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Which insurance is best to get guaranteed monthly income after retirement?

dateKnowledge Centre Team dateFebruary 04, 2021 views135 Views
Which insurance is best to get guaranteed monthly income after retirement?

Getting old means one has to get retirement from his job. Retirement is an important phase no one can ignore; many people have retirement dreams. So, it's important to start saving now if a person wants to fulfil his dreams and live happily ever after. The first step is how much a person should save to reach a retirement goal; many people get stuck at this question.

How much should a person save?

According to the thumb rule of savings, one needs to save 15% of one's pre-retirement income if taken to assume that a person has started saving at 25 to 67 years.

15% may seem a lot of your income, but if a person has a savings account with the employer, it counts as a person's annual savings. Is 15% enough? That solely depends on choices one makes before retiring and most importantly, when he starts saving. Any other source of income like pension should also be considered.

Steps on how one can save better

Now, when you know how much to save, let's talk about how to save better.

Step 1- Start early save better:

The earlier you start, the better it is. Early savings means a person's investment has time to grow through all the market's up and downs.

It may seem futile to save when young, and when retirement is far away, but when young a person has time to start saving, the investments also have time to grow and every penny saved equals every penny earned.

Step 2- Delay retirement as much as possible:

The thumb rule that is suggested requires a person to work till the age of 67 because that is the age after which people are eligible for social security benefits. But if a person wants to retire early, he needs to save more.

Step 3- Increase savings by 1% every year:

1% may seem very less, but after 30 years of retiring, he will see the benefits. For example, if he is 20 and increases 1% of his savings, his total savings are increased by 3%.

Step 4 – Check the portfolio:

A fall and an increase in the market can affect the investment a person has. If he has invested too much, it can shift him towards risks, too less invested in stocks won't benefit him. So, one needs to be sure that he has a mix of investment. A regular check is needed on his investment to ensure he has the right amount of stocks, bonds, to meet his goals.

Step 5- Consider the style of investment:

It is important to keep regular checks on investment if a person doesn't have time to opt for a managed account If a person has a managed account then, professional managers do the job. A person can pick the level of risk he is willing to take.

Step 6- Make savings a priority:

Among the various priorities a person has like a house, children, parents, he should make retirement his priority. Be sure to save at least 15% of the income every year.

Monthly income plans for senior citizens

These plans come to provide a person with a normal salary after retirement. Considering the regular inflation investing in a retirement plan has become necessary. The best pension plan will support the old aged when all other income wells dry.

Types of pension plans-

There are plenty of plans available now depending on requirements and income of a person.

Deferred annuity

This allows a person to accumulate an amount by either regular payment or premium payment over a tenure. When the term is over the amount is handed to the person. This scheme provides tax exemption benefit, although only one-third of the withdrawn amount is tax-free. The amount invested in the deferred scheme is locked and cannot be withdrawn at times of emergency.

Immediate annuity

In this scheme, a policyholder can be instantly provided with the pension with the payment of a required amount. A person can choose from various options in an immediate annuity scheme, and the premium paid is tax exempted under the Income Tax Act, 1961.

Annuity certain

In this, the policyholder receives the pension for a specific number of years. The holder can choose the number of years, and if the holder passes away while the term is not over, the beneficiary will receive the amount.

Life annuity

In this scheme, the policyholder will receive the pension till death. If the holder chooses to nominate the spouse, the spouse receives the pension after the holder's death.

National pension scheme

The government of India introduced this for securing the future of the old aged people. The policyholder can choose to invest in equity and debt funds for ensured returns on the investment. The holder can withdraw at least 60%, and rest is used to purchase an annuity.

Pension funds

These provide better returns as compared to other schemes on maturity. This scheme allows withdrawal in emergencies to relieve a person to take a loan. Pension funds remain active for a specific period.

Whole life ULIPs

With ULIPs, the money stays invested the whole life of the investor. Upon retirement, the withdrawal can be made tax free. It also allows withdrawal when necessary.

Guaranteed pension plan

In this pension plan, an amount is provided for a certain period like 5 years, 10 years, 15 years, whether the insured lives till that time or not.

CANARA HSBC ORIENTAL BANK OF COMMERCE retirement plans:

Canara HSBC OBC offers the following pension plans-

Canara HSBC OBC Smart immediate income plan:

This plan offers regular, guaranteed income after retirement. These instalments are provided regularly for a lifetime.

Key features of this plan-

1. Guaranteed income for the whole life.

2. Single as well as joint annuity options.

3. The safety net for the whole family

4. Higher-income for high purchase options.

5. Instalment income flexibility.

6. Avail tax benefits with the scheme.

Benefits of the plan

Lifetime income with death benefit:

The policyholder receives regular income the whole life, and if death occurs, the purchase price is returned.

Death benefit:

The purchase price is returned, and any remaining instalments are also returned to the policyholder's family.

Eligibility for the plan

Factors Minimum Maximum
Age ( as on the last birthday) 30 years No limit
Purchase Price (Single Premium Rs 2,00,000 No limit
Annuity term Till The Death Of The Annuitant (single Life) Till The Death Of The Last Survivor (joint Life
Annuity payout frequency Annually, Semi Annually, Quarterly & Monthly -
Annual annuity installment Rs 12,300 (Single Life), Rs 13,494 (Joint Life) -
Freeland period 15 Days/ 30 Days (for Distance Marketing Channel) From The Receipt Of The Policy
Grace period Nil
Plan type Offline

Canara HSBC OBC Life Smart Future Income Plan-

It's a traditional income plan with monthly income and profit that allows a person to enjoy his current lifestyle even after retirement.

Key features of this plan-

1. Guaranteed income for at least 15 years of the policyholder.

2. Extra income provided through annual and monthly bonuses.

3. Premium and payment tenure is limited.

4. Loan benefit in case of emergency.

5. Enjoy a high sum of returns that are assured.

Benefits of this plan

Death benefit-

The higher benefit applies to the already existing death sum assured benefit and annual bonus on the policyholder's demise.

Maturity benefit-

If the policyholder holder is still alive on the plan's maturity, he receives an annual bonus and final bonus.

Guaranteed income benefit-

Guaranteed monthly income for at least 15 years of the policyholder is payable to the insured at the end of the policy's 121st month till the end of the policy term.

Annual bonus-

This is added to the income of the policyholder every year, depending on the profit fund. There is an interim bonus applicable in case of demise of the holder.

Eligibility for the plan-

Factors Minimum Maximum
Age ( on last birthday) 18 years 55 years
Maturity term 43 years 80 years
Policy term 25 years
Premium payment term 10 years
Premium paying mode Annually & Monthly
Monthly income Rs 5.000 No limit ( subject to underwriting)
Premium amount Depends On The Entry Age, Monthly Income And Premium Mode Chosen No limit ( subject to underwriting)
Sum assured 100 Times The Chosen Monthly Income
Free Look period 15 Days/ 30 Days (for Distance Marketing Channel) From The Receipt Of The Policy
Grace period 30 days
Plan type Offline

Canara HSBC OBC Life Samridh Bhavishya Plan

This plan provides the insurer with regular guaranteed income post-retirement. It provides annuity instalments throughout the lifetime of the insurer.

Key benefits of the plan-

1. Guaranteed regular monthly income

2. Payments that are provided regularly to the person and his partner.

3. Multiple annuity options to choose from.

4. Options to receive payment whenever required by the insured.

5. Increase in the income that is regularly paid at the purchase price.

6. Tax benefits also available.

Benefits available on this plan-

Annuity benefits:

1. Lifetime annuity- these are regularly paid over the years until the insured's death after that no bonus is paid.

2. Lifetime annuity with a guaranteed 5/10/15/20 years period: the payment is paid until the completion of the chosen term.

3. Joint Life, Last survivor with 100% annuity to the secondary annuitant on the primary annuitant's death: instalments are paid at an informed rate until one of the insured is alive. The purchase amount is 100% payable.

Death benefit:

The amount is payable until the completion of the guaranteed payment period. In the case of the above mentioned third option after the second insurer's death, the payment will cease.

Eligibility for the plan

Factors Minimum Maximum
Age ( as on last birthday) 30 years No limit
Purchase Price (Single Premium Rs 2,00,000 No limit
Annuity term Till The Death Of The Annuitant (single Life)- For Option A & C Till The Death Of TheAnnuitant Or End Of Guaranteed Payment Period, Whichever Is Higher- For Option 3
Annuity payouts frequency Annually, Semi Annually, Quarterly & Monthly -
Annual installment Rs 1,000 (depending On Entry Age And Minimum Purchase Price)
Free Look Period 15 Days/ 30 Days (for Distance Marketing Channel) From The Receipt Of The Policy
Grace period Nil
Plan type Offline

These life insurance plans ensure a better future after a person retires. A person can opt for any one of these monthly income plans for senior citizens to avail assured benefits. Prepare for the wellness of your golden years.

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TERM Insurance PLAN

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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