It requires extensive financial planning to maintain the desired standard of living & a better quality of life. A Single-term plan includes payment of the premium in a lump sum at the policy’s inception. This plan provides a steady flow of income when a one-time premium has been paid in a lump sum, making it hassle-free & convenient.
This plan suits individuals who have surplus funds & in cases where regular premium payments cannot be made. It offers comprehensive coverage throughout the policy tenure, unlike other regular term plans where repeated premium payments have to be made. This plan covers the policyholder throughout the policy tenure, ensuring the financial security of the family members.
Steps to Choose the Best Single Premium Pension Plans
Provided are the steps to choose the best single premium pension plan:
Step 1: Check the Eligibility for the Minimum Age
Before investing in the single premium plan, check for eligibility to see if the minimum age requirement is met.
Step 2: Compare Plan Costs & Choose the Most Suitable One
Compare different plans on the basis of associated costs, & choose one that best suits your pocket.
Step 3: Determine How You Want to Receive the Payout
Determine the plan, its payout options available & opt for one that best suits your financial needs.
Step 4: Go for a Plan Offering Flexible Features
Opt for a plan that provides flexibility in the frequency of payouts.
Step 5: See if the Plan is for a Limited or Lifetime Period
Check the plan’s period, whether it is for a limited or whole life period.
Step 6: Check the Add-ons Available with the Plan
Check for available additional riders, such as life insurance cover, guarantee minimum return, critical illness coverage, etc.
Step 7: Choose the Plan with Your Desired Payment Mode
Opt for the online premium payment option as it is a more convenient way.
Step 8: Ensure to Research the Insurance Company
Ensure you conduct thorough research on the insurance company, including its claim settlement ratio, track record, financial ratings, & any other relevant information, to understandits financial stability & reputation.
Steps to Start with a Single Premium Pension Plan
To start with the single premium pension plan, follow these steps:
Step 1: Calculate Payout Amount
Evaluate your monthly or annual requirements post-retirement for which online tools, such as the term insurance calculator, can be used. This will help understand the benefits, payout, & premium amount offered.
Step 2: Determine Investment Amount
Evaluate the amount to be invested to get the desired income post-retirement.
Step 3: Select Your Age for Payout
Choose the age at which you want to start receiving your pension amount.
Step 4: Choose the Income Period
Determine the period for which you desire to receive income, i.e. limited or lifetime.
Step 5: Select Single or Joint Life Annuity
Choose the desired plan, i.e. single for self, & joint if you want your spouse to be covered along with.
Step 6: Complete the Application Process & Make the Payment
Fill out all the details in the application form, submit the documents, invest the desired amount & make payment accordingly.
Types of Single Premium Pension Plans
Provided are the types of single premium pension plans:
1. Non-Linked & Non-Participating Annuity Plans
These are regular plans that requirea single time investment &offer a steady flow of income. Under this plan, funds are invested in government securities & are not linked to the market, which ensures stable & consistent returns throughout the retirement tenure.
i) Deferred Annuity
This plan requires a premium to be paid either in instalments or in a lump sum, allowing funds to grow over a certain period. This plan is best suited for young individuals who can leave funds to grow for a specific, definite period & want to get a high return with a secure retirement period. The minimum waiting period is one year, after which you will start receiving the income. The financial objectives can be set easily since the amount to be received is pre-determined at the time of purchase.
ii) Immediate Annuity
Under this type of annuity plan, a lump sum amount is invested to start with a regular payout within a month or so. This plan is considered ideal for those nearing retirement who want to receive either fixed or variable payouts, as well as a regular source of income to meet routine expenses.
2. Unit-Linked Pension Plans (ULIP)
ULIPs are market-linked investments which offer high returns & are considered riskier plans. ULIP offers a part of the premium to be paid towards life insurance &the rest towards investment. One can opt to invest in debt, equity, or both, depending upon the level of risk &your objectives, making it an ideal investment option. It provides a flexible option to switch between the funds anytime during the policy tenure.
Benefits of Single Premium Pension Plans
Provided are the benefits of term insurance with single premium payment options:
- Simple & Convenient:
This plan requires a single payment, i.e., no periodic premium payments are required, which makes the plan simple, convenient, & hassle-free.
- Guaranteed Income:
Due to non-linked plans not being linked to the market, they offer retireesstable & guaranteed returns.
- Steady Income:
This plan provides a steady flow of income throughout the retirement period at regular intervals.
- Tax Benefits:
Get tax deductions u/s 80C on payment of premium amount & an exemption of tax u/s 10(10D) of the Income Tax Act, 1961.
- Added Cover:
This means a policyholder can get their spouse & dependents included in the plan.
- No Policy Lapsing:
This policy does not lapse on non-payment of premiums, as a lump sum amount paid once makes this policy remain active.
- Loan Benefit:
The single annuity deferred plan helps policyholders avail of a loan, providing them with financial security.
- Beat Inflation:
This plan helps combat inflation, with higher returns offered & growth in wealth.
- Reduced Financial Burden:
As there is no need to make regular premium payments, it helps save money, thus reducing the financial burden.
Conclusion
A single premium term plan is the most hassle-free plan & ensures financial safety & security for your family members in your absence. It includes a single lump sum payment, which eliminates the problem of regular premium payments. Hence, this plan is considered to be the wisest choice for those who are looking for long-term security in a convenient way, offering financial security, comprehensive coverage & mental peace.