In developed countries such as the United States and the United Kingdom, there is a provision for social security under which senior citizens get a bouquet of benefits that provide them financial security during their old-age. But what about India?
Here if you are a government servant, then you are entitled for pension throughout your retirement life. But there are millions of people who do not work for the government. In this case, one has to think and plan about his retirement life by himself.
Thanks to the reforms in insurance sector in India. There are several options at your disposal now. You can choose any credible company and buy its annuity plan.
It can be a public company like the Life Insurance Corporation (LIC) of India or private sector companies such as Max Life Insurance or Reliance Life Insurance. All the companies operating in the insurance sector are governed by the Insurance Regulatory and Development Authority (IRDA) and therefore you can expect a safe investment.
Now coming back to the annuity plan, here are some salient features of such plans, which will help you in ensuring that you make a right decision based on information and knowledge.
Assured returns: There are several annuity plans, which offer assured returns until a certain period of time. This way, you can expect guaranteed appreciation in your investment in an annuity plan.
Tax exemption: Buying an annuity plan brings another benefit to you in the form of tax breaks. The premium paid towards the annuity plan can be claimed for tax exemption under Section 80CCC of the Income Tax Act. Thus, you end up saving more money and that can be treated as an indirect return on investment.
Bonuses: There are annuity plans under which your policy starts participating in the annual profits of the company after a point in time. Therefore, you become eligible for bonus, which get added to your policy.
Annuity for life: After the completion of vesting period, that is the period under which you keep paying the premium, your annuity plan shall provide you pension throughout your lifetime. There is no limit or tenure of the period for payment of annuity.
Annuity for certain period: There are plans under which you may choose to get annuity for a certain period of time. Naturally, the amount of premium differs as per the facilities.
Annuity with death benefit: There are options under which one can buy an annuity plan wherein the policy holder becomes entitled for pension throughout the life and then the nominee gets death benefit also. These are dual benefit schemes available in the market.
Increase in annuity: You may be thinking that a fixed annuity amount during retirement age may not suffice. Inflation may wreak havoc on your plans and after a few years, the amount of pension would simply look insufficient. Well, these plans have provisions to increase the annuity amount at the rate of 3-5 per cent a year. In such case, you can expect a decent life irrespective of inflation.
As per the experts , the best way to determine which plan is best for you is by comparing insurance plans online and after a detailed diagnosis of the plan, opt for one.
Top 10 Tax Saving Mutual Funds to invest in India for 2016
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1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
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