Pension Plan

 Pension Plan: Several Things To Understand

Senior citizen’s wish to be independent and free is more than it was ever before. They want to live their life in their way, free of other duties. Retirement is now being planned for, in terms of lifestyle maintenance, holidays, hobbies, and even a new business enterprise. Joint families and living with children after retirement are disappearing fast. In this scenario, it makes sense to have a Pension Plan to take care of this independence.

The pension plan is a scheme that ensures financial independence for self after retirement. This plan is different from insurance plans that are taken to ensure financial security for dependents in case you die during the policy term.

What does a Pension Plan Offers?

1. It allows you to save money to build your retirement corpus.  You invest some money over the years. This addition at an early age lessens the burden at a later stage. You are free to choose the amount you need as a pension. The premium that you need to pay depends upon the amount you require and the duration of premium payment.

2. You have an option to buy a pension plan with Insurance coverage or without insurance coverage. If you buy a retirement plan from any insurance company, then it has insurance inbuilt. It assures that if anything happens to you, your dependents will get the sum assured.

3. This plan has two phases named Accumulation Phase and Annuitization Phase. In Accumulation Phase, you invest to generate the corpus and the Annuitization Phase is the one where you buy annuities.  You can select the time for which you wish to receive the annuity. The monthly annuity amount is calculated based on the corpus generated and the duration of the annuity. You can choose from the lifetime annuity, fixed duration annuity, or annuity certain and their variations within.

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