Retirement is an inescapableperiod of life. Life insurance companies offer pension plans so that your retirement are trouble free and restful.
Inadequate pension funded by employer,rise in life expectancy, lack of social security, or changes in social structures are a few of the many reasons why one needs to plan well for retirement.
Pension plans are bundled products that offer a combination of investment and protection. Here are a few pointsto keep in mind while choosing a right retirement plan:
1. Right plan
While planning for your post-retirement period, you need to choose a plan that can effectively deal with inflation and yield returns that would be sufficient to meet your needs after retirement.
Also, the plan you buy should complement your existing retirement savings. For instance, if most of your investments are into equity instruments, then your retirement plan should look at debt instruments.
To get the best value for money, compare the quotes on returns and premium basis on Policybazaar.com. For example, if a 25-year old starts investing Rs. 4,510 p.m. towards a retirement plan, then he will get a pension of Rs. 50,000 p.m. after retirement.
2. Pension guarantee
An investment in retirement plans is not only focused on securing your post-retirement life but also securing the futureof your spouse.
The perfect retirement plan is the one that also takes care ofyour dependents’ needsin your absence. The plan that guarantees pension for the spouse in case policyholder’s death is the best plan to go for.
At the time of the policyholder’s death, the lump sum equal to about 30% of the premiums is either paid to the dependent or the dependent can withdraw it at anytime during the annuity period. The balance is paid in the form of pension every month.
3. Premium payment flexibility
You should always choose a plan that allows you flexibility with respect to changing your premium amount.
As you advance in your career, the ability to pay higher premium will also increase. Therefore, choose a plan that offers maximum flexibility and the option to increase the amountof premiums through top-ups every year.
Even an increment as less as 5 % in your premiums each year, can increase your returns by nearly 50% over 25 years.
4. Additional Benefits
While buying a retirement plan, you should carefully assess the bonus and benefits that are offered to you with the plan.
Benefits, such as completion of payment premiums, help in maintaining your future goals even in your absence by self-funding of premiums in case of an untimely death of the policyholder; while the additional benefits,such as loyalty bonus, fetch you a larger amount on your retirement.