Retirement Plans

• Deferred Annuity

  A deferred annuity plan allows you to accumulate the corpus through either single premium payment or regular premium payment over the period of policy term. It offers different benefits to the insured. Moreover, tax exemption as per current provisions of the Income Tax Act can also be availed under this type of pension plan.

• Immediate Annuity

  In the immediate annuity plan, the insured can receive annual/ monthly pension immediately. On payment of a lump-sum amount, the policyholder can begin receiving instant payment of pension. Under this scheme, policyholders can choose from different annuity options, and can also avail the benefit of tax-exempted premium. The nominee of the plan becomes the receiver of money in case of the demise of the policyholder during the policy tenure.

• Annuity Certain

  Under this type of pension plan, the annuitant gets the annuity paid for a specific number of years. The annuitant can select the period of payment and thus receive the payment accordingly. In case of the annuitant passing away, the amount can be received by the beneficiary of the policy.

• With and Without Cover

  The pension plans with cover have the component of life cover added in the plan. On the death of the policyholder, the beneficiary gets paid a lump-sum amount. The pension plan without cover offers no life cover to the insured policyholder. On the death of the insured, the nominee receives the corpus.

• Guaranteed Period Annuity

  Under guaranteed period annuity pension plan, the policyholder receives annuity for a certain pre- determined period like, regardless of the survival of the insured.

• Life Annuity

  Under life annuity plan, the annuitant is paid the pension amount until death. In case of the death of the policyholder, and under the chosen option of ‘with spouse’, the spouse of the policyholder can receive the amount.

• Pension Funds

  This type of pension plan remains in force for a long period of time. It also provides a better return upon maturity.

• National Pension Schemes (NPS)

  The government of India has introduced a new pension scheme, wherein the policyholder can put the amount of savings in the National Pension Scheme. The money put in this scheme is invested in equity and debt funds and the returns on investment can be generated. Under this scheme, the policyholder can withdraw 60% of the amount at the time of retirement, and 40% of it is used to purchase annuity.

• Whole Life ULIPs

  Under this type of pension plan, the money stays invested for the whole life (typically till the life insured reaches the age of 100 years). At the time of retirement, the policyholder can make partial withdrawals (according to terms of policy chosen) and get a tax-free income. They can also make additional withdrawals whenever necessary. Note- in ULIPs, the investment risk in investment portfolio is borne by the policyholder.

• Defined Benefit

  Under the defined benefit type of plans, the policyholder can pay a specific amount from their retirement income. This is decided on the premise of the pension amount, that is determined on the basis of the employed policyholder’s earnings as well as number of years of service.

Retirement represents a milestone in a person’s life. It is the beginning of a new life of the retired. They can pursue the other plans and goals in life, which were earlier burdened and disturbed by the daily work routine. But life still goes on, and they do require financial resources to fulfil these dreams and goals as well as life’s basic necessities. Hence, it is important to choose the best retirement plan for yourself. Here are some of the general features of retirement investment policy plans and schemes that are offered by insurance providers in India :

• Guaranteed Income

  Retirement plan is the gateway to receiving regular and guaranteed income post-retirement. The fixed and steady income ensures a financially independent lifestyle even after retirement. You can use the retirement calculator to have a rough estimate of the amount you will require post-retirement.

• Coverage Terms and Scopes

  The nature of retirement plan benefits is either immediate or deferred. The annuity payouts depend on the nature of the plan, wherein the payouts begin immediately after the plan is purchased in the immediate mode, and the amount gets accumulated for a fixed number of years before being paid out in the deferred mode.

• Main Fund Coverage

  The main fund coverage is also known as the sum assured, which indicates the total coverage to be received. Make sure to check the total sum assured before purchasing the plan.

• Liquidity

  Retirement plans are a product of low liquidity. However, there are plans available that allow withdrawal during the accumulation stage as well.

• Duration of the Fund Build-up

  This feature indicates the number of years for which the policy plan allows you to build up the fund corpus. This accumulated fund is from which the regular pension payouts will be made post-retirement.

• Flexibility of Investment

  The annuity instrument under the retirement plan must offer you the choice of fund option, especially if the returns are market-linked.

• *Tax Benefits

  Some retirement/pension plans offer tax exemption under the Income Tax Act of 1961.

• Vesting Age

  Vesting age is the age from which you begin to receive monthly pensions. In most of the pension plans the vesting age is starts from 45 to 50 years. Though some companies also allow the vesting age up to the age of 90 years.

• Partial Withdrawal Option

  Partial withdrawal is a flexibility that is offered in the plan. It does not have rigid inflexible terms and conditions pertaining to withdrawal during the policy period of fund accumulation. Under this feature, you can withdraw a particular percentage of the main corpus in times of emergency requirement, depending on the terms of the policy purchased.

• Payment Period

  Payment period is often confused with accumulation period. Payment period is the period in which pension is received post-retirement. Most of the retirement plans keep the payment period and accumulation period separate.