Have you ever wondered how it would be to live a life where you have the financial freedom to do what you want? Or go wherever you want or just sit back and watch the days pass by? Well, if this is what you’ve longed for then, you ought to give pension plan a thought. A retirement policy helps you take care of your finances and create a substantial financial corpus for your future. With this accumulated funds not only will your post-retirement life will be at ease when it comes to finances but, also, help you plan early retirement.

The benefits of a pension plan do not end here. This plan also offers a death benefit to the buyer, which means, should anything unfortunate happen to you; your loved ones will gain a financial cover with this plan. Generally, any pension plan comes with two broad phases – Accumulation phase and Distribution phase. The Accumulation Phase comprises of the buyer paying a premium to create a financial corpus for themselves. However, the Distribution Phase is where you get to use the accumulated finances in the form of pension or income after retirement.

In this article, we will discuss five reasons why you should consider buying a pension plan. Here are a few points that will see:

Power of compounding

Financial safety for your loved ones

Inculcates the habit of saving

Benefits of insurance plan too

Tax benefits

Now, let’s take a look at these points in detail:

One of the reasons why you should opt for a retirement plan is because of its power of compounding. Usually, pension plans in India work on compounding which invariably allows you to grow your financial corpus. These plans will help you to invest in the form of a premium and build a retirement corpus with the power of compounding. The longer you stay invested, the larger you are likely to create your retirement corpus.

The best pension policy allows you to keep one or two nominees, depending upon the plan you select. With this option, your plan can serve as a financial cover to your dependents with the insurance component that comes invariably with the plan.

Another reason why you should opt for a pension plan is that it helps you save each month. You can link your bank account with your retirement policy and put it on auto-mode. This helps you pay your premiums without having to do this manually. With this, your premiums will be cut as soon as your salary arrives and leave you with the exact amount that you can use. Saving a bit of your income monthly will eventually help you create a substantial financial corpse for your future.

A retirement plan also includes insurance plan too. This is a special category that is designed to meet your post-retirement needs. Based on your investment strength, you can choose from an array of insurance and investment plans offered by your pension.

For those who opt for a retirement planning, can also avail for tax exemption on the payable premiums or investments. Section 80CCC of the Indian Income Tax Act in its Chapter VI-A states so.

So, with lucrative benefit as mentioned above and the possibility of creating a financially independent future, pension plans are certainly something you should opt for.