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A guaranteed income plan is an investment that will give you a predictable and steady income for a fixed period. All the policyholder has to do is make sure that the premiums get paid on time. People can choose the amount of time they want to receive the income and they can align their plan according to their financial needs and goals. Such investment plans provide financial security and life cover, along with delivering enhanced protection with riders.
However, it is important to pick the right kind of income plan for your retirement. So let us discover all the things you need to consider for making a sound choice.
Factors to Consider for Picking the Right Guaranteed Income Plan
Here are all the things you must consider to get the best plan possible to have a really secure and carefree retirement.
Understand your Financial Goals
Any investment plan should align with your goals completely. So start with assessing what your financial objectives and needs are. Determine the income you will need to cover your desired lifestyle and essential expenses post-retirement.
Consider your other sources of income, current savings, and any other financial obligation that you may have during the policy’s tenure. Account the value of the savings you want to build and the frequency of the payments you want to make.
Find and Compare Different Income Plans
Once you have understood what you want your post-retirement life to look like and what your financial goals are, you can start looking for different income plans. Begin with selecting all the plans that you are eligible for. Once you have a collection of plans that you like, you can compare them with each other to see which provides the best benefit.
Based on this you can determine which guaranteed income plan will be most suitable for your life ahead.
Estimate Your Premiums
Once you have picked the plan you like, you can calculate the premium you will have to pay for it. Use an investment plan calculator to get an accurate assessment of what your premiums will look like. Input different values for the sum insured to understand what your premium amount could look like at different ranges.
Determine the sum insured for the plan, and then you can check the policy term to evaluate the premium amount. You can determine the money you must save, the premium for it, and the returns you could get through these calculators.
Analyse the Plan’s Features
Comprehend the plan’s features and benefits upon determining the premium amount. See whether you can get flexible features to accommodate your unique financial goals. Some insurers allow you to pay your premiums for some time and then enjoy the plan’s benefits for the long run. Evaluate whether you get that option in your guaranteed income plan or even something better.
Pick the Needed Add-On Benefits
Consider the different add-on riders once you have finalised a plan. These riders will boost the plan’s benefits. You can select the riders for disability, accidental death, terminal illness, etc. It could deliver a lump sum advantage, waiver of future premium payments, or even income for a fixed period.
Summing Up
Getting the right guaranteed income plan is crucial to having a comfortable retired life. Ensure that you can get the most benefit at a good premium. At the same time, you must account for all the expenses that you will have in your life post-retirement. Depending on your expenses, your income plan and the sum insured could differ.
No matter what you choose, you can always use the investment plan calculator to get a correct assessment. You can base your decision on the numbers and data you see in front of you and then determine which plan will be the best.
FAQs
1. Why should you get a guaranteed income plan?
An income plan with guaranteed returns is a safety cushion for your post-retirement days. It will ensure that you can enjoy life without worrying about the money. You could also use the plan to fund any emergency needs or some other financial commitments later in life. So, it takes care of you in every way without making you dependent on someone else.
2. Are guaranteed income plans a reliable investment?
A guaranteed income plan is one of the most reliable investments you can find. It is low-risk and does not get affected by market changes. It also gives you stable returns and ensures that your family is financially covered no matter what happens.
3. Are there any tax benefits from the income plan?
Yes, you can receive tax benefits from your guaranteed income plan. It makes you eligible for benefits under the Income Tax Act’s Section 80(C) and under Section 10(10D). But, you must check whether you are eligible for them to truly determine how much your tax benefit will be.
Note to readers: This article is part of HT’s paid consumer connect initiative and is independently created by the brand. HT assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently.
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