A good pension plan assures a regular income for your golden years of retirement and also offers financial security to your family after your demise. Since the returns are assured, they’re not dependent on market conditions or the insurance provider’s profits. Before investing in a retirement plan, you should check its features and benefits. One advantage could be no cap on the investment amount. Here are some other good features to look for.
Survival Benefit
See whether you can get the following survival benefits depending on the annuity type:
- Single Life Annuity: Annuity payouts are made in parts based on the chosen mode throughout the time the annuitant lives.
- Joint Life Annuity: Annuity payouts are made in parts according to the chosen mode throughout the time either or both of the annuitants is/are alive.
There is flexibility to choose from annual, half-yearly, quarterly, and monthly payouts.
Tax Benefits
The claims you make and your premium payments towards the chosen pension plan should be eligible for tax deduction under Section 10 (10A) (iii) and Section 80CCC of the Income Tax Act.
Death Benefit
Choose a retirement plan with the following death benefits:
- For Single Life Annuity: Once the annuitant passes away, the annuity payments are instantly discontinued. Then the full purchase price is paid to the legal heirs (nominees).
- For Joint Life Annuity: After the first demise of one of the covered annuitants, the whole annuity amount is continuously paid as long as the other annuitant lives. After the last survivor passes away, annuity payouts are discontinued instantly. Then the nominee receives the purchase price.
Easy Premium Payment Options
People often tend to forget the premium amount payable regularly and the payment dates. To help you do away with the hassle, a good pension plan allows you to pay just once. This single lump-sum premium becomes the plan’s purchase price.
Flexibility to Surrender the Policy
See if the annuitant can surrender the plan anytime after a certain duration from the date of the plan’s commencement if he/she, his/her spouse or one of the kids is diagnosed with a critical illness listed in the plan’s document.
You need to submit the required documents to initiate the surrender approval and satisfy the insurer’s medical examiner. Once your surrender request is approved, a good plan offers 95% of its purchase price after any applicable deductions. Once the surrender value is paid, the plan is terminated.
Option to Take a Loan Against the Policy
The best pension plan allows you to avail a loan against it such that the annual interest payable on the maximum borrowed amount is up to half of the annual annuity amount payable under the plan.
Easy Eligibility Criteria
A good retirement plan is available to people aged 40-80. It comes with no maximum maturity age by acting as a whole life policy.
Make sure to choose a reputed insurance provider and use an online pension plan calculator on the insurer’s website to determine how much you should save for your retirement.