Plan and Secure Your Future with Pension Plans

What Is Pension Plan?

A pension plan is a retirement plan that requires an employer to make contributions to a pool of funds set aside for a worker's future benefit. The pool of funds is invested on the employee's behalf, and the earnings on the investments generate income to the worker upon retirement.  

There are two main types of pension plans the defined-benefit and the defined-contribution plans.

Planning for the old age when the ability to earn diminishes while the expenses to live a dignified and healthy life start rising is of utmost importance.

A lot of companies and consultants offer a host of financial products so that you save enough money for the golden years of your life. 

However, the rising costs ensure that no amounts of savings are enough to meet the daily expenses. 

Also, savings are depleted fast in case of an emergency. This is where you need to factor in the pension plans

• Pension plan is an investment tool that helps you to save money for your post-retirement life
• After the term of the plan is over, the insurance company pays you monthly income for a pre-decided period of time to meet your financial requirements apart from paying a substantial amount as lump sum.
• This ensures you have a steady income flow even during your old age and you will never be dependent on others for your monetary needs.

Investing in a pension plan is to give yourself a gift in the old age: a gift in the form of money that will help you to meet routine expenses as well as manage any medical emergencies with your head held high!

We are her to help you choose the best pension plan! Just start your comparison at www.allpfinancial.com

Pension Plans come with distinctive features, which help to frame a policy specially meant for people who wish to plan for old age and do not want to depend on anyone for financial needs in later years. 

Here are the most important features of pension plans you must know and understand:

Sum Assured Insurance Cover 

Sum assured is part of particular pension plans that come with attached insurance cover. This sum is offered as life insurance to the pension plan buyer, which comes in handy in the scenario where the buyer needs to provide for the dependent family in their absence. The sum assured can be 10 times the premium amount or a lump sum fund value of the policy bought. It depends on the choice of pension plan taken. The advantage of this feature is security for family and a stress-free life.

Immediate and Deferred Returns Annuity

All pension plans come with an annuity attached: deferred or immediate. Based on individual requirement, whether you need funds immediately or after a certain age, you can buy pension plan accordingly. In case of immediate annuity, the insurance provider will pay the pension plan amount immediately after receiving the single lump sum premium. In case of deferred annuity, the insurance provider will start paying a certain amount only after a few years. The advantage of this feature is that you get to choose as per your foreseen needs.

Funds Accumulation and Payment Period

There is a certain period where the buyer is required to pay regular premiums to the insurance company. This period is called the accumulation period. There is an option to keep paying the part premiums from receivables during the term, and use the rest of the money on other requirements. This makes the availability of small funds throughout. Some insurance companies keep the accumulation period completely different from the payment period. The payment period is the time when you start withdrawing the money from the corpus generated. This means the premiums are paid first and the returns come later. This helps to save and withdraw at the time of need. Both kinds of plans are available, depending upon your individual requirement.

Surrender Value Plan

If, for any reasons, you need to surrender the plan, the insurance company will pay a certain amount, that only if the minimum period premiums are paid. This surrender value is not of great use as the rest of the benefits such as life cover etc. become void. Also, the surrender value feature is added only with insurance based plans where there is a provision of creating a corpus of funds. With sole term plans, this feature is not available. If you foresee a reason to surrender, you may opt for insurance based plans with corpus accumulation. This brings the advantage of getting some amount back in case you cannot carry on the plan or cannot pay future premiums.

These features help you to understand your requirement of a pension plan. Now go ahead and buy the most suitable one, only at www.allpfinancial.com

Find out more about   Benefits of Pension Plan and Importance to having Pension Plan

Speak with a Professional !

Many retirement savers can benefit from working with a professional to discuss these issues. Consider how a qualified professional may be able to aid with your specific retirement planning needs. Start your search now, at www.allpfinancial.com , to reach the best suited pension plan for your coming years.

Each individual has different needs pre and post retirement. Therefore, the pension plans come in various forms too, with different features, which can take care of your individual needs. Usually, pension plans differ on the basis of annuity (regular or lump sum returns) that they offer to the policyholder.

Here are the types of pension plans you can choose from, depending as per your financial planning before and after your retirement.

Life Annuity Pension Plans

Choosing this plan, makes the policyholder entitled to annuity until his/her death, and entitles the spouse to receive the annuity after the policyholder dies. This is a very important plan if you wish to secure the financial future of your spouse, especially in old age.

Without Cover Pension Plans

There is no life cover component with such plans. The nominee of the policyholder receives the corpus accumulated over a period of time, till the death of policyholder. As per current trends, insurance providers offer Immediate Annuity Plans without life cover. You can buy this plan if you already have a separate life insurance policy.

With Cover Pension Plans

These pension plans come with a life cover component. This works as a term insurance plan, where a lump sum assured against life cover is paid to the family members, if the policyholder dies during the term of the plan. Do not take this lump sum amount as substantial, because, usually the major part of premium for such plans goes towards building the corpus of pension funds. Hence, the life cover component brings a nominal amount as returns. As per current trends, Deferred Annuity Plans come with life cover. This is a good plan to invest, and save money on term insurance.

Deferred Annuity Pension Plans

As the name suggests, the returns are not immediate, they are deferred for a later period, which is called pay-out or payment period. The policyholder is allowed to accumulate a corpus over a term by paying regular premiums or a single lump sum premium. This period of paying premiums is called accumulation period. Once the accumulation term is over, the returns in form of pension are received by the policyholder. The premiums paid (regular or one time) are exempted of tax. Deferred Annuity Plans are suitable for both kind of investors, the one who want to invest systematically and periodically, and the ones who have an amount to be invested in one single go.

Annuity Certain Pension Plans

Here the return (annuity) is paid to the policyholder for a certain number of years. It is up to the policy holder to choose that period of payments. If, in any case, the policyholder dies within those years, then the annuity is paid to the beneficiary nominated by the policyholder. One can nominate children or grandchildren to receive the benefits.

Guaranteed Period Annuity Pension Plans

Under this plan, the policyholder receives the returns for a set number of years such as 5, 10, 15 or 20. These limits are set by the insurance provider and one of them is chosen by the policyholder. It is irrespective whether the policyholder remains alive for the chosen years, the annuity is offered for those years only.

Investing in a good pension plan will prove to be the most sensible step of your financial planning. These plans ensure a secure future in late years of life and also help to save money systematically.