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Is life insurance also for retirement planning

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April 08, 2019
 

Every person wants to reap the benefits of a careful financial planning after retirement, in the absence of a regular monthly income. For this matter, it is very essential that a timely decision is taken for ensuring that a sufficient corpus is created by the time of retirement. When it comes to retirement planning, many people often think of life insurance as an ideal mode that can help contribute significantly towards it. A traditional life insurance policy is the one that entitles the policy holder to receive the main plan benefits i.e. the sum assured in the event of her/his survival of the policy term and at the same time, entitles the policy holders nominee(s) for the sum assured in the event of the policy holders demise during the plan term. In many ways, a standard life insurance policy can help a person in building a sufficient corpus for the retirement ahead. This is because a life insurance plan offers maturity benefits as per the chosen policy term. These benefits add up to create a significant amount that can then be utilized for purchasing an annuity plan.

A specific retirement plan has a range of features that are meant to act as clauses for helping you create and retain a significant financial corpus after retirement. This includes the features of both-immediate as well as deferred annuity. In simple words, the terms and conditions of annuity can be chosen as per the specific requirements and hence, this ensures a degree of flexibility of choice as far as the terms and conditions are concerned. A retirement plan comes with specific policy terms that are further differentiated as the phase of fund-accumulation and the later phase of fund-allocation towards annuity. Initially, there is the accumulation phase during which funds are simply accumulated towards building the retirement corpus. The disbursal of funds begins as soon as this phase is over and the policy holder becomes eligible for receiving the benefits of the plan as such.

When it comes to retirement planning through a life insurance policy, there are certain things that must be kept in mind, given the specific requirements of annuity. These factors are listed below:

  1. Sum assured: This offers the scope of entire coverage and must be chosen carefully as per the specific future financial goals in sight. This has to ensure coverage not just for the policy holder but for her/his dependent spouse as well.
  2. Mode of disbursement: This must be chosen carefully, and after seeking expert advice. The mode of disbursal may be periodic or in the form of a one-time lump sum payment. While some may choose a lump sum payment, especially if thinking about a different annuity investment, others may prefer a periodic, monthly mode of regular payment as this ensures a frequent in-flow of money.
  3. Payable premium terms and frequency: This is another important parameter that must be taken into due consideration given the fact that premium-terms and frequency must be as per the proportionate plan benefits.

HDFC Life offers various retirement plans that are aimed at ensuring your financial security during the golden years and at safeguarding your monetary reserves for a happy and content retired life ahead. For details, click on the mentioned link: https://www.hdfclife.com/retirement-and-pension-plans. 

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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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