A life insurance retirement plan is an investment-cum-insurance product designed to provide a financial safety net and a regular income stream after you stop working. These plans require you to make periodic contributions during your earning years, which are then invested by the insurance company to build a retirement fund. At retirement, this fund is converted into an annuity to provide you with regular payouts or a lump sum, ensuring financial stability and independence for your post-retirement life.
How it works :
- Accumulation Phase:
You pay regular premiums into the retirement plan. The insurance company invests these funds in various securities and funds to grow your savings. - Distribution Phase:
Once you retire, the accumulated corpus is used to provide you with regular income. This can be in the form of a monthly pension or a lump sum.
Benefits of a retirement plan
- Financial Security:
Provides a regular income to cover living expenses and unexpected costs during your retirement years. - Life Cover:
Offers a death benefit to your beneficiaries if you pass away during the policy term. - Tax Benefits:
Many retirement plans offer tax deductions on premiums and tax exemptions on maturity benefits, helping to reduce your tax liability. - Peace of Mind:
Ensures you can maintain your lifestyle and financial independence without depending on others.
Why choose a life insurance retirement plan?
- Combats inflation: The invested funds have the potential to grow over time, helping to counter the effect of inflation on the purchasing power of your money.
- Financial independence: A regular income stream helps you maintain your lifestyle and financial independence after your professional income ceases.
- Security for loved ones: A life cover provides a financial safety net for your family in the event of your death.
- Tax benefits: You can often avail of tax benefits on the premiums paid and, in some cases, the maturity or pension payouts, as per the prevailing tax laws