Setting aside funds to cope with life post-employment is necessary. Yes, you will have your pension plans and provident fund, but will that be enough? With the cost of living rising by the day, being financially independent when you need it the most is important. In addition to this, meeting medical expenses during old age or just living your dream requires financial planning. This is exactly what a ULIP helps you do - save today for a better tomorrow! The small amount that you invest regularly in a ULIP plan will accumulate and on retirement, provide that much needed financial assistance.
Your retirement is when you finally hang your professional boots and look forward to a relaxed, more comforting phase of life. An ideal retired life is one led without any financial burdens. In an effort to ensure that you do not have to struggle for financial stability after retirement, it is best to start investing early. Investing in a good pension plan allows you to enjoy your retirement days without hassles.
Following are the different types of pension plans available in India.
Deferred Annuity Plan
In this pension plan, the premium is paid for a limited period. The pension starts as soon as the tenure ends.
Immediate Annuity Plan
Under this pension plan, the investment is done once through a lump-sum amount. The pension starts as soon as the investment is done.
Pension Plan With/Without Life Cover
Pension plans with a life cover offer a sum assured to the nominee upon the untimely death of the policyholder during the ULIP tenure. Immediate annuity pension plans are pension ULIPs that do not offer life cover.
Traditional & Unit-Linked Pension Plans
These pension schemes are a type of investment plan. They either invest in government securities, called traditional pension plans, or in a combination of bonds, stocks, equities, etc., called Unit-Linked Pension Plans.
Annuity Certain Plan
In this, you get the annuity amount for a specific number of years, which you can choose as per your requirement. In the case of your demise before the expiry of the payments, your nominee will be paid the amount.
Guaranteed Period Annuity
As the insured, you get the annuity for a certain period, such as 5, 10, or 15 years, etc.
In a life annuity retirement plan, you receive the pension throughout your life. If you choose the ‘with spouse’ option, he/she will get the pension benefit in your absence.
You can easily start planning your retirement with these ULIP pension plans available on Bajaj Markets.
As compared to normal retirement plans, ULIP pension plans offer the benefit of insurance coverage and investment, all under a single policy. In other words, you get to invest in market-linked investment opportunities to earn a substantial amount by the time you retire and safeguard your family’s financial future with a life insurance cover.
The reasons you should choose Bajaj Markets for your retirement plans are as follows:
As per Bajaj Allianz Life Insurance Co. Ltd., ULIP funds at Bajaj Markets enjoy good ratings with approximate returns as high as 25% over a five-year investment period.
High Assets Under Management
With approximately ₹2 lakh crore held in terms of Assets Under Management (AUM), know that your ULIP investments are the best in the market.
As per Budget 2021, any ULIPs with premiums exceeding ₹2.5 lakh will be treated as capital gains and charged accordingly. However, ULIPs with premium less than this limit can continue to enjoy the tax benefits as before. You can read more about ULIP tax benefits on Bajaj Markets.
Least Cost Structure
With ULIPs at Bajaj Markets, policyholders do not have to pay any charge when allocating funds, nor are the return of mortality charges levied.
Policyholders enjoy the flexibility of choosing between investment strategies, thus helping one plan better for higher returns.
Buy Bajaj Allianz Pension Plans available on Bajaj Markets to secure your post retirement life. ULIP Pension Plans offer tax benefits, life insurance and market linked returns. Get a free retirement plan quote today!
Let us understand the necessity of ULIP pension plans for a stress-free retirement life with an example.
Illustration: Amit recently turned 40. He has a secure job that earns him sufficient income to sustain himself, his family members, take care of his financial liabilities, and make small savings. Nearing retirement, he reviewed his finances that year. After careful assessment, he decides to make some much-needed changes to his financial portfolio. Why?
Well, Amit realises that while his savings could sustain him and his family members for some time, much of their life depends heavily on his regular income. However, when he retires, this income would come to a halt altogether, leaving everyone to rely on his life savings. Besides, Amit does not wish to rely upon his children financially during his retirement.
That’s when Amit decides to start investing in a retirement plan that provides him and his wife with a steady source of income, even when he is not working. While there are several retirement options available in the market, what stood out about ULIP pension plans for Amit is the dual benefits offered by these policies. As stated earlier, ULIP pension plans offer the facility of investing towards your retirement as well as providing life insurance cover.
However, ULIP pension plans are more than this. Let’s continue reading.
Here’s a list of salient features of ULIP pension plans.
Extra Financial Cushion Post-Retirement
No matter how much savings you have made during your professional life or how much pension you are eligible for post-retirement, it always helps to have an extra financial cushion in the face of growing inflation.
Additional Medical Riders
Retirement time calls for extra medical expenses for people. People in their old age are prone to several medical conditions, and the amount required for covering these medical expenses can prove burdensome for a retiree. However, some insurance providers offer additional medical riders with their ULIP pension plans that take care of these expenses.
Even though your monthly income stops after retirement, you might still be liable to pay certain taxes on your investments, fixed-deposit returns, rent, or any other alternative sources of income. However, ULIP returns are exempted from tax under the Insurance Act. Moreover, the premium you will be paying throughout your professional life for these pension plans is also exempted under Section 80C of the Income Tax Act.
Opportunity to Fulfil your Future Goals
Most individuals have some dreams and goals for their retired life. Be it travelling to their dream destination or buying a retirement home, these pension plans can help fulfil all your long-cherished dreams.
ULIP pension plans work differently from normal pension plans or investment options available in the market. Here, the ULIP investment that you make in the form of the premium is accumulated until your retirement. A part of this investment (generally one-third) is paid back to you at the time of your retirement. The remaining amount is invested in an annuity scheme, the returns on which are paid to the policyholder as pension either monthly, quarterly, or annually.
When buying ULIP pension plans with us at Bajaj Markets, check your eligibility beforehand. Also, ensure that you have the following documents handy.
Eligibility Criteria for ULIP Pension Plans
Documents Required for ULIP Pension Plans
You will be asked to submit the following documents:
A minimum guarantee plan is a policy that comes with a predefined amount that you will receive at the end of the policy term. Pension plans come with a minimum guarantee. In other words, the premiums paid towards the scheme (life insurance cover and maturity benefits) must have ‘on zero returns’ according to the Insurance Regulatory and Development Authority of India (IRDAI).
While the minimum guarantee is valid on all variant insurance plans in India, most insurers provide pension plans with better returns than guaranteed plans. However, this may vary from policy to policy. Keep reading to know how you can calculate your returns on ULIP pension plans.
The sooner you start your pension plan, the sooner you can enjoy the ULIP benefits. In order to estimate the returns on your investment as well as the pension amount you are eligible for, you can take the help of an online ULIP calculator. All you will have to do is submit your details such as current age, age of retirement, current income, expected income growth rate, current savings, monthly expenses, etc., to estimate the ULIP returns upon retirement.
Planning for your retirement is one of the many future financial goals that you set. However, before you invest in a pension plan, it is best to be mindful of the following factors.
When you plan your retirement, it is important to take into account your family’s monthly expenses. Since a significant chunk of your income is cut off after retirement, your pension plan should be able to fulfil your family’s needs.
Another important factor to consider is the growing inflation rate. It is imperative to invest in a pension plan wherein inflation and other economic variables do not affect your standard of living post-retirement.
Many people forget to consider the medical expenses in their retirement plan. It is important to note that your health might degrade as you get older, and you might need medical assistance often. Hence, your pension plan should be able to cover you and your family for any unforeseen medical emergencies in the future.
Chances are that you have repaid all your financial liabilities by the time you decide to retire. However, if you think you might have some outstanding debts, it is best to plan your retirement funds accordingly. That way, you will not have to compromise financially, even in your post-retirement days.
Your Future Financial Needs
Along with sustaining your financial need during retirement, you have to take into account the needs of your dependents (your spouse and/or children and grandchildren).
Planning your retirement is a crucial step in financial planning. We believe that the following tips will help you plan your retirement days.
1. Explore Several Insurance/Investment Options
In India, we have different insurance and investment plans available in the market to meet your changing lifestyle needs. However, before you start to buy/invest in these policies blindly, it is important to consider a few things, such as:
Your monthly income
Your family’s medical history
Future financial needs
Having a complete understanding of these aspects will allow you to plan towards your retirement in a better way. You can then shortlist the essential insurance and investment options that will help you accomplish your goals.
2. Invest Early
Whether you are buying an insurance policy or making investments, it is best to start as early as possible. Doing so will allow you to build substantial wealth over time.
3. Diversify your Investments
Policies like ULIP pension plans offer dual benefits of life insurance cover and market-linked investments. In such scenarios, it is advisable to diversify your investments to gain higher returns. You can make changes to the investment portfolio of your ULIP pension plan with the fund switching option. Depending on your financial needs and market performance, make necessary changes to your portfolio to earn reasonable returns.
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Starting early is always advisable, but nevertheless, if you haven’t, it’s never too late! As the average life expectancy continues to increase, life post-employment is a crucial period and needs rather serious planning. While there is no regular source of income, expenses continue to exist (if not increase), post retirement. Moreover, gone are those days when one would depend on his/her child/children for financial assistance. Citing these reasons, it is essential that you have a retirement plan in place and build a fund corpus to ensure that you continue to live the way you do now, even after employment.
If long-term financial planning and creation of wealth is your goal then ULIP’s are the best investment option for you. In simple words, if you are looking to buy a house or build a corpus to fund your child’s education as well as take care of your life post-retirement, then investing in ULIP plans is the way to go. Coming to the benefits, these plans come with a 5-year lock in period. However, the longer the period of investment, the more you earn. To add to this, ULIP policies are flexible and allow the policy holder to switch funds based on market performance and one’s risk appetite, unlike mutual funds. As for time, the earlier you start, the better it is for you!
Funds that are part of a ULIP investment plan are linked to the share market and thus their performance is directly affected by the same. Hence, ULIPs are often referred to as being market-driven.
Contrary to what you may think, this is the best time for you to start planning for your retirement. When you are single, the responsibilities that you shoulder are lesser as compared to someone who has a family to take care of. Moreover, the earlier you start, the more you save, the better for you during retirement. Being financially stable when there is no regular source of income is imperative and thus early planning is the way to go!
The truth is, everyone needs a retirement plan. A retirement/pension plan is different from a pension plan in terms of the purpose it serves. It prepares and provides you with the financial security you need when there is no regular source of income. In conjunction with Bajaj Allianz, we provide some of the best retirement plans online that will help you save for life post-employment.
Though there are plenty of benefits, let us deal with the following four to understand the need and importance of investing in a pension plan/retirement plan. 1. Compounding Effect: Like we have mentioned time and again, the earlier you start, the more you save and the better the effect of compounding on your investments. We would encourage you to opt for the pension plans offered by our partner Bajaj Allianz the moment you start earning. This helps as you can set aside a certain amount and regularly invest over a long period of time. You can then imagine the gains you’d receive on retirement. 2. Managing unforeseen expenses: The best way to dealing with unexpected and unforeseen expenses that may crop up during your retired life. This could be medical bills, costs related to treatment/hospitalization, or any other financial expense. When you opt for a retirement plan, you build a corpus of funds that will help take care of such expenses, especially during retirement. Should you need to relocate post-employment, a pension plan is sure to be of great help. 3. Protecting your property and assets: Imagine not having sufficient funds to deal with a serious medical ailment during your retirement. What would you do? If you have property, you’d probably liquidate the same to meet your expenses. When you have a retirement plan in place, you will have the financial capability of dealing with such situations leaving your property and assets to be enjoyed by your children/family.
A Retired Life Income is a regular income-like pay out, that you get through systematic partial withdrawal. You can decide when you want to receive this RLI at any policy anniversary, when you turn 55 years or after the 10th policy year, whichever is later. This retirement income constitutes of a percentage of your fund value (ranging from 0 to 12% per annum), as chosen by you, and is paid yearly, half-yearly, quarterly or monthly. The instalment is paid by redeeming units from the funds in the same proportion as the fund value in each fund and will be redeemed at the unit price applicable on the date of each RLI instalment. RLI payment is through Systematic Partial Withdrawal and the percentage can be changed anytime during the policy term or even after starting RLI. However, the fund value after payment of the instalment of RLI should not drop below 105% of total premiums paid till date, otherwise your Bajaj Allianz ULIP return gets deeply impacted.
Bajaj Allianz ULIPs available on Bajaj Markets, offer the dynamic option of switching only under the investor selectable portfolio strategy, which adds the much-needed flexibility to ULIP plans. As an investor it helps you to optimize asset allocation by allocating funds between equity and debt funds to best leverage the market scenario. Switches under this whole life insurance plan allow you to move your investments from one fund to another, within one plan, without any additional charge. You can transfer units fully or partially between fund options - equity, debt or a combination of both. If you opt for Investor Selectable Portfolio Strategy, you also have the flexibility of switching units between the investment funds as per your choice. However, this option is not available in other portfolio strategies. The minimum switching amount is Rs 5,000 or the value of units in the fund to be switched from, whichever is lower. You can make unlimited free switches during the policy term by giving a written notice to Bajaj Allianz Life. You will need to mention the exact amount to be switched and the name of the existing and the new fund. You can also avail this option through our customer portal, where you can manage this whole life insurance plan. In addition to market fluctuations, the decision to switch funds should also be based upon your risk appetite and life goals.
As a Bajaj Allianz ULIP policyholder you have the option of switching between any of the following portfolio strategies - Investor Selectable Portfolio Strategy, Wheel of Life Portfolio Strategy II, Auto Transfer Portfolio Strategy, except for Trigger Based Portfolio Strategy. You can opt for Trigger Based Portfolio Strategy only at the time of the start of the ULIP plan. You will need to give 30-days written notice before the policy anniversary to exercise the switching option.
The PROMC enhances your ULIP returns by periodically adding back the mortality charges to the fund value. The first addition is when you, as a policyholder attain 60 years of age or at the end of the 15th policy year, whichever is later. The next additions are at the end of each subsequent 10th year, and the last addition is on the date of maturity. However, PROMC is not applicable in case of a surrendered, discontinued or paid-up policy and will be payable provided all due premiums under your ULIP plan have been paid up to date.