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Single premium pension plans are simply those pension plans where you can invest a large lump sum amount in a single transaction. The plan remains active and does not require any further investments to provide the benefits you have selected.
There may come times when you are busy with your work and forget to pay your premiums or are unable to pay due to some other reasons. A single premium pension plan eliminates all these possibilities. It involves no regular payments. All you have to do is pay once in a lump sum and then relax. Once you reach your retirement age, this retirement plan will come into action and will create a regular income stream from the money you once deposited.
Also Read - What is Pension Meaning?
There are many types of single premium plans available on the market. Each plan has its own features. You can choose a plan that suits your objectives the most. These plans can be broadly classified into two categories:
These are also called regular or non-linked single premium plans. Your funds are invested in safe securities such as government bonds and corporate bonds. The main objective of these plans is to ensure the stability of returns.
The returns are predictable and are along the same lines throughout the period. Thus, non-linked plans are more uniform.
These can be further divided into two parts:
These are the types of annuities in which the income to be received is deferred to a later date after the premiums are paid. These are deferred annuity plans, where the insurance company agrees to pay your amount at a future date. The minimum period of waiting is 1 year.
Under this type, you make a one-time contribution to your annuity. The premium is paid in a lump sum. This lump sum is contributed to a regular income stream at the time of pay-out. Here, the payment starts almost immediately rather than at a future date.
These plans are linked to the market. That is, the investment that you make towards your unit-linked plan will be invested in market securities such as equity, debt, etc. These are great options for retirement if you want to increase your wealth in the long run.
Because these plans are based on market performance, they are riskier but also provide you with higher returns over time.
These plans give you the freedom to choose the security or fund in which your money will be invested. Thus, you can manage your plan according to your preferences and risk-taking capabilities.
ULIPs, NPS, and equity-linked pension plans from life insurers are examples of this type of pension plan.
A single premium pension plan works in the following manner. Notice that depending on the plan features you select at the time of purchase, the plan workings may differ:
The first step is to select an income you wish to receive during your retirement. This is the total monthly or quarterly amount you want to receive as regular income after you retire.
Use the online single premium pension plan calculator to
estimate how much money you need to invest now for the
intended income after 60.
You can buy pension plans usually after the age of 40. So, if you are not yet eligible for purchase you can plan to build this corpus by the time you retire or become eligible.
This is the age when the pension plan will start releasing the accumulated corpus in a stream of regular income. Based on this age you will need to select a deferred annuity or immediate annuity.
You can select a limited period income. However, if retirement pension is your only objective and this plan is the sole income source, you should select the lifetime income option.
Joint life annuity secures post-retirement income not only for you but also for your spouse. However, if your spouse already has a separate pension plan, or you are single, you can opt for a single-life annuity.
Now that you have selected most of the features you can complete your application form. Do check the summary of benefits and features available to you in the policy.
Single premium pension plans from Canara HSBC Life insurance have the following features:
A single premium pension plan offers multiple advantages to you as a pensioner. Some of the prominent advantages are as follows:
The best single premium pension plan would be the one that fulfils all of your financial and safety needs post-retirement. Follow the steps below to select the best single premium pension plan in India:
Before you purchase a pension plan for yourself, you need to undergo a verification process by the pension plan provider.
Here are the documents you should keep with yourself:
Backed by Canara Bank and HSBC Bank
Assets Under Management as of March 2022
In FY 2021-2022
The best single premium pension plan would be the one that allows a lifetime income after the single investment. Additionally, the plan should allow tax-saving on invested amount and tax benefits on the withdrawals once pension starts.
You can use the single premium pension plan calculator to estimate the amount you will need to invest so that you can receive Rs 30,000 p.m. as a pension. The amount you need to invest now will depend on when you want the pension to start and for how long will you need it to continue. A longer period before the start would mean lower investment. However, a longer pension period will mean higher immediate investment.
A single premium pension plan refers to the annuity plans which require only one-time investment. Few single premium pension plans where you can select a deferred annuity option also allow top-up investments.
Generally, the best pension plan would be the one that fulfils most of your financial needs post-retirement. However, any good pension plan should allow these features –
You can use the single premium pension calculator to estimate the lump sum amount you need to invest now to receive Rs 50,000 p.m. as a pension. Then use an SIP calculator to estimate the amount you can invest regularly to build such a corpus at the age of retirement. Also, do not forget to factor in the inflation in your estimates, as lifetime pension must keep up with inflation.
You can use the online pension calculators available with the pension plans on the life insurer’s website to estimate your expected pension amount. The factors which will affect your pension amount are –
A good pension amount should be enough to look after your regular budget and help you keep some money for unforeseen needs. Also, a good pension amount will continue to grow and keep up with inflation. This will ensure that you can have a stable lifestyle after retirement.
If you still have any unused amount left in your NPS Tier-I account after the age of 60, the entire amount is paid to your nominee. Even when you have not withdrawn any amount from your NPS Tier-I account after 60, the nominee will receive 100% of the money. The nominee does not need to invest 40% of the proceeds into a pension plan.
Depends on whether you have joint life or single life pension plan. In the case of a joint life pension plan, the pension continues for the surviving spouse. After the death of the last surviving spouse higher of the remaining amount and the life cover is paid to the nominee. In the case of a single life plan, the life cover is paid to the nominee after your death.