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How to Use the Various Types of Life Insurance Plans for Retirement Planning?

28-06-2022 |

Retirement is one of the most important and exciting phases in an individual's life. It is when you finally will feel away from career stress and family commitments. However, to enjoy the best during your retirement, adequate financial support is necessary.

And to achieve that, you should start retirement planning early in your life. While there are many options to plan for retirement, different types of life insurance plans are considered appropriate solutions for individual needs due to their advanced policy features. Here is a detail about it all and how to use them for your benefit.

 

How Should You Plan For Retirement?

When you consider financial planning for retirement, you have to keep in mind certain factors:

  • Purpose of retirement planning - Every individual will have different financial objectives. For instance, one person will need financial support to pay daily utility bills and grocery and medical expenses for living with a spouse. On the other hand, another person might have certain money goals such as organising a marriage for children apart from the routine expenses. So, identifying the objectives will help you decide on the fund required.
  • Current financial condition - Based on the financial requirements, you will have to allocate a specific fund regularly towards retirement planning. And to do so, you have to understand the current financial condition and refine it to afford a certain amount every month or year.
  • Choose the right life insurance plan - If you are an important earning member in the family, purchasing a life insurance plan to safeguard your family's future becomes a moral obligation. Insurers have introduced comprehensive life insurance solutions that provide a life cover, savings, and investment benefits.

Buy a life insurance plan by analysing the different options and understanding which plan will suit your financial needs ideally.



Life Insurance Types

As we have seen, comprehensive life insurance plans offer wide-ranging benefits. Here is a detail about traditional and comprehensive life insurance solutions.



  • Term insurance plans - Term insurance plans provide a life cover that offers a death benefit to your loved ones in case of your unexpected death during the policy term. If you have commitments relating to dependent parents, your spouse, and children, you can choose the whole life term insurance to ascertain financial security in your absence anytime.

    Insurers have introduced customisable term insurance plans to make them more beneficial. For instance, you can opt for term plan with return of premium option that will provide a refund of the premium paid on maturity. You can use this amount as a savings benefit for your retirement expenses. You can check different term insurance plans available on the Tata AIA website.

  • Endowment plans - Endowment plans are life insurance plans that provide a life cover and a maturity benefit. You can invest in such plans early in life and choose a longer policy term to accumulate a large corpus for your retirement expenses.

  • Guaranteed1 Return Insurance Plans - It is a comprehensive life insurance solution that provides a life cover and savings benefit in the form of guaranteed1 returns. As the returns are guaranteed1 during the policy inception, you can decide on the extent of funds required based on the purpose of retirement planning, as we discussed above, to benefit maximally.

    It is one of the types of life insurance plans because it provides varied payout options. Our Tata AIA life insurance policy offers payout options such as receiving the payout as a lump sum, regular monthly income for a defined period, or a combination of lump sum and regular income. You can use the second option for a regular income after retirement.

  • Money-back plans - The money-back plan is a life insurance plan that provides a life cover, a lump sum amount on maturity, and also guaranteed1 payouts at regular intervals of time throughout the term of the policy. It can be beneficial for those people planning retirement with extensive family commitments during the employment phase.

    For example, you can use the fund provided at regular intervals for paying your child's tuition fees. Insurers also provide bonuses2 for such plans based on the company's profits and policy features.

  • Unit Linked Insurance Plans(ULIPs) - ULIP plans provide a life cover and an investment opportunity for market-linked returns. When you buy this life insurance plan, you will invest in the financial markets. On the basis of your risk profile, you can choose between equity funds, debt funds, and hybrid funds.

    For instance, if you can afford a high-risk investment, you can choose the equity fund. ULIP policies also offer the option to switch between fund options in uncertain economic conditions to preserve your investment. Therefore, it is one of the best retirement plans for individuals who start planning early when the risk profile and commitments are easily acceptable. Tata AIA also offers a host of ULIP plans for your benefit, and you can check them out from our website.

  • Investment-Linked Policy - Investment-linked policies invest the money in the market so that you can get returns. When you buy an ILP, you will also receive monetary benefits at specific events in your life. These policies also include riders so that the amount of coverage can be enhanced. Moreover, these policies offer coverage for the whole life i.e, 100 years. Thus, this can be an ideal plan for your retirement goals.

  • Retirement plans - Insurers also provide exclusive retirement plan options, wherein you can invest your lump sum retirement corpus earned from your employer to purchase an single premium annuity plan that will provide a regular income for the defined income period. You can choose to receive the regular income immediately or defer it for a certain period.

    For example, Tata AIA offers various retirement plans that can help you manage your retirement better.

In addition to these types of life insurance plans, it is important to mention that life insurance solutions also provide add-on rider# benefits. The rider# options provide additional funds or options in specific scenarios to recover from the situation without affecting the life cover. For example, our Tata AIA Life Insurance Waiver Of Premium Plus Rider(Linked, Individual, Health Insurance Rider, UIN: 110A025V02)# provides the option to waive off future premium payments in case of the insured person's death or total and permanent disability. You can also check our range of riders available on our website.



Conclusion

Retirement planning is a prerequisite if you look forward to peaceful and effortless retirement life. Understand the difference between life and term insurance before you make a decision. With the different types of life insurance options, you can receive the desired savings and investment benefits based on the purpose of your retirement needs and your current financial conditions. Therefore, choose the right life insurance plan and stay invested for maximum benefits. Choose wisely and invest smartly to secure your retirement!

L&C/Advt/2022/Jun/1384

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions, please read sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.
  • 2These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.
  • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.

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