How Life Insurance Help Maximize Your Retirement

  • December 27, 2017

A shocking data was revealed by a recent research on retirement planning conducted by Reliance capital asset management. This research was conducted in collaboration with IMRB international. As per the data, the actual percentage of people in India actually planning for retirement was shocking! This percentage has shown a considerable decline with an increase in the rate of overall life expectancy. The result of research revealed that percentage of individuals falling within the retired category by the year 2050 will make for around 20 per cent of the entire population in the country.

The Benefits of Retirement Planning

The statistics show that the working population in India is not seriously concerned about retirement planning. In fact, only around 15 per cent of population actually plans for their retirement. Although people would like to have a happy retired life, lack of awareness about the available options keeps them from achieving the goal.

So what plans actually help in retirement?

Life insurance Annuity Plans

These plans are precisely meant for retirement planning. The policy holders pay a premium either in regular mode or lump sum for a specific period of time to receive a regular stream of income until the policy holder or their spouse survives. These retirement plans offer regular income to individuals who have retired from work till they are alive.

Types of Annuity Plans

These policies are categorized into two basic categories which are further subdivided into other categories.

1. Defined Benefit Pension Plans
2. Individual annuity Plans

Defined Benefit Pension Plans

These plans are offered to the specific organization or by the government. Several factors are taken into consideration prior to deciding on the amount to be offered under this plan. These include varied factors such as the amount of salary received, age, and work tenure in the organization.

Individual Annuity Plans

These are offered by the insurance organizations to individual customers. Customers can choose from a wide range of options. Some of the annuity plans available under this category include:

– Immediate Annuity
– Fixed and variable annuity
– Guaranteed annuity
– Joint annuity
– Impaired life annuity

Let us now have a detailed look of all the categories:

Immediate Annuity

The plan ensures payments to the policy holder as soon as the premium is paid. This is paid till the time of policy holder’s death. The only thing to keep in mind is to make the payment in single premium. The plan comprises only of a distribution phase. These plans are also sold under the names income annuity, single premium immediate annuity, and payout annuity.
Fixed and Variable Annuities

These annuities are paid in certain annuity amounts. The amounts are pre-determined or in amounts which increases according to a fixed rate. The plans pay according to the performance of specific investments (usually investments or equities in bonds).

Guaranteed Annuity

The plan ensures payments to annuity holder for a specific number of years referred to as the “period certain”. Under the event where the annuitant lives beyond the pre-determined period, the plan will continue to make annuity payments until the death of the annuity holder. Under the circumstances where the annuitant dies prior to the expiry of the period certain, the remaining payments (payments certain) will be given to annuitant’s legal heir. Payment to be received should be taken into consideration while investing under this plan. This will be smaller as compared to the payments received under a ‘pure life
annuity plan’. This plan makes payments only till the time of annuitant’s death.

Joint Annuity

Also referred to as joint life and joint survivor annuities, these offer regular payments until the time of death of either or both of holders. Payments to legally wedded couple are also paid by an annuity plan till the time of death of both the holders. They may also choose to reduce the payment amount made to the surviving holder in the event of death of any one of the holders.

In India, a number of Life Insurance Annuity plans are available. However, you need to choose the right plan for you to be able to actually lead a happy retired life. Choosing one can be easier via keeping certain factors into consideration such as the inflation, the amount of retirement income required by you, and the life expectancy. Make sure you choose the most appropriate annuity plan for yourself. This will let you enjoy a happy and comfortable retired life ahead.



Leave A comment