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Have you thought about your post-retirement life? Today, many young people complete their education, start their careers, spend more, save less, and ignore the importance of retirement planning! However, it is not a good financial practice. If not planned and invested in a well-defined retirement savings plan, it can degrade or deplete your financial reserves in a few years. Furthermore, if you are not consistent in managing your retirement, it will significantly affect your family’s peace of mind.
So let us get ahead and understand better why a dedicated retirement savings plan is important in your life.
Ensure a stress-free retirement: Retirement is an important phase in your life. It is the best time to seek peace because you will not have employment pressures, financial stress about raising your children, or other financial liabilities.
However, if you do not have a defined financial plan, your retirement will suffer from financial stress. It is because you would have set a standard of living during your employment phase that you may not be able to satisfy during your retirement days. Also, if you didn’t have a proper financial plan in place, you may not have planned for your financial liabilities, such as your child's marriage or higher education, for which you would have to use your retirement corpus.
Therefore, a retirement savings plan exclusively for your retirement purposes is an ultimate necessity.
Protects family and provides a regular income: If you are the sole earning member in the family, it is your responsibility to fulfil your family’s financial commitments at different stages in their life. A regular monthly income will certainly be necessary if you have dependents such as your spouse and parents staying with you in the long term. And, also in your absence, their survival should not get affected.
A pension plan with life cover provided by the insurers also ensures a guaranteed1 maturity benefit. The life cover will provide a sum assured to your family in case of your sudden unexpected demise and the guaranteed1 return on maturity. The plan also offers varied payout options, such as receiving it as a lump sum amount, a combination of the lump sum and assured annual income, or regular monthly income.
Therefore, you can customize the savings insurance plan with the regular monthly income option to serve as the best life insurance for pensioners. You can define the income period for the regular income for a specific number of years or throughout your life until death.
Inculcate the habit of saving regularly: The habit of saving regularly is extremely important. It has to be imbibed early in life for maximum benefits. If you are not saving regularly at a younger age, you will not accommodate savings at different stages in your life when expenses keep increasing.
Based on a financial plan considering your current lifestyle and financial commitments for the future, you can make a budget accounting for inflation. Use this budget and follow it religiously and allocate a specific amount for your savings plan. Choose the plan that will be affordable for you in the longer term and start investing regularly.
During your younger age, you may not have very high financial commitments. Therefore, you can invest more and get used to investing as well.
The benefit of compounding: Retirement planning is always based on a long-term financial perspective. Hence, the benefit of compounding is an added advantage. It means your earnings grow based on your previous earnings. The longer you stay invested and let your earnings grow, the better are your returns in the longer term. It is the best way to accumulate your earnings for wealth creation.
Flexible features: You can craft a dedicated savings plan based on the flexible features provided by the plan. For example, you can decide on the frequency of premium payment with the savings insurance plan, whether monthly, quarterly, half-yearly or annually. You can also decide on the payout options based on your family needs. If you feel your nominee will not handle a lump sum amount wisely, you can always opt for the monthly income plan. Tata AIA pension policy provides various flexible features for the benefit of different categories of investors.
Anticipate uncertain medical expenses: When you have a designated retirement plan, you will account for medical expenses predominant at an older age. It will help you manage the expenses without hampering your savings or financial reserves. On the other hand, if you didn't have a retirement plan from the beginning, the fund you accumulated during the employment phase might deplete if you get affected due to a disease that costs high for the treatment.
Rider# options for pension plans with life insurance: Insurers provide additional rider# benefits to extend the protection to the policyholders. For example, the critical illness rider# will provide a sum assured to you in case you get affected due to a critical illness for the first time in your life during the policy term. You can use the lump sum amount provided by the insurer to pay for the hospital expenses and other treatment charges. Apart from the life cover, the additional benefit ensures the best investment for retirement for people with a family medical history of critical illnesses.
Dedicated retirement planning is an important step in life that you need to account for in your financial plan. It will negate the stress in your family after retirement, provide a regular monthly income, help you benefit from the power of compounding, make use of the flexible features and the optional riders#. In addition, life insurance is vital if you have dependents throughout your life, and a guaranteed1 return income plan will suffice such needs perfectly.
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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 the 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