Now you can buy life insurance plans completely online right here.
Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!
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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
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.
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%.
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
a)Commutation
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.
- A Consumer Education Initiative series by Kotak Life
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