Reliance Life Pension Plans
Reliance Life Insurance Company offers two types of Pension Plans. One Reliance retirement plan is a traditional annuity plan while the other is a Unit Linked Insurance Plan which builds a corpus through market participation. Both Reliance retirement plans offered by the company help an individual to lead a comfortable retired life. Let us take a look at the types of Reliance retirement plans offered by the company and the features and benefits of each of these Reliance retirement plans.
Reliance Retirement Plans – Summary
Reliance Immediate Annuity Plan
A Reliance retirement plan which promises annuity payouts right after the payment of single premium called the Purchase Price.
Under this Reliance retirement plan, the annuity payments will start immediately from the next chosen frequency (monthly, quarterly, half-yearly or annually) after the payment of single premium
There are different choices under this Reliance retirement plan to get the annuity payouts like –
Life Annuity where the Purchase Price is returned on death
Life Annuity guaranteed for 5, 10 or 15 years and thereafter payable for life
There is no requirement of a medical check-up before enrolling in this Reliance retirement plan
Under the Reliance retirement plan, the single premium which is paid to secure payouts does not attract tax under Section 80CCC
Reliance Smart Pension Plan
A unit linked pension plan which gives growth through market participation as well as a guaranteed benefit to protect against market volatility.
The premiums under this Reliance retirement plan can be paid regularly for the entire tenure under the Regular Pay option, for a limited tenure under the Limited Pay option or at one lump sum under the Single Pay option
Under this Reliance retirement plan, the premiums paid net of charges are invested in the Pension Smart Fund 1
On maturity of this Reliance retirement plan, higher of the Fund Value or 110% of aggregate premiums paid is payable. The policyholder can utilise the maturity proceeds to avail a Deferred Annuity plan with one-time premium from the company or withdraw 1/3rd amount of the corpus thereby leaving 2/3rds for annuity payouts.
Under this Reliance retirement plan, deferment of vesting age is possible if the age of the policyholder is below 55 years
There are three annuity options under the Reliance retirement plan to choose from if the policyholder commutes 1/3rd of the corpus and avails annuity from the remainder. The options are:
Life Annuity where Purchase Price is returned intact on death
Life Annuity guaranteed for 5, 10 or 15 years and thereafter payable for life
Under this Reliance retirement plan, if the insured meets with unexpected death, an amount which would be higher of fund value or an amount equal to 105% of all premiums paid is payable. The nominee can take the entire benefit in cash or as pension payouts.
Loyalty Additions accrue under this Reliance retirement plan @1% from the end of the 6th policy year and thereafter increases by 1% after every block of 3 years
Top-ups can be made under the Reliance retirement plan by paying additional premiums to increase the fund value. The minimum value of top-up allowed is Rs.5000.
The premium payable for the Reliance retirement plan is exempt under Section 80CCC, the claim received in case of death is exempt under Section 10(10D) while the commuted pension is exempt under Section 10(10A)
Applying For A Pension Plan From The Company:
The company offers specific Reliance retirement plans which are available online only. The customer only needs to log into the companys website, choose the required Reliance retirement plan, choose the coverage and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card or net banking facilities and the policy will be issued.
Reliance retirement plans which are not available online can be purchased from agents, brokers, banks, etc. where the intermediaries help with the application process.
Why Should You Invest in a Pension Plan and When?
A pension plan should be an essential part of your financial planning process if you want to save for your retirement. The plan would provide a financial support in your retirement days when you are threatened with the absence of regular income. You work hard for your entire life to create sufficient investments which would be required for your future. After your retirement your investments should work hard to provide you with enough finances so that the expenses you face in the old age would be easily met. Pension plans ensure the same and provide you with a source of regular income which is guaranteed in nature.
As per the next question as to when should you buy the plan, the answer is simple. Retirement planning is resorted to by individuals in their older middle-ages when retirement is 10-15 years ahead. Ideally, you should make provisions for your retirement through pension plans earlier after you cross 40 years of age. This is because you would have ample time to build a considerable corpus by making small payments over the years which would not pinch your pocket. This would leave you to make savings for those other important financial goals which are to be met in the near future. After you cross the age of 40, there would be about 20-25 years left for your retirement. Buying a longer tenure deferred pension plan would ensure that you utilise these 20-25 years in deferring the plan and making premium payments. Your premiums paid along with the interest that they would earn over this long time horizon would build a sizeable fund which would pay a sizeable pension sufficient to meet the sizeable expenses post retirement.
To know about Reliance retirement plans, check at Reliance Life Investment plans
The Need for Retirement Planning and Therefore Pension Plans
Retirement is a crucial stage in life because one is past ones prime, the body has aged and continues to do so at a faster rate. One is more susceptible to health issues. Regular income would have stopped in all likelihood.
Though retirement may appear to be far off and is relatively a long-term goal, it requires careful planning. Pension plans such as Reliance retirement plan help ensure that one is financially well prepared for the twilight years so that one can lead a happy stress-free life post-retirement.
The primary reasons why retirement planning, and consequently pension plans such as Reliance retirement plans are required are explained below:
Higher Life Spans
The average life spans are increasing world-over and in India too, leading to longer retirement years. This presents everyone with a unique situation. If not addressed properly and in time, life after retirement may be full of strife, pain and worry. It is extremely important to start investing in a Reliance retirement plan to have a peaceful life.
Inflation is the sustained increase in the general level of prices of goods and services. Due to yearly rise in inflation, every rupee buys less goods and services. Therefore, the value of savings will also decrease over time and this will be a big problem during retirement years when a steady source of income has stopped. This makes it vital to plan for life after retirement with the help of Reliance retirement plans to pay the bills and live comfortably. Good retirement planning with Reliance retirement plans will help counter the effects of inflation.
Financial Independence Post Retirement
Nobody likes to be dependent on others for survival, even if is ones own children. Judicious retirement planning by way of investment in a Reliance retirement plan will ensure financial independence after retirement. That way one can spend money as one deems it fit without answering to someone else.
Maintain Living Standard
Reliance retirement plans provide financial security so that an individual can live with pride without compromising on living standards that he / she has been used to over the years. Retirement planning done well with a Reliance retirement plan ensures that one does not have to resort to living a frugal life by drastically cut down expenses.
Means to Pursue Hobbies
Retirement is a time when one has all the time and not much to do. With plenty of time available, it is a good opportunity to pursue interests and hobbies which one has been avoiding all throughout working years due to lack of time. But the pursuit of any activity requires money. Sound retirement planning by investment in Reliance retirement plans grants the means to pursue a pastime of choice.
Guiding Principles When Buying a Retirement Plan
Retirement planning is a financial responsibility that every person owes to himself / herself and his / her dependent family members. With a marked increase in life expectancy over the decades, inflation and general rise in cost of living, retirement planning has become more important than ever. These reasons are why it should be at the top of every individuals priority list.
Mentioned below are things to keep in mind while purchasing a Reliance retirement plan:
The earlier one starts retirement planning, the better it is. This is because the longer the period of ones investment, the more one will accumulate. How and why? This is made possible by the principle of compounding. Compounding in a Reliance retirement plan creates a snowball effect when it comes to money. The earnings next year are always a little more than the previous year as the base keeps on increasing. As a result, with time, earnings contribute more towards the total value of investment. The power of compounding is the ability of an asset to generate earnings, which are again reinvested to generate more earnings. It dictates that one start early. In fact one should begin saving for ones golden years right from the time one starts working.
The idiom `don’t put all your eggs in one basket is most true when it comes to ones investments. Diversification is often underrated. However, when it comes to investing money, it makes sense to diversify and not concentrate all the investment in one asset class. This way if something goes wrong with one type of investments, all savings will not be lost. There are various investment avenues to choose from – equities, fixed deposits, gold, property, bonds etc. The allocation of funds to each of these assets should be done carefully after considering their returns over a period of time and respective pros and cons. A well balanced portfolio will ensure that one has a comfortable life post-retirement.
Role of Equities
The role of equities cannot be stressed enough. Whether in the form of actual stocks, unit-linked pension plans or mutual funds, they ought to play a central role in retirement planning. Research studies have demonstrated that equities add significant value over long periods of time. Long term investment in equities also offers tax advantages. Besides, these are very liquid in nature, unlike assets like property etc. If required, they can be sold to make funds available. It is also easy to keep track of the value of equity investment as this information is readily available online as well as offline in newspapers. Using a Reliance retirement plan that invests in equities ensures that individuals can take make the best use of the equities market
PPF is Not Enough
Contribution to PPF (public provident fund) or EPF (employees provident fund) alone is not sufficient for retirement planning. It is naive of people to believe that they have done their job by investing just in PPF. The returns on PPF are always in single digits and most of it is taken away by inflation, leaving a paltry sum for future. Therefore, it is imperative that one also invest in other investment avenues besides PPF like a Reliance retirement plan, equities, gold etc.
Importance of a Financial Advisor / Planner
Retirement planning should be given serious thought as it has considerable long term implications. The task of retirement planning is made complex due to many variables in the form of different asset classes – their risks and returns, advantages and disadvantages, tax implications among other factors. A qualified and experienced financial advisor / planner can be of great help in developing a sound retirement plan for the individual, keeping in mind his/her unique circumstances so that he / she can have the maximum possible funds available during retirement years.