It Makes Sense To Buy Pension Plan
Senior citizens desire to be independent and free is more than it was ever before
. They wish to lead their lives there way, free of any other responsibilities to take care of. Retirement is now being planned for, in terms of lifestyle maintenance, vacations, hobbies and even a new business venture. Joint families and living with children after retirement are disappearing fast. In this scenario, it makes sense to have a pension plan to support this independence.Pension plans are taken to ensure financial independence for self after retirement. They are unlike life insurance plans that are taken to ensure financial security for dependents in case you die during the policy term.
But what does a pension plan offer?
Helps create a retirement corpus
Just like an investment plan, pension plans allow you to save systematically to build your retirement corpus. You invest some amount systematically over the years. This systematic and disciplined addition at an early age lessens the burden at a later stage. You can choose the amount you might need as pension. Your premiums will be based on the retirement corpus you desire and duration of premium payment
Inbuilt insurance
Till sometime back, customer had an option to buy with cover or without cover plan. Now any retirement plan taken from an insurance company has insurance inbuilt. This ensures that if anything happens to you, your dependents will get the sum assured and the corpus generated. If you die after the accumulation phase is over, the corpus is given to your dependents as per the annuity option chosen by you.
Mandatory annuitization
A typical pension plan has two stages namely accumulation phase, where you invest to generate the corpus and annuitization phase, when you buy annuities. You can choose the vesting or retirement age. Once you reach the vesting age, it is mandatory to buy annuity form the generated corpus. You are allowed to withdraw only up to 1/3rd of the corpus. This makes sure that there is some source of income after you retire.
Choice of annuity duration
You can choose the duration for which you wish to receive the annuity. Monthly annuity amount is calculated based on the corpus generated and duration of annuity. You can choose from lifetime annuity, fixed duration annuity or annuity certain and their variations within.
Immediate annuity option
If you are already reaching the retirement age or are already retired, you have the option to buy immediate annuity. In this case you can buy annuities from the lump sum amount that you may have received from other sources. You start receiving pension immediately. Annuity in this case depends upon the single payment you have made and duration of annuity. All annuity options are available.
You invest in a pension plan to get income during the age you are not earning. You take this to remain financially independent through your life. Plan early and buy cautiously. Pension plans are for financially secure and happy retirement years.
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