Best Strategies To Use Life Insurance For Retirement

Retirement planning can always be better with life insurance. To understand your life insurance retirement strategy, let’s find out how different insurance can help you with your retirement planning.

We all wish to retire rich, and there are numerous ways to achieve this. The only thing that we need is to know the ways that can help you achieve your retirement investment corpus. You can start your saving for retirement at an early age by investing in different retirement savings plan and maximising your returns. Life insurance also plays an important role in giving you the desired returns on your retirement. Let’s have a look at different life insurance retirement plans that could help you with your planning:

1. Unit linked retirement plans

2. Endowment plans

3. Retirements plans

4. Whole life plans

How does Pension Unit Linked Insurance Plans (ULIPs) or Unit Linked Retirement Plans work?

This is a market-linked product which ensures twin benefits of insurance and investment (saving for retirement). One part of the premium is used for getting a life cover while the other part is invested in capital markets.

Depending upon the risk appetite of the investor, insurance companies invest a part of the premium in debt funds, equity funds or even hybrid funds. This is a much-preferred insurance product as it covers life-risks till the scheme is in force and also ensures returns from the money invested in the market.

How does Endowment Plans work?

This policy is designed to pay the insurer a certain lump sum amount after the maturity period or in case of death. This policy is an opportunity for long term saving for retirement, if the insurer lives till the maturity period, the company pays survival/maturity benefit. In case of death of the insurer, the company pays the nominee the entire death benefit. This kind of plan helps to build a retirement corpus and also provide a financial solution for the family.

How does Retirement Plans work?

Retirement plans or pensions plans are designed to meet the retirement needs in a pocket-friendly way. Retirement plans can be divided into two phases- accumulation phase and annuity phase.

Accumulation phase:

This is a phase where one pays premium during the entire policy tenure. This premium is then invested in the securities by the insurance companies. The investment done in the securities grow overtime leading to accumulation of capital.

Annuity Phase:

This is the phase where one gets returns on the invested amount. On the maturity of the policy or once you retire, you start getting a regular income monthly or quarterly according to the option or mode you opted for. The vesting age for receiving the returns is set between 50 – 70 years. This policy ensures a regular cash flow after your retirement.

How does Whole Life Insurance work?

As the name suggests, this insurance policy covers the entire life of the insurer till the age of 100. At the time of the death, the assured sum along with the bonus (if any) is given to the nominee. If the insured survives beyond 100 years, the matured amount is paid to the insured.

Conclusion

If you wish to get the best from your life insurance plans, you have to start investing at a very young age so that your money remains invested for a longer duration. You need to decide the amount that would suffice your retirement expenses considering inflation growth and then choose the best pension plan.

Pension plans