Life-Long Income vs Long-Term Income: What Should You Opt For?

Understanding the Life-Long Income Plan

• A life-long income plan, such as a deferred annuity, is a type of insurance or investment product that provides you with a regular stream of income for as long as you live, according to the terms of the plan. These plans are designed to offer financial security in retirement by ensuring that you continue to receive payments each year.Income plans like annuity plans help the life assured get steady money after retirement or during old age.The plan uses concepts such as the present value of an annuity to calculate how much income you will get.

What is Long-term Income Plan?

A long-term income plan pays an income over a fixed time frame. For example, in fixed term annuity plans, the payouts begin after a specified time period, known as the "policy term." It doesn't continue till life, but if you have a specific financial need over a set number of years, this can help in your planning.

This option is suitable for those who want to save for a specific goal, such as their children’s higher education, paying off loans, or managing household expenses during early retirement.

• You buy the plan and pay for a few years.
• After the plan starts, you get regular payouts for a fixed time only.
• These payouts help handle regular needs for a certain number of years.

Difference Between Life-Long Income and Long-Term Income Plans

Let us now understand the life-long income or long-term income difference clearly. These two plans may seem similar, but they are meant for different needs.

The life-long or long-term income plan you choose should depend on your personal financial goal, your age, and how long you want to receive regular income.

• If you want to stay financially stable for the rest of your life after retirement, a life-long income plan is suitable.
• If you need support for a fixed number of years a long-term plan is better.

When selecting a plan, always consider your needs and the payout period, which indicates how much money today will be worth in the future.

Conclusion

Selecting between life-long income or long-term income plan based on your financial objectives. If you require money throughout your entire life, a lifelong income plan can take care of you. But if you just require a steady income for some years, a long-term plan is a suitable option. Both the options have significant implications in investment planning, enabling policyholders to strike a balance between steady income and flexibility through the years.

FAQs

1. Which policy gives a monthly income?

   Policies like guaranteed income insurance plans and deferred annuity plans with monthly payouts give you monthly income. These ensure steady cash flow during retirement or other key life stages.

   
   

2. Are long-term plans a good option?

   Long-term income plans are a good choice if you need a steady income for a specific period. These plans are ideal for meeting planned goals like education, marriage expenses, or EMIs.