Retirement is that phase of life wherein an active source of income might dry up for salaried individuals. In such cases, you may need to substitute the income to live comfortably and meet your financial needs. This is where retirement plans can come into the picture.
Retirement plans serve two main purposes –
- They help in creating a retirement corpus
- They create a source of regular income for retirement
There are two main types of retirement plans, and each plan has its specific use. Have a look –
1. Deferred annuity plans
Deferred annuity plans are those that help in creating a retirement corpus to be used in future. Since the annuity payout starts at a later point of time, it is called “deferred” annuity plans.
You can buy a deferred annuity plan when you are working and save over the policy tenure to create a retirement fund. Upon maturity, the plans offer the benefit of lump sum and annuity payouts so that you can enjoy guaranteed* and lifelong incomes from the retirement fund that you have created.
2. Immediate annuity plans
Immediate annuity plans are for those who have accumulated a retirement fund and now want to invest the fund for regular income. Under these plans, guaranteed* and lifetime annuity is paid immediately after you buy the plan. There are different annuity options allowing you to choose a payout per your needs.
How to Buy a Retirement Plan Online?
Whether you opt for a deferred annuity plan or an immediate annuity plan, you can buy the policy online through the insurer’s website. Many insurance companies allow online purchases which may be quick and convenient.
Here are the basic steps for buying a retirement plan online –
- Visit the insurance company’s website and check out the retirement plans available
- Understand the features and benefits of the available plans and choose one or more of these plans per your needs
- Once you have finalised the plan, fill up the online proposal form.
- Provide all the required details in the form and submit it online along with the relevant documents. You can upload the documents on the insurer’s portal to submit them online
- Pay the premium through available online payment channels
Your proposal will be submitted for verification and underwriting. Once the insurance company verifies all the details, it may underwrite the policy after successful verification, and the policy will be issued.
You may also buy the policy offline by visiting the nearest branch of the company or by meeting with the company’s intermediary. You will have to fill up the physical proposal form and attach copies of your documents to submit your proposal. The insurer would underwrite the proposal and issue the policy if everything is found to be satisfactory.
Documents Required to Buy Retirement Plans
Some of the documents that you would have to submit when buying a retirement plan include the following –
- Identity proof like voter’s ID Card, Aadhaar card, passport, driving license, etc.
- Address proof like voter’s ID Card, Aadhaar card, passport, utility bills, etc.
- Age proof like birth certificate, voter’s ID Card, Aadhaar card, passport, PAN Card, school certificates, etc.
- Passport Size Photograph of applicant.
- Income proof like income tax returns, salary slip, Form 16, etc.
- Other Mandatory Documents like PAN Card or Form 60 is required.
Things to Keep In Mind When Buying a Retirement Plan
Though retirement plans are available online as well as offline and can be bought easily, here are a few things that you should keep in mind –
- Understand the features and benefits of the plan that you intend to buy. Also, know the associated terms and conditions regarding the policy tenure, premium paying tenure, etc. If you find anything difficult, you can reach out to the company’s representatives to help you buy the plan.
- Deferred annuity plans are offered as both traditional plans and ULIPs (Unit Linked Insurance Plan). Choose a plan based on your needs, investment strategy, and risk profile
- Provide all your details correctly to insurer while filling the application form. Any false or hidden information might cause a problem at the time of claims
- You can use retirement calculators available online to estimate the savings needed to create a desired retirement corpus
The Bottom Line
Start planning for your retirement from an early age so that you can build up a good corpus over time. If you start early, you can benefit from compounding returns which help in building up your corpus. Moreover, you can save and still accumulate a suitable corpus.
Life post-retirement could be financially independent so that you can relax and enjoy your golden years. Plan your retirement effectively for a worry-free retirement and get to enjoy your golden years without any financial strain.