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Pension Plan

The risks in human life arise out of both dying too early and living too long. The concerns of living too long are acquiring great importance. Longevity is increasing. The number of old persons is increasing considerably in almost all the countries. It is estimated that 8.8% of overall world population is to be over 65 years of age.
Every individual wants to have a tension free and peaceful retired life after years of hard work. However with the rising inflation and people preferring to live in nuclear families one cannot expect to have a tension free life unless one has accumulated great wealth, inherited a huge sum of money or at least have a retirement plan/pension plan. A person investing in a pension plan would receive a corpus amount during retirement which would be useful for paying the annuities to him, thus ensuring that he has the same standard of living as he was having before.Retirement Plan Calculator

Pension plan = Investment + Death Benefit + Survival Benefit + Regular Income + Tax Benefits

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How does it work?
The working of a pension plan can be explained under the following two phases – Accumulation phase and Distribution Phase.

Accumulation Phase – During the accumulation phase, an individual either invests in a regular retirement plan or in a lump sum so that he could have accumulated wealth in future.

Distribution Phase – This phase may be described as the phase when accumulated wealth is being used for paying the annuities to the policy holder.

The types of pension plans:
There are different types of pension plans available in the market these days. They can be categorized as follows:

  • Deferred annuity plan: The payment for these plans is deferred till the retirement age as declared by the policy holder when the policy was bought. The accumulated sum of money is used for paying regular payments after the retirement age.
  • Immediate annuity plan: In this type one does not need to invest monthly instead one can pay a single premium for receiving fixed payments till one is alive. The immediate annuity plan comes in three forms:
  • Annuity certain: Under this scheme a fixed amount of money is paid for a fixed interval of time.
  • Guaranteed period return: In case of guaranteed period return scheme one would receive the payment for a fixed period of time and if he/she does not survive the nominee will get the benefit.
  • Life annuity: In this case the policy holder would get the pension till one survives. After her/his death the nominee would get the sum assured plus bonus amount, if any.

Disclaimer: Please note that the information provided is collected from sources publicly available & we believe to be reliable. The website doesn't warrant the accuracy, reliability & absolute information available on the website. Participation by site visitors or registered customers is on a voluntary basis. The policies are offered by various life Insurance & non-life insurance offering companies and Bimadeals does not seek to, either directly or indirectly, advise, offer, solicit or recommend that any person who is or proposes to become its member should purchase the Policy.

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