Looking for Pension Schemes in India? Read This
Pension schemes are a financial instrument that can help you grow your hard-earned savings for your days after retirement. It can cater to your financial needs and enable you to lead a financially stable retired life. The primary objective of a pension plan is to get you a regular income after retirement. Due to the rising inflation and advancing lifestyle putting your funds into a pension plan is fundamental.
Even if you have enough funds in your saving, you may need to invest in a pension scheme in India. It is one of the safest investments you can make, which will secure you and your family a safe financial future. The best pension plan will be your financial cushion when all other income streams cease to exist.
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How Does a Pension Plan Work?
The goal of investing in a pension scheme in India is to have a stable and regular income even after retirement. It can also act as your last option if your savings fall short in case of emergencies.
You need to pay a premium for the pension scheme in India, just like other investment or saving plans. These premiums are accumulated in a fund of your choice and last for a fixed period of time. When the plans reach their maturity, you become eligible to avail of the pension benefits. You can use these funds in three ways: –
- Withdraw all the funds in one go.
- Buy an annuity plan.
- Withdraw the benefits partially and invest the remaining in an annuity plan.
Policyholders can also opt to surrender/discount the pension plan with a cancellation fee. You can keep earning interest on the plan if you surrender after 5 years. And you will be required to buy a deferred or annuity plan if you choose to discontinue the pension scheme in India before 5 years.
Types of Pension Plans?
There are a variety of pension schemes in India. You must know about them to make an informed decision to buy the best pension plan. Here are the different types of pension funds:–
- Deferred Annuity
Deferred annuity lets you build a corpus by paying either a single or daily premiums. Therefore, they save a large sum of money for the pension over a time period of the scheme. You can also avail of tax exemption under this pension plan.
- Immediate Annuity
It is a pension plan that is paid to the policyholder right away. You have to deposit a lump sum, and you can start receiving the pension immediately. Under this, you can choose among various annuity plans along with the sum you wish to invest.
- Annuity Certain
Under the best pension plan, the policyholder has to collect the annuity for a fixed number of years in this form of the pension scheme. They can choose the payment duration, which is very convenient.
- National Pension Scheme
This is a pension scheme offered by the government of India. Under this pension scheme, you can save regularly in the pension account, which is paid out on retirement.
- Life Annuity
The life annuity pension scheme in India is active until the demise of the policyholder. If the policy has a ‘with spouse’ option, the pension is paid to the spouse if the policyholder passes away.
- Life Insurance Pension Scheme
It is a combination of life insurance and investment. The family of the insured receives the death benefit in case of his unfortunate demise. However, the insurance payout amount of this plan is lower than a standard life insurance plan.
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Factor to Consider Before Investing in a Pension Scheme in India
Here are a few factors you should look for while buying a pension scheme in India: –
- Monthly Expenses
The monthly expense requirement after retirement is the first factor you should consider while investing in the best pension plan. You must choose a plan that provides sufficient pension income and financial cover to your family even after your demise.
It is essential to consider the inflation factor while buying a pension scheme in India. The prices of various items may increase drastically over time. Therefore, make sure to consider inflation when estimating your monthly expenses.
- Vesting Period
The vesting period is the period you must wait before you are eligible to avail of the benefits of the pension scheme. The best pension plan has a vesting period that matches your financial objectives.
- Medical Expenses
Individuals who retire young tend to ignore the medical expenses for the future. People become more prone to medical ailments as they age. Therefore, it is vital to consider this factor while planning for retirement.
Make sure to consider all the necessary factors while looking for the best pension plan. Since there are many investment options for retirement planning, picking one can be confusing. You can consider buying a pension plan from Max Life Insurance. They offer these plans at affordable premiums and extensive benefits.
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