4 ways life insurance can help you maximise your retirement

2024-08-02

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Retirement age in India might have been fixed at 60 years, however an average Indian plans to retire from active working life at the age of 56 years. Indians are also increasingly aware of building a corpus for their retirement years and start saving when they reach 29 years of age. However, they are only able to accumulate ₹50 lakh to 2 crores which may fall short after 30 years given the rate of inflation and other factors.

Life insurance can help you be better prepared for your retirement and should be an integral part of your financial planning. It can not only help you build a corpus for your old age but also provide protection to your loved ones in your absence. Here are a few ways that you can utilise to maximise your savings for retirement by choosing a life insurance policy that suits you.

1. Unit Linked investment plan(ULIP):

A ULIP serves the dual purpose of insurance and investment. The annual premium paid by you is diverted two ways: while a part of it is used to provide you a life cover, another part is invested in capital markets. Investors can choose from debt, equity or hybrid funds as per their risk appetite and can even switch from one fund to another. This investment tool not only provides financial security to your family till the time your life insurance policy is in effect, but also helps create wealth from the money invested in the market. ULIP allow for partial withdrawal, top-ups and redirection of premium as well offering considerable flexibility in saving for retirement.

2. Endowment plan:

Such a life insurance policy not only covers the insured person’s life, but also allows for regular savings over the long term. The policyholder can get a lump sum amount upon the maturity of the policy subject to survival past the duration of his/her plan. This could be used to fund their retirement among other milestones in life such as a child’s marriage, buying a home etc. In case the insured dies during the term of the policy, the lump sum benefit is paid out to the immediate family or nominee as instructed. An endowment plan allows you to save while keeping an eye on your financial goals with the comfort of knowing that your life is covered. It is a good wealth creation tool to invest for a long term goal such as retirement.

3. Pension plan:

Also, known as retirement plans, these are the cheapest life insurance plans and have two distinct phases in their lifetime. The first phase is when the investor is paying premium during the term of the policy. The company invests this premium in market securities and your money grows as capital accumulates and wealth is generated. In the second phase, when the policy has matured, you can get a stipulated amount on a monthly or quarterly basis as opted by you. These plans ensure a regular income stream and are a perfect saving for retirement also because the age for receiving annuity on your investment is fixed between 50 to 70 years.

4. Whole life insurance:

If you have dependants such as a spouse or a child with special needs or aging parents, it is best to opt for a term insurance policy that covers you till 99 years of age. Premiums are fixed for the entire policy duration allowing you to plan your expenses within budget. On survival of the policy term, the maturity amount is given to the insured, and in the case of death, the amount is disbursed to the nominee along with the bonus if any. You can also opt for riders for additional benefits such as critical illness, accidental death or permanent disability among others.

A life insurance policy can help you achieve a comfortable retirement and enjoy this period to the fullest. The Invest 4G plan from Canara HSBC Life Insurance comes with 7 fund options and 4 strategies to help you maximise wealth for your retirement as per your risk taking capacity. Switch or redirect funds or opt for a partial withdrawal during a time of need as per your preference.

Those looking for a whole life cover can choose the iSelect Smart360 Term Plan which comes with varied premium, benefits and coverage options that can be customised as per your preferences for a tailor made policy. Not only this, you can also opt for inbuilt additional coverage and enjoy discounts to make the most of your investment. So choose a plan that suits your requirements and ensure that you retire with financial security and peace of mind.

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