Retirement Planning with Life Insurance

Retirement brings with it a drop in income and in some cases no income at all. This means that unless you plan well in time for your golden years, you might be left high and dry, and dependent on another for your financial needs. This is where retirement planning using life insurance comes to the rescue.

Retirement planning entails the accumulation of wealth during one’s earning phase for life after retirement. It eliminates chances of dependency and ensures that you can easily maintain your quality of life, even when you no longer actively employed. There are a number of tools available in the market for retirement planning, such as EPF provided by the employers, PPF accounts and other such plans. Life insurance too offers pension plans. Let’s find out more about them.

Features of Life Insurance Pension Plans

At the beginning of the policy, you can pick the lump sum savings that you want to receive on vesting. One-third of this sum may be withdrawn tax free, while the remainder will have to be invested in an annuity plan. Your retirement savings will increase with non-guaranteed bonuses (if declared), starting after the very first year of the policy. No declaration of health status or medical examination is required for the issuance of such a policy. The policy also allows the insured to get another such policy from any other insurer in the industry simultaneously. The age criteria of this policy are as follows:

• Minimum age at entry: 40 years (10 year policy term) or 18years (to the age of 60)
• Maximum age at entry: 70 years (10 year policy term) or 45 years (to the age of 60)

Benefits of Life Insurance Pension Plans

Under Section 80 CCC of the Income Tax Act, an amount of up to INR 1,00,000 is deductible towards the premiums paid for a pension plan when the tax is calculated. Under Section 10(10)A(iii), any sum received by way of benefit out of the Retirement Insurance Policy

is exempt from tax. The death benefit of the Retirement Insurance Policy is that in case of an unfortunate event of death of the person insured during the policy term, the beneficiary shall receive 108% of the total premiums paid. On maturity of the pension plan, the policyholder gets the Vesting Fund, along with the declared bonus. You also have the option to withdraw 1/3 of the vesting sum tax free and start receiving a pension from the residual 2/3 amount. You might also choose to get pension from another insurer.

With such benefits and features retirement planning using life insurance pension plans becomes easy, ensuring that you are financially secured and independent in later life.

[Source: http://onlinelifeinsurance1.weebly.com/blog/retirement-planning-with-life-insurance]