You may work hard throughout your working years to ensure that you retire happily and be financially independent. And to accomplish your dream, you may start saving from a young age. However, considering the rapidly increasing inflation, savings alone may not be enough to help you take care of your post-retirement needs. You must make sure that your savings also grows over time and gives you valuable returns.
You can consider investing in different vehicles like mutual funds, bank fixed deposits, NPS, etc., to suit your risk appetite and financial goals. Apart from these vehicles, many experts also recommend investing in a guaranteed pension plan that allows you to purchase an annuity after you retire and get regular income for a lifetime.
Many insurance companies in India offer a guaranteed pension plan that gives you and your family life insurance protection and assurance of a regular pension for you and your spouse after your demise. Let us look at the benefits of buying such a plan.
Reliable source income
When you retire, you may not have a regular income. You may probably rely on the returns from your investments to take care of your everyday and emergency needs. However, by investing in a guaranteed investment plan, you can ensure that you get a regular income even after you retire. This will help you meet your everyday needs and keep your savings and income from other sources intact.
Also, by having a regular income, you need not compromise on your living standards and enjoy living the same lifestyle you are used to.
Another significant feature of annuity plans is that they are excellent tax-saving instruments. The premium you pay is eligible for tax deduction under Section 80C of the Indian Income Tax Act. You can get a deduction up to ₹1.5 lakhs in a financial year. Thus, it helps you reduce your annual tax liability.
Also, if you wish to withdraw from the accumulated corpus partially, the amount is entirely tax-free. Not to mention, the maturity proceeds your family receives in the event of your demise are tax-exempt.
Unlike other market-linked instruments like stocks, equity mutual funds, and NPS, guaranteed pension plans have zero risk. This means you get 100% assurance of capital safety and the pension you are predetermined, and it does not change as per the changes in the market performance.
Financial emergencies can occur anytime. If you need access to immediate cash, you may think about surrendering the plan and withdrawing the corpus. However, this may jeopardise your retirement goals. This is where a guaranteed retirement plan comes as a saviour.
Instead of surrendering the plan, you can avail of a loan against the policy’s surrender value. Typically, most insurance companies allow you to get a loan up to 80% of the surrender value. Also, the interest rates are usually affordable, and you can easily repay the amount in EMIs.
Thus, a guaranteed pension plan allows you to secure your future and get a regular income for a lifetime while getting insurance protection and tax benefits.