The life expectancy figures in India have risen over the last decade. As per Statista, life expectancy in India has increased from 67-68 years in 2015 to 69-70 years in 2020. This implies that the post-retirement life span has also increased. This has a direct influence on the financial preparedness for retirement. While many of you might rely on your accumulated savings to get you through the non-working years of your life, the truth is, the annual rise in inflation (nearly 5-6%) combined with the longer life span and mounting medical expenses can all be an expensive outcome.
To ensure a financially secure retirement, your basic need is to have a regular source of income in your post-retirement life. You should plan and invest in wise investment options like life insurance that offer you dual advantages of a life cover, along with guaranteed post-retirement income. With a regular source of post-retirement income, you will be better equipped to maintain your standard of living, combat the impact of inflation, and meet your and your family’s medical expenses in the future.
How does life insurance help?
Specific life insurance plans known as retirement plans are designed to provide you with financial stability during the non-working years of your life. These plans offer the double benefit of life insurance and investment. You pay regular premiums when you are working and enjoy tax exemptions on the premiums paid. The money is invested in the market, and it accrues over the policy tenure. At the vesting age, when you decide to receive the payouts, you can choose to take regular income withdrawals as per your preference. You also get life insurance cover throughout the policy term like a term insurance.
Some benefits of the Retirement Insurance Plans
- Life protection and regular income till 99 years: When you invest in the Retirement Plan, you enjoy a life insurance cover along with regular income and tax benefits. The payouts can begin from the 2nd policy year and continue till 99 years. This means that even during your retired life, you will have a regular source of income to meet your expenses.
- Income options of your preference: You can choose your income payout period. You could opt to receive a regular income stream from the 2nd policy year or take the defer income option, where you start getting income a year post your policy tenure expiry. Further, you can also choose the guaranteed income type. You could either take a stable payout or select an increasing income option, where your payouts increase at a defined frequency. This gives you the freedom to plan your retired life well.
- Added rewards and bonuses: You also benefit from the good financial health of the company. Every time the plan performs well, you have the chance to get added cash bonus as a reward. Each added reward helps to increase your retirement corpus.
- Riders to enhance your coverage: These Plans helps you enhance your insurance coverage by offering additional riders. These include Critical Illness Rider, Income Benefit Rider, Accidental Death Benefit Rider, Accidental Total and Permanent Disability Rider, Waiver of Premium Rider and Payor Waiver Benefit Rider.
- A reliable friend in times of urgent need: In case of financial troubles or urgent need of cash, you can also take a loan from your Active Income Plan. This means that even during critical times in retirement, you will have a reliable asset to fall back on.
- Tax benefits: The premiums you pay in this plan are exempt from taxes under Section 80 (C). Moreover, the income you receive is also eligible for tax benefits under Section 10(10D). This will lower your tax burden in the present as well as in the future after retirement.
With effective retirement planning and the right income options, you can easily secure the most important phase of your life, spanning decades. There is no margin for error here, so make the right choice and at the right time.