Retirement plan

Retirement plan

Get to know everything about Retirement Plan in India- Stay Financially independent and secured all-life

Retirement is a phase in life that many of us eagerly look forward to. It is a time when we can finally relax, pursue our passions, and enjoy the fruits of our labor. However, it is also a period of uncertainty and financial challenges. To ensure a secure and comfortable retirement, it is crucial to plan ahead and consider various options, including retirement insurance plans. In this article, we will explore the significance of buying retirement insurance plans and how they can provide a safety net for your future.

How does a retirement plan work?

Before buying a retirement plan, you need to set your exact financial goals. Like how much money you need for retirement and the age you are likely to get return of your retirement plan investment.

Secondly, you want to decide how much corpus you want to build towards this goal. Do you prefer making small contributions in a retirement plan, or gather enough amount, and save into a single premium annuity plan.

Benefits of buying a retirement plan

Ensuring peace of mind

Buying a retirement plan at an early age will help in reducing uncertainty and keeps you free for your later years. It will work for senior citizens as a regular source of income post- retirement to live the same lifestyle as they were leading pre-retirement.

Act as a financial backup for emergencies

When you are no longer getting a regular source of income post-retirement, buying a retirement plan will ensure that you and your family stay financially secured during financial emergencies. The retirement corpus after the 60s acts as a financial backup for uncertain emergencies.

Source of income for private sector employees with no-pension

In private jobs, there are no pensions, so buying a retirement plan would be a wise decision. One can choose the investment vehicles to save your earnings on your terms of retirement.

Legacy Opportunities

When you imagine your life goals post-retirement, it can look completely different from now. Your priorities might change with age and time. When we talk about the benefits of retirement planning, the legacy opportunity is one that can cover such possibilities. You can leave behind a large sum of money for your heirs or for a charitable cause that you prefer.

Tax Benefits

Buying a retirement plan at a young age is always better. Apart from financial security, pension plans also offer tax exemptions under Section 80C of the Income Tax Act. Premium paid in retirement plans are tax exempted. You will also get tax benefit on partial withdrawals of the maturity amount under Section 10 (a) (a) of the income tax act 1961.

Power of compounding

The earlier you buy a retirement plan, the longer the period your money gets for compounding. The retirement investment accumulates interests, which then added to your capital. Thus, your capital becomes more than what you originally invested and the cycle continues year after year.

Factors to keep in mind while buying a retirement insurance plan

Monthly expenses-

Your day-to-day living expenses are the top most consideration while choosing an insurance plan. After retirement, the regular source of income is cut-off. Apart from monthly expenses, there are other reasons also for which we need money. For instance, if you are planning more vacation trips post-retirement, your annuity must cover these expenses and help you save money for travel.

Life Expectancy

There is no way to predict how long a person is going to live. Hence, building a retirement corpus should be large enough to support your needs during your old age. There are some annuity plans where you will get payout for life long and in some annuity plans; the payout is for the defined period. Evaluate your financial requirements carefully before you buy any pension plan.

Take into account your major expenses

Major expenses: There are certain major expenses you might have to encounter once or twice in life. For instance, you will have to pay for your children’s higher education and marriage. If you do not have provisions for these expenses, your post-retirement life will get unaffected.

Medical expenses

Always choose a retirement plan keeping in mind the future medical expenses so that post –retirement, your regular source of income covers up all your medical expenses without hampering your daily expenses.

Types of Retirement Plans in India

Deferred Annuity

It is a retirement plan in which by paying regular monthly premiums, policyholders build up the retirement corpus. Deferred Annuity plan also offers tax benefits along with building your corpus.

Immediate annuity

In this retirement plan, you are required to deposit a lump sum amount one time and post that you will start receiving annuities. In this plan, you are flexible to choose the amount you want to invest on your own.

Annuity certain

When it comes to choosing the best retirement plans in India, an annuity can also be considered. In this, the policyholder collects the annuity for a certain number of years as a pension plan. After the demise of the policyholder, all the contributions transferred to the nominee of the pension plan.

The National Pension Scheme

The Government of India is offering a variety of pension schemes, one of them is the National Pension Scheme. The best part about this scheme is that you add money in your pension account at regular intervals.

Life Annuity

This form of pension plan is active until the policyholder is alive. In case there is a spouse option in the policy, post demise the spouse becomes entitled for pension payout.

Life insurance pension plans

Life insurance and investment both are part of pension plans only. After the demise of the policyholder, the death benefit is given to the family in the form of lump sum payout. It is wise to choose the right insurance payout sum.

Defined Contribution Pension Plan

The defined contribution retirement is a joint contribution of employer and employee. Usually the employer contributes the same amount as the employee. In this, there are some restrictions on withdrawal.

Defined Benefit

A defined benefit is an employee related benefit pension plan sponsored by the employer. The plan was offered to the employee after considering numerous factors such as salary and employment history. The employer often hires an investment manager to manage risks and investment funds.

Guaranteed Period Annuity

In this retirement plan, there will be guaranteed annuity for a predetermined period. The duration decides at the time of purchase.

Whole Life ULIPs

Standard pension and retirement plans offer coverage up to 70-80 years. While United Link Insurance Plan offers coverage up to 100 years. ULIP not only offers death benefit but maturity benefit also.

With Cover Pension Plans

The pension payments stop after the demise of the policyholder. Here, the nominee(s) of the policyholder receives a lump sum amount after the demise of the policyholder

Types of Retirement plan riders

Accidental Death Benefit Rider

Adding an accidental death benefit rider in the retirement plan will get policyholders an additional sum assured in the event of sudden demise.

Dismemberment benefit rider

Any unfortunate accident leading to dismemberment or disability, this rider plan ensures compensation to the policyholder.

Critical illness rider plan

If you add this plan in your existing retirement plan, you will become entitled to receive financial assistance if diagnosed with pre-specified critical illnesses.

Waiver of premium

It is one of the most added riders in retirement plans where premium waives off in the event of illness or accident resulting in loss of income.

Popular Retirement Plans in India

Source- PolicyBazaar

Company Name Plan Name Plan Type Entry Age Maturity Age Policy Term
LIC LIC’s New Jeevan Shanti Non-linked Deferred annuity 39-70 years 31-80 years NA
HDFC Life HDFC Life Click 2 Retire Market-Linked 18-65 years 45-75 years 10-35 years
ICICI Pru ICICI-Pru easy retirement Market-Linked 18-70 years 30-80 years 10-30 years
Max Life Max-Life guaranteed Life-Time Income Plan Immediate/ Deferred Annuity Immediate Annuity
> 0-80 years
Deferred annuity- 45-80 years

46-90 years NA
Bajaj Allianz Bajaj Allianz Life-Time Goal Market-linked 18-65 years 99 years 99-entry age
Kotak Life Kotak Premier Pension Plans Traditional Savings 30-60 years 45-70 years 10-30 years

Key takeaways

Investing in retirement insurance plans is a prudent step towards ensuring a secure and stress-free retirement. These plans offer financial security, protect against longevity risk, provide inflation protection, and often include healthcare coverage. Moreover, they offer tax benefits and allow customization to meet individual requirements.

Start planning for your retirement today and explore the wide range of retirement insurance plans available to secure a comfortable future. Remember, the earlier you start, the better prepared you’ll be when the time comes to enjoy your well-deserved retirement.

Join PBPartners as a PoSP insurance Agent and revolutionize the way of taking insurance to Bharat!


Why is buying a retirement plan important?

Retirement planning is important as it keeps us financially secure and avoids being in a situation of running out of money.

What are the phases of retirement planning?

There are mainly three phases in retirement planning- accumulation, investment, and withdrawal.

What is rule 100 in retirement?

According to this principle, individuals should hold a percentage of stocks equal to 100 minus their age. Therefore, for a typical 60-year-old, 40% of the portfolio should be equities. The rest would comprise high-grade bonds, government debt, and other relatively safe assets.

What are the tax benefits in a retirement plan?

Under Section 80CCC of the Indian Income Tax Act, your paid premiums offer you tax deduction of up to a maximum of Rs 10,000 on your taxable income.

How does a retirement insurance plan work?

You pay a certain amount monthly frequently to build a corpus fund. This grows your capital through the investment component of your Retirement Plan. When you retire, you will receive regular payments from this corpus.

What are the top reasons to buy a retirement plan?

Planning for retirement puts you in control of your life. When you have a plan in place, you can make informed decisions about your future.

The top reasons to buy retirement plan are:

  • Ensure regular and guaranteed income
  • Tax Benefits
  • Healthcare cost
  • Earn peace of mind

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2021 PBPartners. All Rights Reserved |

PB Partners - A Brand Under Policybazaar Insurance Brokers Private Limited
CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana - 122001
Policybazaar is now registered as a Direct Broker |Registration No. 742, Registration Code No. IRDA/ DB 797/ 19, Valid till 09/06/2024, License category- Direct Broker (Life & General)