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Retirement is possibly one of the phases in an individual’s life when guaranteed income is the need of the hour. A guaranteed pension plan goes a long way in fulfilling this need. This is the stage in a person’s life in which income is no longer regularly generated. So, people must plan to safeguard their financial future with a guaranteed plan.
If you are a salaried individual, or even if you own a business, a guaranteed pension creates financial security for retirement. By investing a sum on a regular basis throughout your earning life, you can guarantee a corpus at retirement. The money you place in a pension fund regularly is invested in such a way that yields a regular income flow at retirement. Here are the key benefits:
Some benefits of a guaranteed pension plan overlap with some of the features. Nonetheless, here are the main features:
In any plan with a maturity period, there is a guaranteed benefit at maturity. The benefits at maturity in a guaranteed pension plan constitute the value of the fund, or 101% of premiums (regular investments made by the pension holder), the higher of the two being applicable.
Every pension plan includes a death benefit, payable to nominees after the passing away of the holder of the plan.
Under Section 80C of the Income Tax Act#, the proceeds of a pension plan are exempted from taxation. This may depend on the plan.
Dependents of pension plan holders get financial security for life.
You may discontinue a plan at any time.
You can follow the steps below to buy a pension plan online:
When you buy a guaranteed pension plan, you get a range to choose from, depending on the ages of entry and exit. The options for annuity also change with these ages. Here are some aspects of guaranteed plans at a glance:
Term of Policy | Tenure of Premium | Minimum Entry Age | Maximum Entry Age | Minimum Vesting Age | Maximum Vesting Age |
8 - 30 years | 5 to 12 years | 35 years | 70 years | 55 years | 80 years |
Note that the annuity is the periodic payment made by the company from where the plan is issued to the holder of the plan (the Annuitant), and this is given according to a fixed tenure or till survival. The annuity options available under a guaranteed pension plan are the following:
A guaranteed pension plan is a sensible way to secure your future when you retire and that of your beneficiaries should an unforeseen emergency occur (like your demise). While you earn, it is easy to opt for such a plan and grow your corpus, increasing it with increased premiums, ensuring you have the capital for the future.
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# This material has been prepared for information purposes only, should not be relied on for tax or accounting advice. The customer is requested to seek tax advice from his/her Chartered Accountant or personal tax advisor with respect to his/her personal tax liabilities under the Income-tax law.
# The above stated tax benefits are subject to the provisions & conditions mentioned in the existing Income Tax Act, of 1961. Tax Laws are also subject to change from time to time.