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Annual Income (In Lacs)

What is Single Premium Pension Plan?

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.

Types of Single Premium Plans

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:

1. Traditional Single Premium Plans

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:

  • Deferred Annuity

    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.

  • Immediate Annuity

    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.

2. Unit-Linked Pension Plans

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.

How Does a Single Premium Pension Policy Work?

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:

  • Selecting the Income

    1. Selecting the Income

    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.

  • Total Amount You Need To Invest

    2. Total Amount You Need To Invest

    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.

  • Select the Age When your Pension

    3. Select the Age When your Pension

    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.

  • Select the Income Period

    4. Select the Income Period

    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.

  • Select Single or Joint Life Annuity

    5. Select Single or Joint Life Annuity

    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.

  • Complete Application and Invest Money

    6. Complete Application and Invest Money

    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.

What are the Features of Best Single Premium Pension Policy?

Single premium pension plans from Canara HSBC Oriental Bank of Commerce Life insurance have the following features:

  • You need to invest only once.
  • You can select either a lifetime income or the option to continue the income for a limited period only.
  • You can choose from up to six different annuity options.
  • Buy a joint life pension with the spouse so that pension continues for the surviving spouse without hiccups.
  • Guaranteed death benefits and income stream.
  • Add-on cover for critical diseases like cancer and CABG, etc.

Advantages of Buying a Single Premium Pension Plan

A single premium pension plan offers multiple advantages to you as a pensioner. Some of the prominent advantages are as follows:

  • One time investment means no further commitments are necessary. You can simply post the maturity proceeds from a retirement savings plan to the single premium pension plan.
  • Added life cover provides lifetime pension to your spouse and any other financially dependent family member
  • Plans like Saral Pension Plan from Canara HSBC Oriental Bank of Commerce Life Insurance also provide added cover for life-threatening critical diseases
  • The investment in the plan is completely safe from market movements. Thus, you can be sure to receive the promised pension amount for the selected period.
  • If you have chosen a deferred annuity option, you can also avail of a loan from the policy in case of emergency before the pension starts.

How to Choose the Best Single Premium Pension Policy?

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:

  • 1

    Check the Minimum Entry Age

    Minimum entry age allows you to invest money early and leaving it to grow until your retirement.
  • 2

    Check for Bonus Additions

    Bonus additions increase the growth rate of your invested money. Bonus additions can be guaranteed or performance-based. Canara HSBC Oriental Bank of Commerce Life Insurance Pension4Life plan offers guaranteed bonus additions to your plan.
  • 3

    Pension Duration

    Many single premium pension plans offer a pension for a limited period only, for example, 10 years. However, post-retirement if you want to avoid bothering with investments every few years, the lifetime pension plan is a better choice.
  • 4

    Guarantee on Pension Payment

    You should also check the investment pattern of the pension plan, especially during the pension period. The plans which guarantee the pension for a long time, usually invest the money only in safe investments.
  • 5

    Solvency of Insurer

    You can also consider the financial strength of the life insurance company before buying their pension plan. Canara HSBC Oriental Bank of Commerce Life insurance has been consistently rated AAA by CARE on their paying ability for claims.
  • 6

    Mode of Payment and Investment

    Although the online mode of payment and investment is the most convenient nowadays, you should choose the mode most comfortable for you. Online pension plans usually offer investments and payments completely online.
  • 7

    Check for the Add-on Benefits

    During old age when most life insurance plans do not cover you for health, critical illnesses can derail the best laid out plans. So, if you have a chance to cover yourself for such life-threatening diseases, why not consider the cover?
  • 8

    Joint or Single Life Cover

    If you are married with a spouse financially dependent on you, you would want to protect him/her from falling out after your demise. Thus, a pension plan with joint life cover will be more apt for you.
    Once you have checked all of these features in your favour your search for the best single premium pension plan ends and you can invest in the plan.Here are 5 reasons to invest in the best pension plan.

Documents Required to Buy a Single Premium Pension Plan

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:

  • The required application form for the single premium pension plan

  • Bank account details

  • Address Proof: AADHAR card, Telephone bill, Electricity bill

  • Identity Proof: AADHAR card, Voter ID, PAN card

  • Medical history records

Why Buy From Canara HSBC Oriental Bank of Commerce Life Insurance?

Partner Bank Branches

10000

+
Bank branches

Backed by Canara Bank and HSBC Bank

Crores

25000

Cr.+

Assets Under Management as of March 2022

Individual Death Claims Settled

98.57% ^

Individual Death Claims Settled

In FY 2021-2022

FAQs Related to Single Premium Pension Plan

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 –

  1. Joint life option
  2. Lifetime guaranteed pension
  3. Critical health cover against cancer and other life-threatening diseases.

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 –

  1. The amount you plan to invest
  2. When do you want to start the pension
  3. How long the pension must continue

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.