Five reasons to have pension plan

by Contact4policy India Best Insurance Services

best pension plan

If you think pension plans are made just to fulfill your old-age needs, you might be missing on some very important benefits the plan provides. A pension plan bought is a timely action taken to fight inflation woes but alongside it provides all the other benefits an individual is expecting out of his investments made by him.

Let us delve into some of the most important reasons to buy pension plan.

Graceful retirement: Let’s admit it, financial issues put pressure on us than anything else. What would happen during the retirement? Needs do not decrease in fact they increase once you reach a certain age threshold. It is not just basic necessities but your health needs your attention too. Besides this, you might want to travel and explore the places you have never been too. If you have a decent amount of funds available with you, you can undertake travel as well as other activities that you have always wanted to.

Small amount saved regularly are enough: When you start early, say when you have started earning or you are just in your 30’s, even a small amount saved every month or annually can build a corpus for your retirement needs. Added to this, you also get the benefit of compounding. When you are saving, your funds are getting compounded and you get dual benefit simultaneously.

Insurance benefits: Pension plans are provided by insurance companies. Therefore you get win-win situation there too. You get life insurance coverage as you would have got through any life insurance plan. In case something untoward happens to you, your nominee gets the entire amount you saved along with guaranteed additions.

Focused and goal-based savings: It is always said that you should be goal oriented. When you work towards a specific goal you work in a better and a planned way. The similar fundamental applies on savings made for retirement. Your pension plan demands you to save a fixed amount or allocate a percentage of your savings towards your old age requirements. Since you are aware about the goal and compulsion you save for it, come what may.

Tax-saving advantage: When you save aside an amount for your retirement fund you also get the tax-saving advantage. The premium paid towards pension plan qualifies to get exempted from tax under section 80C of Income Tax Act 1961 to the maximum limit of Rs 1, 50, 000 annually.

These are some of the basic reasons to buy a pension plan. There are other benefits as well like you are able to have a corpus of funds for an event in your old-age, you are able to withdraw a part just at the beginning of your retirement age, so on and so forth. Count them all and weight against your needs and buy a pension plan accordingly.