subject: Tips For Choosing The Best Retirement Insurance Plan [print this page] Financially secured future is on everyones mind these days because of the high rise in the cost of living compared to few years ago. An average increase in the prices by 10% every year would make for 100% increase after a decade and hence today, more than ever, there is a need to make arrangements for income in the golden years of ones life i.e., retirement years.
Retirement years for old people are supposed to be a time to relax and lay back and not to worry about money. As most people are working in private sector now and in private sector there is no scope for pension, one has to look for an outside option to generate income after retirement. This calls for retirement pension plan. A retirement pension plan is similar to a life insurance plan in many respects but different in some aspects. In regular insurance policies, one has to pay premiums for a certain period of time before realizing the annuity amount or death benefit.
Similarly, in retirement pension plans one has to pay premiums for certain period of time, say 10 years or 15 years before realizing the annuity amount. The annuity amount, in most cases is not paid at once, but it is paid either in monthly installments or an interest on the matured annuity amount is paid regularly as income to the policy holder. This is a very convenient way of planning for income after retirement.
There are actually two types of retirement plan India offered by insurance companies. These include regular or conventional plans and unit linked plans. In regular plans, the premiums paid are invested in safe investments which yield low return on investment. This is considered as low risk, low return type of investment.
On the other hand, investing in unit linked plans, the premiums paid are invested in stock market in units similar to mutual funds. These units have NAV or Net Asset Value. This net asset value is the declared value of the each unit, which in turn determines the actual amount that is accrued to the policy holder.
After the retirement plan India matures, a part of the amount or an interest from the annuity is debited in the policy holders account either every month, every quarterly, half yearly or yearly.
This is considered as a very good way of making an investment and getting a return out of it. In this way, the principal amount is gathered over a period of time and this principal amount is used to obtain return. This return is what becomes the income from retirement plan india.
Today, there are many insurance companies offer seemingly best retirement plans. But, one has to look more carefully at these best retirement plans before going ahead and buying them. One of the issues is the high expenses or deductions that the insurance companies deduct from the premiums. So, in order to look for the best retirement plan, it needs to have minimum deductions so that most of the premium amount is invested in the units and give maximum benefits.
by: raj sharma
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