Insurance based Retirement Plans
The insurance based retirement plans are the combination of pension income and death benefit both. These plans are offered by various insurance companies and can be availed directly by the individual. Hence they are also known as personal pension plans. The major types of personal plans are as below:
Deferred Annuity Retirement Plan
Under such a plan, you can begin receiving a pre-decided pension amount every month, once you attain the specific age. While you subscribe to such plans, you will have an option to select a debt plan (low risk product) or capital market plan(equities and bonds). The debt plan is suitable for conservative investors/ The capital market plan is expected to give high return, with higher exposure to the market risk.
The key feature of deferred annuity is the wealth accumulation through power of compounding. Due to the waiting period, your corpus gets the time to grow. After the waiting period is over, you will get a higher pension amount, even if your original subscription was very small.
Immediate Annuity Plan
This plan is most suitable for those who have recently retired with lump sum retirement benefits like gratuity, leave encashment, bonus and other similar proceeds. The retired person can park the lumpsum amount to purchase an immediate annuity plan that gives you a regular pension amount from very next month.
The key advantage of this plan is proper management of your retirement benefits. Once you retire from a long service, you will receive a lump sum amount, that is quite larger than your monthly salary. Hence there is a tendency to utilise this money for unproductive purposes. Later on, you may end up with shortages of funds to meet your daily, routine expenses. The immediate annuity plan is the perfect answer to avoid this situation. You can park your entire retirement proceeds safely to buy an immediate annuity plan and ensure your monthly pension income for the entire lifespan.
Pension with insurance cover
These plas are the combination of regular monthly pension and life cover. Upon the unfortunate death of the policy holder, the nominee receives death benefits from the insurance company. The subscriber gets pension income till his or her lifespan.
Pension without insurance cover
These plans are plain pension plans, that provide you income till your lifespan. However, no death benefits are covered under these plans. The key benefit is, these plans are available at substantially lower cost as compared to combination plans. If you have already availed other insurance cover like term insurance with sufficient sum insured, you can opt for this plan and ensure regular pension after your retirement.