Financial goals pose a serious concern for your future. Retirement financial planning is one of the most common among them. Financial institutions throughout the country realise the need for micro pension in India and provide different solutions to safeguard individual financial interests on retirement. Pension plans are a widely preferred option among them for many reasons. Are pension plans good? Is it important to purchase a pension plan in your life? Let us find out!
 

Before we get started, let us understand what a pension plan means.

What Is A Pension Plan?

A pension plan is a financial retirement plan that helps you manage your retirement expenses and other family financial obligations conveniently and cost-effectively. There are two types of pension plans. In the first variant, there are the accumulation and annuity phases.

During the accumulation phase, you will save a specific fund regularly throughout the entire period. Then, at the end of the phase, you can take a portion of the accumulated corpus and invest the rest to purchase the annuity plan that provides a regular income throughout your life. In the second variant, you can directly invest a lump sum amount to purchase the annuity plan.
 

Why Should You Buy A Pension Plan?
 

Now that you know what a pension plan means let us try to understand its importance in your life.
 

• Helps you manage routine financial expenses - You must have defined a lifestyle during your employment phase. It includes your regular grocery, entertainment, clothing, medical, travel expenses, etc. It is important that you secure your finances to ensure the same even after your retirement to lead a comfortable lifestyle.
  
  
• Manage uncertain medical emergencies - At an older age, you might start encountering certain health complications. With the ever-increasing medical costs, you must plan for such emergencies with a long-term investment.
  
  
• Provides apt and secure returns from compounding - When you start investing in a pension plan regularly, you will gain from the compounding benefit that will help you gain apt returns at the end of the policy term. Also, the investment is made on safer platforms to ensure you secure the returns for your financial needs when the plan matures. The fund options will be conservative based on your choice, even if it is invested for market-linked returns.
  
  
• Provides guaranteed¹ returns - Life insurance providers offer retirement pension plans that provide guaranteed¹ returns. Life insurance pension plans also provide annuity options such as the immediate and the deferred annuity plans in which you can invest a lump sum to start receiving the regular income immediately or defer it to a later date based on your requirements. When you purchase life insurance online, you can analyze these products based on the features and cost to derive an affordable premium using the online premium calculator.
  
  
• Provides tax* benefits - Savings in retirement insurance will qualify for a tax* deduction benefit under Section 80C and a tax* exemption benefit under Section 10(10D) of the Income Tax Act, 1961, based on the nature of the investment product.
  
  
• Helps financially secure your dependent family - When you save in an insurance pension plan, you can secure your family's financial future in the event of your unexpected demise. Thus, it provides dual benefits of securing your family while saving a retirement corpus for your future retirement needs.
  
  
• Helps you lead a peaceful life - Retirement is the golden period of your life. Therefore, you need to secure your finances to lead a peaceful life. Retirement pension plans, when planned smartly and early in life, can help you yield the necessary financial resources to satisfy your needs.
  
  
• Provides rider^# benefits in retirement insurance - When you opt for retirement insurance plans, you can also benefit from the add-on rider^# options. The rider^# options will enhance the financial benefit to help you manage unexpected hospitalisation and medical expenses. For example, the rider^# option for the critical illness benefit will provide a lump sum amount for paying for the medical expenses during the policy term apart from the life cover and the guaranteed¹ returns.
  
  
• Ensures financial independence - As you grow older, you will prefer leading a financially independent life. You may not like asking your children for financial support for leading a retirement life. With a well-devised strategy, you can accumulate the funds to lead a comfortable life using a pension plan.
  
  
• Offers a long-term investment benefit - With pension plans, you can invest for a long term to maximise the returns. The longer you invest in a financial product, the more the returns. However, the key is to start investing early and be invested for the entire term!
   

Conclusion

Retirement might be the last phase of your life. However, it is the most important and beautiful part of your life. It is because you are free from professional and family stress. Therefore, securing finances is vital to managing routine finances, paying for unexpected emergencies, ensuring guaranteed¹ returns and leading a peaceful life. Pension plans help you strategise your income to satisfy these needs for your future comfortably and cost-efficiently. However, you must choose the right pension plan wisely, start investing early and stay invested for the entire policy duration! 

L&C/Advt/2022/Oct/2423