Life Insurance Companies offer products that is beneficial in terms of both insurance and investment. A retirement plan consists of two phases. The first phase is known as the accumulation phase. At this phase, the money keeps getting accumulating throughout the tenure of the plan while you keep on paying premiums for it. Afterwards, the money that gets accumulated is invested in securities after getting approval from Insurance Regulatory and Development Authority (IRDA).
On the one hand, the value of your principal will be protected and on the other hand, you will get steady returns.
After the accumulation stage comes the vesting age. In this age, you will start receiving the pension. Again, you have the privilege to select the time. In most plans, the vesting age is 40 to 70 years. The annuity phase is the period when a person gets the regular monthly pension. This phase comes after you cross the vesting age. In one go, during this phase, you can withdraw up to 33% while the rest of the amount is paid as a pension.
In the market, presently there are four ULIPS related to retirement in the market. At the beginning of the plan, you have to pay the premium just for once as these are all single premium plans.
In the ULIPS, you have to invest a very small amount in equity-based funds to rule out any possibility of risks and capital can be secured. There is a maximum 10 percent equity exposure in SBI’s Smart Pension and IDBI’s Retiresurance Milestone Pension Plan.
If you are not too old and can invest for a long period of time, you can go for equity contribution that requires a higher amount of contribution however it ensures better earnings. Retirement based ULIPS are all single premium ones, hence to earn huge returns you may go for equity contribution.
To Avail Early Benefits in Life
HDFC SL Pension Maximum can give you the best returns since its vesting age starts from 40 years. Those who plan to retire late, for them IDBI’s Retiresurance Milestone Pension Plan suits the best.
Unlike ICICI Pru Life Link Pension SP, plans pay either guaranteed fund value or guaranteed vesting value, the one that is higher. The net asset value in ICICIPru Life Link Pension SP is Rs 19.10 during the time of vesting. However, in case if the NAV falls below Rs 19.10, then also the calculation of the fund value will be based on Rs 19.10.