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Common Features of Retirement Insurance Plans

Published On Jul 16, 2021 12:00 PM By InsuranceDekho

A pension plan is especially developed to match your specific needs, and is great for ensuring your retirement life is hassle free. Retirement plans are the sole income support for the individuals who don’t have any source of income other than their salary. Read to know about the common features of retirement insurance plans.  

Common Features of Retirement Insurance Plans

These are some of the main characteristics of retirement schemes. Although the characteristics of the pension plans generally remain identical, let us look at the sorts of insurance plans.

  • Unit Linked Insurance Plans or ULIPs

Pension schemes can be an investment and insurance blend. If a pension plan is a ULIP you choose, part of the money is used to protect your life, and the other portion is used to establish a pension plan. After withdrawal, the fund collected is utilised to give the investor a regular pension. Pension plans often put the money of the policyholder into more secure assets such as bonds in order to minimise excessive return volatility. Some unit-linked pension systems offer an opportunity for greater return investments in equity funds.

  • Guaranteed Savings Pension Plans

Investments in a pension plan are a sensible decision to build up a pension entity that may give a consistent retirement income after retirement. The Secure Bhavishya Plan of Canara HSBC Oriental Commerce Bank is a plan that enhances your retirement pension scheme and simultaneously delivers 'capital protection' for your retirement corporation. It gives 101% of the premiums paid (including additional premiums, if available), guaranteed income subject to all due prizes.

  • Mutual Funds Focussed At Retirement

Some mutual funds offer state-approved retirement schemes that are essentially balanced with a 40:60 equity debt allocation. These schemes, however, offer investors a single fund choice, unlike unit-linked schemes. You can develop a sizable corpus for your after-retirement life if you start contributing to your retirement plan early. Post-retirement guaranteed recurring income is provided through a pension or pension plan.

Common Terms Related To Retirement Insurance Plans

In order to make an informed selection you should keep in mind the following terms prior to choosing to invest in one of the above plans:

  • Accumulation Stage

The time the money invested in the pension plan returns is the accumulation stage of a retiring plan. In deferred annuity plans, the accumulation phase is stronger than the payment of an ordinary pension following several years of premium payment. The first premium is paid for the accumulation stage.

  • Vesting Age

The age when a pension scheme begins to pay the regular pension is known as the age of retirement. Although the majority of pension systems are aged between 45% and 50 years, other schemes allow vested age for up to 90 years.

  • Liquidity

While pension plans are long-term products, withdrawals at accumulation stage are not encouraged. However, certain plans allow for partial withdrawals to assist investors to address the needs of liquidity. However, retirement savings should not be used for other purposes.

  • Surrender Value

Long-term products represent the majority of pension plans. If someone chooses to terminate the plan midway through time, the company provides a surrender value based on the total premium amount paid. However, a retirement plan must not be stopped because the guaranteed money and lifetime cover is lost.


Retirement planning should ideally begin when you are young and not old. Regular long-term contributions can lead to large retirement funds being accumulated. While the foregoing programmes offer tax savings advantages, tax efficiency is a significant issue. In addition to ensuring a regular after-retirement income, you can avoid taxes by investment in a retirement plan. Pension plans might assist you in leading a respectable and decent life after retirement.

Also read 

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Why Should You Buy Retirement Insurance Plans Online at InsuranceDekho?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.            

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