Know the Best Reasons to Invest in a Pension Plan

Retirement is that time when you stop earning and your office life ends. During this time, you either enjoy your life to the fullest or feel guilty as you start thinking yourself a burden on others.

It is up to you how you want your post-retirement life to be – the final chance to live life to the fullest or be a burden on others. If you belong to the former category, start financial planning for your future when you still have time.

Retirement planning is a type of financial planning that will help you build a retirement corpus for your future use. You can follow different ways of retirement planning. You can open a savings account, or invest in mutual funds. In our opinion, however, it is best to invest in a pension plan. Pension plans are offered by both mutual funds and insurance companies. Pension plans offered by Mutual funds offer higher returns but riskier. However, there are some added advantages of investing in a pension plan offered by a life insurance company. They are as follows.

• The plan offers guaranteed life coverage.
  
• The plans can be used as good tax saving instruments.
  
• Additional rider options are available with these retirement plans.
  
• You can opt for participating retirement plans that will give you additional bonuses at the end of the policy.
  
• If your risk appetite is high you can choose unit-linked plans for higher returns.
  
• You can choose from different types of retirement plans offered by the life insurance companies in India.

How to choose the right pension plan?

Finding the right pension plan is not at all a difficult task. First of all, you will have to set a goal. Your entire financial planning will be done based on that goal.

Take help of pension calculator to estimate the amount you need to have in your corpus for a financially successful life post retirement. Pension calculators will also give you the amount you need to save or invest every month. Once you know how much you need to save every month, it will definitely be easier for you to do your financial planning better.

If you are still young, we would suggest you to choose a unit-linked pension plan from a good life insurance provider. Unit linked retirement plans are basically investment plans that offer life insurance coverage as well.

These type of insurance cum Investment plans will help you not only get a huge return on your investment, but also allow you to secure the future of your family financially.

What are the benefits offered by retirement plans offered by life insurance companies?

There are a number of benefits offered by a pension plan. Some of them are highlighted below:

•          Guarantee death benefit
  
•          Guarantee maturity benefit
  
•          Income Tax Benefits
  
•          Loyalty Additions (in case of investment plans)
  
•          Simple reversionary bonus( in case of participating plans)
  
•          Terminal bonuses (in case of participating plans))
  
•          Additional rider options for stronger protection
  

The above benefits are obvious reasons for which one must invest in a retirement plan. Retirement investment plans allow you to allocate your funds among diversified fund options. So, at lower cost, you will get live coverage, high ROI, tax benefits etc all at one go and that too without much market-associated risks.

We can see that there are different reasons to invest in retirement plans. However, it is necessary to understand one’s requirements first. If you think that you need insurance cum investment plans to gift yourself a beautiful post-retirement life, invest in a unit linked pension plan and secure your future financially.