Kotak Life

Buy a Life Insurance Plan in a few clicks


Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

How to Build a Tax-Free Pension Income for Retirement?

How to Build a Tax-Free Pension Income for Retirement?
  • 30th Nov 2021 |
  • 342


Shockingly, more than half of the Indian population doesn’t have a retirement plan. Hence, it becomes hard for them to maintain their lifestyle. Planning a tax-free pension income can help you to lead a stable life post-retirement.


Once you retire from your professional life, it becomes hard to maintain a regular stream of income. With increasing inflation, it is not enough to rely only on your savings. You need additional income to maintain your standard of living. On the plus side, retirement plans can ensure the continuous flow of tax-free pension income when you need it. Essentially, you can achieve the following by investing in a retirement plan.

1) A sense of self-reliance

2) A relaxed life post-retirement

3) Assured savings

4) Emotional wellbeing

What is a Retirement Pension Plan?

Retirement plans are insurance products that provide monthly income post-retirement. Generally, you pay regular premiums that can be monthly or annual. Once you strike the retirement age, you get a life cover along with a specific amount every month throughout your life.

Insurance companies provide pension plans with or without life cover. Although, people prefer covered pension plans to safeguard their family from the uncertain events of life.

Types of Pension Plans

Various pension plans are available in India. All of them can be categorized into the following:

1) Sponsored by Insurer

The premium paid for these plans is lent to corporates or banks by the insurer. So, these plans earn income only from the debt securities. Risk-averse people should invest in a sponsored pension plan. You can choose from 2 types of annuity plans here:

a) Deferred Annuity Plan

Under this scheme, you can pay regular premiums until your retirement. Then, post-retirement, you get a regular stream of income to sustain your expenses.

b) Immediate Annuity Plan

You are required to pay a lumpsum premium under this scheme. Subsequently, you can enjoy the monthly pension payments immediately after.

2) Unit Linked Pension Plans

These plans invest your premium money mainly in equity. They also invest a portion of these funds in debt markets to gain stability. Having said that, higher chances of returns imply a higher risk due to stock market exposure. Therefore, investors having a higher risk appetite should opt for these plans.

3) National Pension Scheme

In the wake of the success of private pension plans, the Govt. of India introduced a state-sponsored pension plan in 2004. You receive units as per the NAV of the fund that you choose to invest in. Post-retirement, you are allowed to withdraw 60% of the corpus upfront and purchase an annuity scheme with the remaining 40%.

Taxation of Pension Plans

Is the pension income completely tax-free? No! Here is the correct tax treatment of pension plans.

1)Premium Paid under Pension Plans

a) Deferred Annuity & NPS

Section 80CCC of the Income Tax Act provides for the deduction of deferred annuity premiums from your taxable income up to Rs. 1.50 lakhs in every financial year.

b) Immediate Annuity

You are allowed to claim the entire premium paid for this plan as a deduction in the same financial year. This is done to protect investors’ interest as there is only one lumpsum premium under this scheme.

2)Pension payments post-retirement


You can withdraw 1/3rd of the entire corpus at once after retirement. Tax on this amount is exempt under Section 10(10A) of the Income Tax Act. The 60% commuted pension under NPS is entirely tax-free.

b) Monthly Pension

Tax is levied based on your slab rates for the monthly pension that you earn.

The monthly pension amount that you can earn depends on the size of your invested corpus and the returns thereof. Hence, investing in pension plans early can help you save longer and earn more. Explore the best pension plans online and start planning your retirement now.

Kotak e-Term Plan


  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492


Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

Increasing Term Insurance and Riders

Insuring Against Disability With Disability Insurance Rider

9 Ways to Help Family Members in Financial Trouble

While Buying Term Insurance Compare Features, Not Just Premiums

Why Should You Not Take A Term Plan Without Medical Test in India?

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

10-Year Term Life Insurance Policy - Explained in Detail

Planning For Son or Daughter's Wedding

What Should Be The Duration Of Your Term Plan in India?

Top 3 Reasons Why You Should Buy A Term Plan Now

Insuring yourself against Ill Health with a Critical Illness Rider

How To Change The Nominee in Term Insurance?

Know How to Invest at Every Age for Larger Returns

Make Your Online Term Plan Your Familys Monthly Payout

Term Plans are Definitely Cheaper than You Think!

How Much Term Insurance Do I Need

5 Things To Consider While Buying Term Insurance Plan

Is Life Insurance Investment Worthy Enough

Is Group Term Life Insurance Provided By Employer Sufficient?

Busting Myths and Facts About Term Insurance Policies

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

Understanding Term Insurance Riders

Everything About Claim Settlement Ratio for Term Insurance

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

Is ₹1 Crore Term Insurance Good Enough Cover?

Insurance Policy for Housewife In India

Endowment Plans vs Term Plans: Understanding the difference

Term Insurance Calculator - Everythng You Need To Know

Does Your Term Insurance Plan Cover Death Due to COVID-19?

4 Things To Expect From Your Term Insurance Plan in India

What Are Insurance Riders and How to Choose Them in a Term Plan?

What Should You opt for - Limited or Premium Pay?

Protection for your family

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

What are incremental term insurance plans?

8 Benefits of Term Insurance You Should Know

Gift Your Father A Term Insurance Plan This Father's Day

Insuring Protection Against Death With Death Insurance Rider

Do I Need to Give a Medical Test for Term Insurance in India?

What is Term Insurance - A Complete Guide

Can You Increase Your Term Insurance Cover?

Why 1 Cr Term Plan Is Necessary For Family?

Term Insurance: What Happens When You Don’t Pay Your Premiums?

How Much Term Life Insurance Cover Do I Need in India?

Why Term Insurance Is Better Than ULIP?

What Types of Deaths Are Covered in a Term Insurance Plan?

Individual Life Insurance vs. Group Term Life Insurance

Importance of Term Insurance at Every Stage of Your Life

Is term Insurance Needed for People With No Dependents?

Can Senior Citizens Avail Term Insurance?

How Does Term Life Insurance Work? Learn the Benefits

Difference between Term Insurance and Life Insurance

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

How to Surrender Term Life Insurance When you have No Liabilities

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

How to Ensure That Your Term Insurance Claims Are Never Rejected?

Why Term Insurance Is Important in times of COVID-19?

Term Insurance Age Limit – Term Plan for All Age Groups

Is Term Life Insurance Plan an Investment or Expense?

5 Benefits of Early Retirement Planning

Why Buy Term Insurance Plan With a High Cover?

Term Plan with Spouse Cover

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

How Not To Get Your Term Insurance Claim Rejected

Why Buy Term Insurance Even at Rising Rates?

8 Things To Do After Buying Term Insurance

Reasons You Need Term Insurance Plan as a Self-Employed Person

8 Factors to consider before choosing a Critical Illness Insurance

Eligibility Criteria for Buying Term Insurance in India

5 Term Insurance Benefits for Single Women

Can I Buy Term Insurance for a COVID-19 Patient?

Why Term Plan Should Be The First Step To Securing Your Future?

How Much Cover Should I Take In A Term Plan?

Different Types of Premium in Term Insurance

Why Premium Amount for Term Insurance is So Low?

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

Choosing Riders for Insurance Plans

Why is it important to buy term insurance plan?

Why does every working woman need life insurance?

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

How to Buy 1 Crore Life Insurance Policy Without Medical Test

9 Most Frequently Asked Questions on Term Insurance

Why Should You Add a Rider to a Term Insurance Plan?

Tips to Choose the Right Term Period for Term Insurance Plan

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

How To Choose the Right Term Insurance Plan?

4 Methods to Calculate How Much Term Insurance You Need

How To Choose the Right Sum Assured Under a Term Plan?

Different Types of Protection Plans

Is a Term Insurance Policy Portable?

Online vs Offline Term Insurance: Which Is The Better Option To Buy

All you need to Know about Term Insurance Plans for Housewives

Ensure Protection Against Death, Disease & Disability With Life Insurance

Comparing Term Plans – What Should You Look Out For

What is Critical Illness Policy

How to Identify Term Insurance According to Your Needs?

What Are the Best Term Insurance Plans for Planning Retirement?

Term Insurance with Critical Illness

6 Reasons That Make Term Insurance a Must Buy

Tax Benefits of Term Insurance in India

Is There Any Tax Benefit on Term Insurance?

Can Term Insurance Plans Be Purchased As A Gift?

How Does A Term Life Insurance Work in India?

What Is a Renewable Term Insurance Policy?

All About Term Insurance Inbuilt Coverage

Should You Buy a Term Plan After 40?

Do You Need Term Insurance Cover After Retirement?

Can I Make Changes to My Term Insurance Policy Post Purchase?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Term Insurance Plans and Policies for Smokers

Why Married People Should Buy Term Insurance Under MWP Act?

5 Reasons to Buy Term Insurance When You are in Your 30s

What Happens if you Hide Facts in your Term Insurance?

Term Insurance: Smokers vs Non-Smokers

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

Why should single women purchase term life insurance?

Term Insurance With Riders In India

Insuring Against Accidents with an Accidental Death Insurance Rider

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

Should You Have Multiple Term Life Insurance Policies?

Can I Extend the Tenure of My Term Insurance Plan?

Term Life Insurance Plan for Smokers vs Non-Smokers

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

Planning For Children's Future

Advantages & Disadvantages of Term Insurance in India

What is Insurance Premium - A Detailed Guide

Why Should New Parents Buy Term Life Insurance?

Key Differences Between Term Insurance, ULIPs, And Health Insurance

How To Calculate The Amount Of Term Life Insurance You Need?

Term Insurance – Why You Must Include In Your Financial Planning?

Does Term Insurance Cover Accidental Death?

Do Beneficiaries Pay Taxes on Term Insurance?

Make Your Online Term Plan Your Family's Monthly Pay Cheque

What is a short term insurance policy?

Calculating Term Insurance Premium

4 Reasons Why You Need Critical Illness Cover

Advantages of Buying Term Insurance in Your 50s

Can I Get Term Insurance on Behalf of My Spouse?

Which Death Type Does Your Term Plan Not Cover?

What Is the Correct Age to Buy Term Insurance?

Buying A Term Insurance Plan? Take These Factors into Account

Is It Good To Buy A Term Insurance Plan In 2022?

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Why Should You Buy Term Insurance in 2022?

What are the Documents Required for Term Insurance Plan?

What All Documents Required For Term Insurance In India?

Best Investment Plans for Children - Secure Your Child's Future

How to Compare Term Insurance Online

Steps on How to Buy Term Insurance Online

6 Types of Death not covered in Term Insurance Plan

Term Insurance Basics You Should Know

Cost of Term Insurance Likely to Increase Soon