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Pension for life and nominees afterwards

Insurance companies offer pensions plans (also called retirement plans or annuity plans) where a person can pay a regular premium or invest a lumpsum for a regular income after retirement

I am 38 years old and I work in a software firm. I would like to know if there are any whole life pension policies which pay through out the life of policy holder and nominees after his death. Please suggest some good policies.
- Sekhar

Insurance companies offer pensions plans (also called retirement plans or annuity plans) where a person can pay a regular premium (monthly, quarterly, semi-annually, yearly, etc) or invest a lumpsum for a regular income after retirement. There are two kinds of pension plans. One, deferred annuity plans: here you pay a premium regularly to create a corpus for your retirement. If you outlive the policy, the maturity benefit (sum assured plus guaranteed additions and bonus if any) is used to generate a regular income. Such policies also give you an option to commute a certain percent of the corpus and use the rest of the money to buy an annuity income. Immediate annuity plans are another kind of pension plans. These plans allow you to invest a lumpsum amount and start receiving regular income immediately. Insurance companies offer a variety of annuity income options like income for life, income for life and for nominees thereafter, income with return of capital, and so on.

If you are looking for a regular income after retirement, it is not necessary to invest in a pension plan. You can always invest in a pure long-term investment option like an equity mutual fund to build a corpus and use a part of the corpus to buy an annuity to ensure a steady income after your retirement. This may be a better option as pension plans from insurance companies mostly have insurance and investment element in them. Most of them offer modest life cover and returns.

If you are a newcomer to the stock market, you can consider investing in a top-rated balanced scheme. If you are well-versed with the stock market, you can consider investing in a diversified equity scheme. Start shifting the money to a safer avenue like a bank deposit or a debt mutual fund a couple of years before your retirement. This is to ensure that a sudden volatility in the stock market do not upset your retirement plans. If you do not want to manage your money after retirement, you can use a part of the corpus to generate income to take care of your living expense.

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