Life without money will be like moving towards the destination without any knowledge of the directions. Sounds crazy?
If you do not know the direction, you will be just moving around and not reach exactly where you want to go. Same, without money you may have different demands but there will be no way on how you can accomplish it. This is why owning money is important. Every minute you are aging and soon you will be close to your retirement age. No doubt, you will have ultimate things to look back at as your achievement. But in the end, you will require money to fulfill your desires. Now, how can you do that?
Simple will be to earn it and save it. While, the major portion of the money you earn will be spent to cater the monthly expenses, there will be less amount left for future. To save yourself from the situation, it is important that you spend wisely and buy protection plans. Life insurance could be the best bet that could save you from financial crisis in life after retirement.
How? Let us read that further. For that we will have to begin reading about life insurance policy.
Table of Contents
What is a life insurance policy?
A life insurance policy is a contract between the insurance company (insurer) and the policyholder (insured). After the realization of the premium, the insurer promises to compensate the life insured/nominee in case of death or maturity.
Depending on the type of the contract, the insurance company will also pay the insured in case of terminal illness or critical illness. The benefits under the life insurance policy are in consideration of the premium payment. Hence, one should choose premium payment which is easily manageable.
Let us understand the concept with an example. Sameer bought a life insurance policy to save for his future. He chose the policy sum assured as Rs.10 lakh with annual premium payment of Rs.20,000 for 15 years. He chose the premium payment term same as the policy term. Sameer survived the complete policy term and was liable to receive the maturity benefit. He paid a total of Rs.3 lakhs of premium for the life cover. On maturity, Sameer received a maturity benefit of Rs.10 lakhs. Once the insurance company pays the maturity benefit to Sameer, the policy will terminate immediately.
If you are in a job, planning for retirement gets all the more relevant. After all the years of earning and managing expenses, you have to create savings for retirement.
Let us explore more about retirement planning.
What is Retirement Planning?
Retirement planning is the process of securing financial resources for retirement when your active income will stop. It is the activity of setting retirement income goals and then choosing the actions and decisions necessary to achieve those goals.
One way of planning for retirement is by controlling the expenditures during the period you earn. The second way will be to buy life insurance plans that provide you financial security when you retire from your job. These life insurance policies are insurance cum investment plans that help you build large retirement corpus for a comfortable and stress-free retirement.
How to plan for your retirement with insurance?
You can buy a retirement plan to save for your life after retirement. Buy a plan after considering your current expenses and future requirements that may arise. In future, you may have requirements like funding your child’s education or getting your child married. Evaluate similar financial requirements and your current living standards. After that, know your premium paying capacity and then buy a retirement plan.
- Buy when young: Those entering adulthood may not have a lot of money to invest, but they do have plenty of time to let the money grow after making investments. It is a valuable part of retirement planning. In terms of compound interest, assets like this might make up a significant portion of a portfolio. Interest can be computed on interest with compound interest. The longer time you have, the more interest you will earn.
- Buying when you are 40 plus: Buying a pension plan when you are 40 plus is definitely less time to save for retirement. But better late than never be the rule for it. Mortgages, school loans, and insurance premiums can cause a lot of financial stress at this age. This is why buy a pension plan at the right time to save yourself from undue financial pressure.
- In the late 50’s: In late 50’s you are halfway through with repaying the loans and the installments. You have higher income levels and you can save more. Even though late, this is the last time when you can save for your retirement.
Why should you plan retirement with insurance?
A retirement plan is also called a pension plan. It is the life insurance policy that helps you save money for your life after retirement. Now you might think why buy a life insurance policy when it is just about savings? Read further.
- Know that with a pension plan you also get a life cover. The premium paid under the life insurance plan fetches you life protection. If any unfortunate event takes place during the policy period, the nominee will receive the sum assured as the death benefit.
- Apart from the savings, the policy will also provide you tax deduction under Section 80C under Income Tax Act, 1961. Coming back to the fact of preparing yourself financially, let us see the relevance of pension planning.
- With the rising cost of inflation and cost of living, retirement planning has become a must. The benefit payout under the plan helps you cover all the expenses that you may incur in the post-retirement years.
- With pension planning, you can save for your long-lost hobby that may include going on a vacation and pursuing your hobby. You gain financial independence like always and live life on your terms and conditions.
Best Pension Plan that you can buy.
ABSLI Guaranteed Annuity Plus
- The ABSLI Guaranteed Annuity Plus is the pension plan that provides guaranteed income for a dream retired life.
- There are 10 plan options to choose from depending on your various needs.
- The plan comes with the deferred annuity option to build a regular stream of income.
- You have the choice to increase the amount of annuity through top-ups.
- The retirement plan provides survival benefit, death benefit, and surrender benefit.
- The premium paid under the pension plan also offers tax benefits.
ABSLI Saral Pension Plan
- ABSLI Saral Pension Plan is a single premium individual immediate annuity plan. In the end, you have guaranteed regular income for life to lead a worry-free retirement life.
- There is no requirement for the medical tests before you take the plan.
- There is a choice of multiple pay-out options under the pension plan.
- The retirement plan provides survival benefit, death benefit, and surrender benefit.
- There are 2 plan options to choose from depending on your various needs.
- The premium paid under the pension plan also offers tax benefits.
Conclusion
Buy a pension plan from Aditya Birla Life Insurance Company. They offer 4 different pension plans that further assure you to pay guaranteed additions and regular income after you retire. You can choose the premium payment under each policy type depending on the type of benefits you look for. For more information on pension plans you can visit here.
