Tag Archive | "Pension Insurance"

How to Buy a Right Plan to Retire Rich?

  • Easypolicy
  • 14 Dec 2012

You have been working hard to provide yourself and your family a good life. You have saved some money and you think that it is sufficient for future and to maintain the same standard of living as you are doing now. However, the reality may be far from the truth. Rising costs of commodities have pushed up the cost of living, and it seems to only go upwards.

The primary reason people go through difficult situations post retirement is not lack of money but lack of proper planning. With increased life expectancy and a fixed retirement age, retirement planning is something really vital that should be imbibed in your mind from a young age.

Types of Retirement Plans


As part of good planning, you must know well what plan you are buying. Here are the most popular types of retirement plans in India:

Immediate Annuity Plan

You can purchase this plan for a lump sum amount in return for fixed payments throughout your life. The three types are:

Life Annuity Plan


Under this plan, you will be paid a regular amount throughout your life. In case of death of the person, the nominee will receive the Maturity amount and Bonus under the “return of purchase plan” option.

Guaranteed Period Annuity Plan

Under this plan, your nominee will be paid Pension for a certain number of fixed years even if you die before this time. In case you survive, you will be paid pension for life.

Annuity Certain Plan

In this case, you will be paid a fixed amount by the insurance company for a certain number of years.

Deferred annuity plan

This plan is ideal for a person who is still in a job and doesn’t need pension for a certain number of years. Under this plan, the accumulated amount of the sum assured, bonuses etc. are then invested to generate regular income.

How to Choose the Right Plan

After you have taken the decision to start investing, you may be thinking about how much to invest. There are various factors that influence this decision.

Here are some of the most important factors:

1.Amount

The most important factor is without doubt the total amount you want to save. The more the amount more comfortable will be your life after retirement.

2.Age

If you start saving at an early age, the more money you will have after your retirement age. Also, you must decide when you want to retire and save accordingly.

3.Life Expectancy

More your life expectancy, greater will be the amount you will need in your retirement corpus. You should choose your amount taking into consideration your health condition and family health history.

4.Rate of Return

The rate of return offered by your investment scheme will determine how much is present in your retirement corpus.
 
5.Inheritance

You must not depend only on your heritage and inheritance to meet your retirement needs. Any untoward incident in your family could cost you a large amount.

6.Inflation

Inflation will determine to a great extent what your purchasing power will be in future. You must therefore take this into account while determining your retirement amount.

You must not procrastinate under any circumstance when it comes to retirement planning. It may not be easy to compensate for the initial lost years by investing higher amounts later in life. Therefore, decide early and invest in the best pension plan that meets your needs.


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tips to choose the best pension plan

  • Easypolicy
  • 21 Nov 2012

There is no right age to start planning for retirement planning, the earlier the better. You have to be wise and prudent in choosing the right Pension plan that meets your financial requirement after retirement. This comes with research and experience alone. Be your own fund manager for your pension portfolio.

How much do you need for retirement?

Based on your age, the vesting period may vary, so you must calculate the sum that you will need during your retirement age and start working backwards from there. You should take into consideration the Inflation rate so as to come up with the right amount of premiums. Once you know the premiums that you need to invest each month or year, plan your investments on SIPs and other investment plans where you are bound to save. Be prompt and do not postpone the investment amount of each Term for a later date. And the most important aspect of a pension plan is the discipline to be maintained during the investment period.

Diversify

Diversify your funds on different investment options. It is best to invest in long term funds and should not worry about the short term volatility of the market conditions. Do not put all your eggs in the same basket. Since this is a long term investment, park percentages of your money in different options on equity and debt. This way even if the market is volatile in the short term, in the long term it will gain. And by diversifying the funds, you are reducing your Risk of losing all your money. Be wise when you are saving for your retirement.

Stay away from the products that have high commissions and other hidden charges. When you are dealing with agents who are selling their products, ask explicit questions about the charges. Agents tend to only highlight about the possible returns of 15% or more and very conveniently hide the charges. You should come up with the possible rate of return of a product by accounting for these charges as well. Remember, it is a pension plan so why pay someone else the extra money when you can save that amount as well for future.

Take Check Points

Watch out for your funds’ performance over the years. And also take the inflation into consideration over time. By time, our income also increases and so does our expenses. May be you have extra income now which needs to be saved for later in life when we need it most. So, try to increase your premiums and savings as time goes as you never know what will come up as a major expense during the time that you need it the most.

It is very easy to neglect the savings for your retirement, and spend the excess money in your dream vacation or any other unwanted expenditure. Remember that retirement is when you will have the time to relax and enjoy your life to the fullest. As much as the vacations and other expenses are important in the present, so is the need to save for your retirement. Start early so you can have a blissful retired life.


retirement planning: investment options

  • Easypolicy
  • 12 Sep 2012

If you have an eye on your retirement age and have an eye on investment for retirement income, it is never too early to start your retirement planning. It takes a good Pension plan to come up with the right solutions that would make it happen for you as you take your tiny steps towards retirement age. So, what are your options?

Public Provident Fund (PPF)

One of the accepted forms of investment for retirement income is the public provident fund (PPF), a fixed investment and an attractive one in that, primarily because of the levels of returns that you get out of the investment and also due to the tax benefits that you could get on your retirement planning. With tax free interests that are compounded, you could expect to earn your interest as well as interest on your interest, a feature that should make the pension plan an attractive one. However, you may have to compromise on liquidity with this investment tool – if you are solely looking at your retirement age and are not concerned about liquidity, PPF may be an option for you.

National Savings Certificate (NSC)


Popularly known as NSC, this is an option for retirement planning with high levels of safety in place. As with PPF, the interest accrued with NSC is also compounded, providing for reasonable rates of returns. However, the casualty, again, is liquidity, as encashment of funds invested in NSC prematurely is out-of-question for all practical purposes. With income tax benefits also built into the instrument, this is one pension plan that you would want to consider, as long as the lack of liquidity doesn’t seem to matter much for you, and if you are happy with reasonable rates of returns on your investment for retirement income. 

National Pension Scheme (NPS)


This is a Government project to help the average Indian citizen with retirement planning, a move that is made compulsory for Central Government employees and one that leverages the wide network of banks and post offices in the country. The advantage with this pension plan is that you could plan early for your retirement age, choosing among three instruments for investment – equity, corporate bond and government bond. Further, you could also choose your fund manager on an annual basis, unlike it is in the case of mutual funds. The minimum contribution stipulated is Rs 6,000 per year. The advantage of choosing the NPS as your investment for retirement income is that you would have minimal fund management charges. However, you do not have tax benefits under Section 80 C, which could be seen as a drawback when it comes to Retirement Planning.

Insurance

This is, perhaps, one of the most popular perspectives towards retirement age and one that is widely looked upon as the preferred investment for retirement income. With regular payment of insurance premiums, and in consideration to certain Exclusions as may be listed in the insurance policy, the main advantage with using insurance for your pension plan is that your family remains protected in the event of unfortunate events as in the case of death or critical illness. Further, there are also options that you could choose from, depending on whether you would want a Term plan that has no investment option included, or you would want endowment plans that also have Maturity benefits. Endowment plans may be costly and provide low returns, though you could have specific requirements translated into tailor-made options to manage your investment for retirement income better.

Insurance is an option that provides benefits such as:
  • Coverage in death or critical illness.
  • Financial security for family members in the event of death of the policyholder.
  • Option of using this tool for retirement planning with wealth creation option involved.
  • Customization options available to make it more appealing as a pension plan.
  • Apart from considerations towards retirement age, there are also tax benefits involved.
Post office Monthly Income Scheme (POMIS)
This is an example of retirement planning that is easy to start and operate on account of the enormous reach that post offices enjoy. With a tenure of 6 years and with a reasonable rate of interest, the only problem with this option as a pension plan is its liquidity issue. You may withdraw after three years of investment without any deduction. This could be an investment for retirement income if you are okay with safe and reasonable returns.

Fixed Deposits (FD)

You could also opt for the age-old fixed deposit schemes with banks for regular interest payouts, setting you up for your retirement age. This is another pension plan that has strings attached with liquidity and premature withdrawal.