Seven Benefits of Buying Traditional Pension Plans

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Retirement Pension Plan
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Seven Benefits of Buying Traditional Pension
Plans
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Retirement is an inevitable phase of life. One of
the many products life insurance companies offer
people for retirement plan is pension. Pension is
aimed at securing your post retirement life, be
it related to financial security, pursuing a
hobby or planning a legacy. There are many
reasons why one needs to plan well for retirement
- increase in life expectancy, inadequate
employer funded pension, change of social
structures, absence of social security system,
desire to remain a contributor or rest and
relaxation. Pension products can be offered
either on ULIP (market linked) or Traditional
(non linked) platforms (difference betweem ulip
traditional plans). Given the nature of these
products, ideally one would want to de-risk
his/her retirement plan from market volatility.
Thats where traditional Pension products have an
edge and have been quite popular among customers.
Traditional retirement solutions are of 2 types
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Participating - These plans participate in
profits of the fund. 90 of the profits get
distributed to the policyholders as bonuses.
Hence, these are also referred to as with
profits plan. Non Participating - These plans
do state a rate of return at outset and are not
linked to the market or any index. They offer
guaranteed returns. You save regularly till you
reach your retirement fund or do it using a lump
sum as per the availability of funds. On
maturity, the benefits are mandated by
regulations to be reinvested, in order to
generate a regular income stream, which is
referred to as annuity. This feature is what
makes pension plans a good fit for retirement
planning. Key advantages of buying traditional
pension plans
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Secure Returns Traditional retirement pension
plan offer secured and guaranteed returns. For
participating plans, the secured returns are in
the form of bonuses. Once declared, bonuses are
guaranteed to be paid at maturity or death. For
non-participating plans, the secured returns are
in the form of additions. These additions are
fixed percentages of the sum assured that are
added every year or on maturity. Today in
addition to the above, traditional pension plans
also have a minimum guaranteed benefit at
maturity and on death. Easy Issuance Pension
Plans are the true over the counter plans. They
do not require any medical tests and hence can be
purchased without much of a hassle. This feature
makes a pension plan possible for all,
irrespective of their health condition. Guarantee
d Income for Life On maturity of the pension
plan, one needs to purchase an annuity. This
annuity is a guaranteed income stream for a
lifetime. This helps in meeting post-retirement
needs.
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Tax Benefits Premiums paid in traditional
pension plans are eligible for tax benefit u/s
80CCC of IT Act. This is subject to the
prevailing tax laws. Health Care Needs in Old
Age Health expenses are a major concern during
old age. With improved life expectancy and
increased medical expenditure, its imperative
that health care expenses are kept in mind while
doing retirement planning, more so because during
old age, the eligibility for a health assurance
or life assurance have their own limitations.
By investing in Pension plans one can easily
create a fund for any contingency. No Limitation
on Maximum Premium You can invest as much as you
need into these plans. Investing higher amounts
means you have a higher chance of better fund
creation and consequently better income post
retirement.
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Death Benefit Though the primary objective of
any pension plan is to build a corpus for post
retirement pension plan expenses, it also brings
with it benefits on death of the life assured.
The nominee then can either choose to take the
complete death benefit or can invest the same in
an annuity plan that will offer a guaranteed
income for life. An individual should always
keep the following in mind while planning their
retirement Maximum duration for the investment
horizon in order to build adequate
corpus Starting early to gain from the effects of
compounding Investing as much as you
need Source http//blog.hdfclife.com/benefits-o
f-traditional-pension-plans-532260  
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To know more on Retirement Pension
Planhttps//www.bajajallianz.com/Corp/retirement
-plans/retirement-plans.jsp
Thank You..!!
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