Is Life Insurance Necessary for Retirement? Find out
The whole point of savings is to park money aside for the future, which could be to fund a holiday, to buy something, to save for your child or for your marriage, etc. However, today’s generation emphasizes on the present rather than what they would do once they have retired. If you’re thinking of retirement planning, then it’s about time that you get started. Take into consideration inflation, rising medical expenses and the general cost of living. If you reach the age of retirement, there’s no assurance that you’d have a stable income, but you’ll need one to survive, wouldn’t you?
Which brings us to the benefits of saving for retirement or for your golden years. There are a number of avenues you could tread to accomplish this goal of retirement planning, such as parking your money in a savings account on a regular basis or making important investments in mutual fund, SIPs or in IPOs to yield you a high return over the investment – if all goes well that is. Another option is life insurance and if you start planning for retirement early, your retirement corpus could very well run into quite a few lakhs and you can receive the accumulated corpus in the form an annuity – a regular income.
The benefits of retirement planning through life insurance
Firstly, you should consider retirement planning as an investment as with any other investment. Through life insurance policies, you will have to set aside an amount for the premiums of the policy and over time this will accumulate into a formidable corpus and an income that could take you comfortably through your retirement years. Apart from your invested amount, you will earn interest over the corpus and this itself will boost your retirement corpus.
Through a retirement or pension life insurance policy, you can choose the premium you wish to invest to take you through your golden years and more importantly, you can choose the annuity structure that you’d wish to be paid back the annuities from the insurer. With life insurance retirement plans, you would have to pay the premiums till the maturity of the scheme, which will be till you reach the age of retirement, and once you reach retirement, the retirement corpus will be paid back in the form of monthly annuities. This will ensure that you have a stable income for a certain period, and you can live life comfortably.
In addition, for the premiums paid towards the life insurance plan you’ve purchased to build your retirement corpus, you can avail tax benefits every financial year. If you do die at any point, then the retirement corpus will be passed on to your nominee and will ensure that he/she has a sufficient income for a certain period.
What you need to keep in mind when planning for retirement
When planning for retirement, take into consideration what the cost of living could be when you do retire. To match to the standard of living then, you will have to make sure that you build a good enough retirement corpus that will pay you out in the form of annuities and the monthly income will be sufficient to take you through your golden years financially. Also, the higher you set the premium, the bigger will be your retirement corpus, so consider it an investment when you start to plan for retirement and do not set aside small amounts that will give you hardly anything when you reach the age of retirement.
Consider who you will be availing the retirement life insurance plan from as well, as the company has to be reputed and should not create a hassle over paying back the corpus in the form of annuities. Lastly, when it comes to retirement planning, the earlier you start, the bigger will be your retirement corpus. If you want to a sustainable financial income, starting as early as possible is what you need to keep in mind.
Source links:
https://www.kiplinger.com/article/retirement/T034-C032-S014-do-you-need-life-insurance-in-retirement.html https://www.forbes.com/sites/jamiehopkins/2017/04/27/why-life-insurance-is-essential-for-retirement-planning/#254ac86231cdhttps://www.maxlifeinsurance.com/knowledge-centre/retirement-planning/early-retirement-planning-benefits.html
