by Monthly pension schemes are immensely helpful for those desirous of a comfortable retirement once they leave the workforce. These offer a fixed sum of money each month for a pre-determined period. If you are a beginner who wishes to start investing in these schemes, here is a guide to help.
Basics of Monthly Pension Plans
Monthly pension scheme are essentially financial products for retirement that will help you build a sufficient corpus for your future monthly costs once you leave the workforce. You can get regular income for a particular duration or even throughout your lifetime. Various kinds of plans are available to customers. Some of the main features usually include the following:
- A large number of pension plans usually involve a phase of accumulation where you invest money through regular premiums. This will help you build up a retirement corpus throughout the whole policy period. The longer this period, the higher your retirement amount. Hence, you can opt for a longer accumulation period in case you invest early on. The annuity can be bought using this corpus or a part of it and it will offer monthly income for a specific duration. These are known as deferred annuity plans.
- Some plans also give you the facility to invest a lump sum amount and the annuities will start immediately afterwards. These are called immediate annuity plans.
- There are some other plan types, namely annuity certain where regular income is given for a fixed duration and the annuity is paid to the beneficiary upon the policyholder’s demise and life annuity (payments till death or the death of the spouse in one’s absence).
- There are several pension plans that insurance companies offer. These come with multiple benefits including life coverage. Rider options also help boost overall protection financially from mishaps like accidental disability and more.
Get the Right Monthly Pension Scheme for a Secure Future
So, which monthly pension scheme is right for you? Do remember the points stated earlier. They will help you finalize the right pension plan for your needs. Simultaneously, keep comparing multiple monthly pension plans from insurance companies, checking their benefits, inclusions and exclusions, features, and premium payments. Choose between deferred and immediate annuities based on your financial circumstances. The former should be started as early as possible in your working life, while the latter is ideal for those who are nearing retirement or are about to retire very soon.
It goes without saying that these monthly schemes are essential, since higher life expectancy and inflation will both necessitate a steady income that is sufficient to take care of all your financial requirements. At the same time, you can also get tax deductions on pension plan contributions subject to certain conditions. Make your final decision only after weighing everything with a lot of care. Ensure that you read all the terms and conditions carefully before signing on the dotted line as well.
