How Life Insurance Can Help You In Retirement Planning

Retirement planning is one of the significant aspects of our life, though with our increasing lifestyle expenses retirement planning often takes a backseat. Starting to plan early for your retirement can make your retirement life easy and worry-free.

To start with retirement planning, several factors need to be kept in mind such as the inflation, savings potential, present expenses and many more. The way you plan now would determine the standard of your life post-retirement days. Obviously, everyone would wish to retire and continue with the same standard of living post-retirement if not better. But assuring the financial security of the family is also vital in your absence. One such plan that helps secure your retirement life and assures a protection cover in your absence is an insurance plan.

Insurance plans are an ideal retirement planning instrument as it gives you the comfort of life protection and along with savings for long term. There are a plethora of insurance plans that can help in your retirement planning like endowment plans or ULIPs. Those who are risk-averse can invest in endowment plans, while those who wish to invest in market-linked products can invest in ULIPs. 

Retirement Planning with Endowment Plans-

Endowment plans provide the insured with maturity benefit if the person lives through the entire tenure or in case of the death of the insured, the insurer pays the nominee/family the whole death benefit. 

Retirement Planning with ULIPs:

Unit linked insurance plans are supposed to be ideal for retirement planning. These plans offer both the protection cover as well as investment opportunities in market-linked funds. A portion of the invested amount is used as premiums for protection cover while the other part is invested in capital markets. Staying invested for a long term such as 15-20 years, can assure a financially strong retirement life. 

Retirement planning with other retirement insurance plans:

Investing in any retirement plan includes two phases mainly the accumulation phase and the distribution phase.

The accumulation phase requires you to contribute periodically towards the plan for a specified time period. The premiums are then accumulated and invested in securities for the wealth to grow over time.

The second is the distribution phase where you start receiving the interests on your investment. You can either opt for regular income or withdraw 33% of the fund in lump sum. In the case of annuity plans you would need to choose the payout option either monthly, quarterly or annually. 

Planning your retirement

To plan your retirement with any of the insurance plans mentioned above would need adequate research and understanding of your needs and requirements post-retirement. While planning for the retirement corpus one should keep in mind the inflation factor too. Considering a 3-4% inflation would increase your retirement budget and your monthly expenses post-retirement.

Another aspect is if you wish to build a good retirement corpus you would need to start planning early. More the number of years more would be the savings, and more financially stable would be your retirement life.

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