All your life, you work hard, put in those long nights to create a corpus large enough to adequately support the golden years of your life. And that is why retirement planning is important - your retirement is your planned holiday from work but most often with no source of income and rising medical expenses. Hence, you must create a well-structured retirement plan so that you do not suffer during the latter part of your life and your retirement is stress-free.
There are two parameters that you must consider when creating a retirement plan. One, the investments you make should align with your risk appetite. And, since during retirement the motto is more focused on the preservation of capital than enhanced returns, it is good to include more stable investment options. Second, apart from being less risky, the investments should offer returns that are enough to ensure that you do not outlive your savings. Moreover, it is good to opt for such instruments that provide you with adequate liquidity while also generating returns.
A savings option that completely justifies all these requirements is a guaranteed1savings plan for retirement. With guaranteed1 savings plan, you get stable and assured returns along with a comprehensive insurance cover.
What is a guaranteed1 savings plan, and how does it work?
A guaranteed1 savings plan is an individual life insurance plan that provides you with a life insurance cover along with a guaranteed1 savings benefit. You can use the benefit to fulfil your long-term financial goals, such as a comfortable retirement. Moreover, these plans give regular income throughout a defined policy term or as part of the maturity proceeds. You can select if you wish to receive these income receipts as a lump sum or as regular income every month or annually.
Guaranteed1savings plans help you develop a financial discipline while generating effective returns from your funds in the long-run. Besides, with the comprehensive insurance cover, you can be stress-free regarding the monetary security of your family, including your spouse.
Different types of retirement savings plans come with different features. However, at the core, all plans offer a reliable life cover, assured returns and reliable income source for a defined period. That said, the guaranteed1 savings plans are also tax#-friendly. By investing in these plans, you are eligible to claim tax# exemption for the premiums paid up to ₹1.5 Lakh under Section 80C of the Income Tax Act, 1961. Further, the maturity proceeds/death benefit under the plan is exempt from tax# under Section 10(10D).
Can guaranteed1 savings plans function as retirement plans?
Guaranteed1 savings plans are best suited for retirees because of the following reasons:
- These plans are non-market linked investment instruments and are not impacted by market fluctuations, which is ideal for a retiree.
- Guaranteed1 plans offer assured benefits without any risk of investment. This works because retirement planning aims to get stable returns at minimum risk.
- These policies come with an inbuilt insurance cover, which means that your family and loved ones are secure even in your absence.
- Guaranteed1 savings plans provide you with the option to get returns from the policy as a lump sum or regular monthly or annual income. You can also choose the period for this. This works to your benefit during retirement as you can get a reliable source of income to sustain your retirement expenses.
- One of the major benefits of these plans is the long-term savings component. You can start investing at a young age and lock-in your investments for up to 40-50 years to ensure long-term compounding and apt returns. Additionally, this long-term tenure is not offered by any other major savings and investment instrument.
- Competitive features of the plans like premium payment modes and frequency can suit you aptly. You can choose to pay all premiums in the present when you are working and not leave any pending premiums for retirement when you have no source of income. This way, you will pay now, but the benefits will come during the non-working years of your life.
- Guaranteed1 savings plans come with enhanced add-on riders* that can help you buy more security for your retired years.
Additionally, the tax# benefits of a savings plan with life cover allow you to reduce your taxable# income in the present while saving even more for your retirement years. Under Section 80C of the Indian Income Tax Act. 1961, the premiums paid for the policy are tax deductible up to ₹1,50,000 every fiscal year. Moreover, the maturity payouts, death benefits and any other returns from the plan are completely tax-exempt under Section 10 (10D), subject to prevailing tax regulations and limits.
What are the benefits of guaranteed1 savings plans for retirement planning?
Guaranteed1 savings plans offer the following benefits for retirement planning:
- Safety of investment
- Assurance of competitive returns
- The dual benefit of insurance and savings component
- Accumulation of strong corpus to fund retirement expenses
- Enhanced liquidity through a regular income source
- Highly adaptable and flexible features to suit your present and retirement needs
- Tax# benefits in an EEE treatment, while paying premium, during the tenure and maturity proceeds tax# free
How to use guaranteed1 savings plans for ensuring a financially secure retirement?
Most retirees rely on a pension scheme in India to fulfil their retirement needs. The basic purpose of a pension is to have a reliable source of income even during retirement when you are officially not working. However, pension schemes are much outdated as they offer weak returns and are sole-benefit policies.
Alternatively, options like the guaranteed1savings plan function like a retirement annuity but are much more progressive and can be optimally used to create a financially secure retirement. These policies provide savings plans with life cover, which tackles two issues at once. First, you get a secure life insurance policy for yourself, which helps you get the peace of mind that your family is safe against an unfortunate event. Second, you get guaranteed1 returns on your investment, which are competitive and can accomplish your retirement needs. Further, these policies are no-risk plans. They help you meet your everyday retirement expenses like medical bills, ration, etc., through their regular income feature.
That said, coupled with flexible features and tax# benefits, guaranteed1 savings plans work effectively to provide you with a happy retired life.