Retirement Planning

Pension Plan

Pension Plan

  • From the second year/month of the policy, the insured person will get a guaranteed amount as an income by paying a premium only once in the pension plan and this guaranteed amount will continue to be received till the insured is alive. The pension plan also offers different options, some of which are given below.
  • Once the premium is paid, you will get a guaranteed amount from the second year/month of the policy till the person is alive.
  • Once the premium is paid, a guaranteed amount will be given from the second year/month of the policy till the insured dies and the premium paid will be given back to the nominee when the insured dies.
  • If the premium is paid only once, a guaranteed amount every year/month after the policy period of 1 to 10 years will be paid plus at the time of death of the insured the premium paid will be paid back to the nominee.
  • All the three options mentioned above can also be taken for joint life.

A pension plan is a smart retirement planning tool that enables you to maintain your standard of living post retirement. By investing in a retirement pension plan, the policyholder is entitled to receive monthly payouts in the form of a pension after his/her premium payment term is over.

The different types of pension plans are:
1. Deferred Annuity
2. Immediate Annuity

As your date of retirement is approaching, you need to arrange for guaranteed regular income for the rest of your life. Invest one lump sum amount in buying an annuity plan and start receiving regular income for the rest of your life. A Single Premium plan that gives you a guaranteed income throughout your retired life. On the death of the annuitant, the entire Purchase Price will be paid to the nominee or legal heirs as a death benefit.

A typical pension plan, also known as a retirement pension plan, has two phases – accumulation and annuity. During the accumulation phase of the pension plan, you pay the premiums for the plan’s tenure. During the annuity phase, your investment fetches returns and you start getting a pension.

Traditional Plans in India

In today’s day and age, maintaining financial stability has become quite difficult for most individuals. Understanding the requirement of financial stability in an individual’s life, the insurance companies have come up with guaranteed income plans. The guaranteed income plans are specifically designed to cater to the requirements of the risk-averse investors and offer them the benefit of life insurance along with maturity benefits and regular guaranteed payouts. The guaranteed income plan offers financial security by providing regular income at a pre-defined percentage (selected by insured and insurer) of Sum Assured. The USP of the plan is that one can receive the income yearly, half-yearly, quarterly, or monthly. This innovative insurance product is a traditional plan that comes with a bonus facility, where the insurance holders are not required to worry about the ups and downs of the market; rather they get to enjoy the maximized returns.


Guaranteed Income Plans are designed for salaried people who fall in the age bracket of 18-60 years and policy term for them extends from 10 years to 30 years.


• It is a variant of a life insurance plan that offers regular income for a specified term varying from 10-30 years.
• Offers vested reversionary bonus along with terminal bonus, if any, at the time of maturity.
• Provides death benefits as well as maturity benefits.
• Provides the benefit of tax exemption.
• Policy term varies from 10-30 years.

Benefits of Guaranteed Income Plans

Maturity Benefit

At the time of maturity, the life insured receives the simple reversionary bonus along with a terminal bonus, if any. In case, the payout period is approximately 15 years, then the insured is paid the regular amount which is pre-defined percentage of the sum assured.

Death benefit

In case of unfortunate event of death of the insured during premium paying term, the nominee of the policy receives the basic sum assured amount along with the reversionary bonuses and terminal bonus if any. And, the payouts are carried for the next 15 years or as mentioned in the policy. In case of demise of the insured after premium paying term or during the payout period, the nominee receives the sum assured amount along with the other benefits.

Income Tax Benefits

Tax deduction under Section 80(C) is available every year and tax exemption under Section 10(10D) is available on the maturity proceeds, subjected to the terms and conditions.