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What to do when markets plummet and you're nearing retirement?

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February 24, 2021

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Life is sometimes defined by unpredictability, which is why more often than not, we find ourselves trying to jump over the latest obstacle that seemsto be in the way. However, this obstacle has become greater and more severe in recent times. With the widespread impact that the recent pandemic has had on various sectors of the economy, some of our most well-laid financial plans appear to be in danger of being jeopardised.

This is particularly true if you are someone who is nearing his or her age of retirement. In order to prepare for retirement, many individuals direct their money into various market-linked investments. The intention is to watch your retirement corpus grow by making the most of ever-fluctuating market conditions.

But when the markets themselves start plummeting due to any number of reasons, such as the recent pandemic panic, it might be worth considering if your retirement corpus would be more securely invested and better off in other options.

Investing In A Savings Insurance Plan

An insurance plan of any kind is primarily known for providing life coverage. In the event of the insured's unfortunate demise, a life insurance plan provides payouts to his or her beneficiaries in the form of death benefit. However, life insurance plans come in many forms and can serve a variety of purposes. While some offer coverage for a short term, others offer coverage for life with only death benefits.

Yet another kind of life insurance plan is one where apart from offering coverage, a part of your premium payments goes into providing you with a savings component. These kinds of plans are known as savings insurance plans and are ideal for individuals looking to accumulate funds for retirement.

Savings insurance plans are designed to offer you and your beneficiaries guaranteed benefits, which is not necessarily the case with most forms of insurance plans. As an insurance plan with a savings component, a savings insurance plan ensures that there is scope for regular payouts in the future. Certain savings insurance plans offer several variants that you can select to receive maturity benefits in the form of guaranteed income for a fixed term or lifelong income. Such benefits can help you and your loved one ensure that your post-retirement life is comfortable and well looked after.

Investing in a savings insurance plan also ensures that you follow a regular financial discipline. As you prepare for your retirement over the course of the next several years, this financial discipline can pay off by accumulating a substantial retirement corpus for you to work with.

Why Invest in a Non-Linked, Non-Participating Savings Insurance Plan?

With the recent dire conditions in which financial markets find themselves, it is all the more important that your savings insurance plan is non-linked as well as non-participating. Both of these features are essential in ensuring that your retirement savings are protected and there is stability in your investment portfolio for the long term.

A non-participating savings insurance plan is simply one where you do not participate in the business of your insurance company and hence, receive no bonus or dividends. Meanwhile, the non-linked feature of this plan implies that it is not linked to the performance of the financial markets. 

All the benefits associated with your non-linked, non-participating savings insurance plan are derived from your premium payments instead of being linked to either the insurer's business or market conditions. This means that in the event that there is widespread volatility in the market, your insurance plan and your expected benefits will remain safe, secure and free of risk. This freedom from risk and assurance of benefits truly pays off when you are nearing retirement and need a steady, reliable investment to help you meet your post-retirement goals.

Conclusion

Every working individual deserves a retirement that is comfortable and free of financial concerns. When market conditions start fluctuating and investments across the board face a difficult road ahead, having a non-linked, non-participating life insurance plan can prove to be a boon. Not only does it assure financial coverage for your loved ones in your absence, but also helps you save up for the post-retirement life you desire.

To that end, HDFC Life Sanchay Plus is an ideal option for those looking to retire in the near future. Not only is the HDFC Life Sanchay Plus plan non-linked and non-participating but it also offers a variety of options in which you can receive your maturity benefits. These include the lifelong income option, guaranteeing* a steady income till the age of 99. There is also the long-term income option, in which you can receive periodic income payouts from for a duration of 25 to 30 years.

*Provided all due premiums have been paid and the policy is in force.

ARN:ED/11/20/21325

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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