Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
During our working years, we often tend to forget to save for our retirement goals because the flow of money is continuous. But what about post-retirement needs? For a continuous flow of money even after the retirement, having a perfect retirement plan is important.
There are several pension plans available in the market to serve you post retirement. Most of them even come with tax benefits as well. Here are a few pension plans offered by insurance companies:
Immediate Annuity
In this plan, the individual gets immediate pension. Its a one time investment where an individual pays a lumpsum amount. If the policyholder dies, the nominee is entitled to get the money.
The policyholder can get the pension monthly, quarterly, semi-annually or yearly. The only limitation to this plan is that the policyholder cannot cancel the annuity or withdraw the investment. The returns on the immediate annuity plan can be set by the policyholder as per the need.
This can be explained as if a policyholder wants higher returns in the beginning then he will get the returns accordingly but, after the set time, the policyholder will receive lower returns on his annuity.
Deferred Annuity
As the name suggests, under this scheme, the investor can delay the pay-out as per the need. How is it done? During the accumulation phase, the investors pays a sum of money regularly as a premium. After the accumulation period ends, the investor can withdraw about one-third of the accumulated money and receive rest of the money as regular pension.
Under this plan, an individual either make investments in tradition plans like government schemes and debt instruments, or Unit-Linked Plans where an investor can choose between different asset classes like debts or equities.
The scheme also provides some tax benefits which will be listed later in this article.
Guaranteed Period Annuity
Under this plan, the policyholder gets annuity for a certain period, say 5 years or 10 years. The plan ends either by the death of the policyholder or completion of the certain guaranteed period, whichever is earlier.
National Pension Scheme
NPS is government-backed pension plan offered to all the citizens of the country except the armed forces. The subscribers can contribute regularly in their NPS account during their working years and and can withdraw a certain accumulated amount post retirement. The rest of the amount can be used to receive regular pension. Citizens between 18-60 years of age are eligible to apply for NPS scheme after they comply with KYC norms.
Are there any tax benefits attached to pension plans?
Under Section 80CCC of the Income Tax Act, one can save the tax by contributing towards pension funds. The contributions can be deducted from the gross income, which automatically will save tax.
Also, an individual can withdraw on-third of the accumulated amount without paying any tax on pension.
The government has provided such tax benefits to encourage more people to invest for their retirement.