Retirement Pension Plans vs Life Insurance Plans

If you have been a regular visitor to this blog you must be knowing about Life Insurance Plans (LIP). While Life Insurance Plans take care of you and your family in case of permanent disability or worse-death. Pension Plans are their to take care of you if u survive. :)

In LIP you get entire sum assured or maturity value at one go, which is tax free, but in case of Pension Plans, you get only 1/3 rd of the maturity benefit (tax free). Rest is given as annuity (or pension) and is taxed as any other income is taxed. If you choose to withdraw the remaining 2/3 rd amount in one go, then you will have to pay tax on that.

While premium paid for LIP comes under Sec 80 C, for pension plans it comes under Sec 80 CCC.

One thing to keep note of is that Pension Plans come with 'With Cover' and 'Without Cover' option. Under 'With Cover' option, in case of death of the policy holder, the sum assured is paid to the nominee (like in LIP). While in 'Without Cover' Plan, only the accumulated amount (plus bonus if any) is given to the nominee.


Lump Sum Annuity said...

Insurance is a risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by event(s) beyond the control of the insured party.

Nice posting as well, clearly describing retirement insurance plans and life insurance plans...Lump Sum Annuity

File Personal Bankruptcy said...

Pension plans differ from the insurance plans in a fundamental way – not all of them offer life cover

File Personal Bankruptcy said...

Retirement planning is all about knowing what you want and being disciplined towards achieving it.Planning for life after work is not so difficult once you follow a few simple steps:

1.Determine an amount that is required
2.Determine how much additional is needed
3.Allocate investments Wait, review and reallocate

File Personal Bankruptcy

indianist said...

I learn what is Retirement Pension Plans but i have one doubt this pension plan has two types one is conventional pension plan invest and ULIP or market linked pension plans which is best pls give detail ........

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