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About Pension Plans

      Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life. Pension plans are getting more and more important in these times of uncertain job security and mid-life career shifts. It is important because you have your earning years to provide yourself with a regular income during your retirement years.

    How they work?Most pension plans work in two phases – the accumulation phase, followed by the annuity or pension phase during which you receive regular retirement income. These plans require you to have a fix on your retirement age, also called vesting age in the parlance of pension plans. You can then decide the regular contribution you need to make. Accumulation phase is the stage where savings, investments or your contributions are made for creating the lump sum amount for the vesting age.

    Traditional Pension Plans:Traditionally, most pension plans were with-profit or bonus-based. In such plans, the insurers bear the investment risk. Your investment is at a lower risk with returns varying with the profits and the surplus influenced to the extent of the investment performance of the insurer. However, you can’t change your vesting age. You need to keep paying premiums for the entire duration of the plan.

    On Reaching Vesting Age:Once you reach the vesting age, you can withdraw up to one-third of the fund value as a tax-free amount, and with the rest of the amount, you can buy an annuity from the same insurance firm. Most plans keep vesting age 45 or above.

    For whom?If your risk profile does not allow you to take risk by saving for retirement through equity exposure, such bonus-based plans are your best bet. Traditional pension plans might work for extremely risk-averse people with low income. They may even work for those who want to use them to create a base retirement income, supplemented by income from other sources.

    Unit-Linked Pension Plans:A popular version of the pension plans are the unit-linked pension plans as they not only have the potential to deliver higher returns over the long term, but also provide flexibility. You can decide your retirement or vesting age. Most plans give you the option to extend it further. Minimum guarantee of 4.5 per cent per annum is now offered with all pension plans. Partial withdrawals are not allowed.

    LIC’s Insurance Plans are designed to meet all individuals requirements when taken in combination of plans.

Premium paid in that financial year towards all life insurance come  with Tax rebate under Sec 80C and in case of Health insurance under sec 80D.


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For more infomation contact LIC Bangalore on 9945689986.