ahead and convert the rest into annuity for obtaining regular monthly income.

Convert the Entire Corpus Amount into Annuity: By converting the entire corpus into an annuity, we can plan for a higher monthly income for a comfortable living.

A cleverly invested future can be cherished fully.

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