In this video, we will discuss key features of unit linked insurance pension plans or ULIP pension plans
Edited highlights
0:06 In this video, we will discuss unit linked insurance pension plans or ULIP pension plans
2:05 Pension planning has to be done for the long term since one cannot expect to have a large retirement savings corpus just a few years before retirement
2:23 We generally associate retirement with superannuation
2:37 In pension plans, it is not related to superannuation, As a policyholder, you can choose your retirement period
2:45 Life insurance companies allow you to choose your retirement age and in pension plans it is called vesting age
2:55 You can have the minimum vesting age as 45 years in some plan and in other it is 50 years
3:08 One can buy these retirement plan early on in one's career
3:25 The maximum vesting age can be 70 years and in some cases, even 75 years
4:04 The freedom to choose the vesting age is not available in other categories of pension plans
4:17 Like other ULIP plans, in a ULIP Pension Plan, you get all the flexibility
4:22 For instance, any time you want, you can switch from equity fund to debt fund
4:45 There is flexibility to put your money in the fund of your choice
4:53 You can also top up your ULIP investment with the top up facility
5:03 During the period you are investing and putting the money in the ULIP Plan is called the accumulation phase
5:10 After the vesting age, there is the payout phase where the insurance starts your annuities
5:18 The annuity is typically a pension. A annuity could be at the rate of interest prevailing at that time of vesting
5:40 As a policyholder, one has the option to commute 33.33% of the corpus, However, the remaining portion will need to be taken as annuity
5:52 The commuted amount from the ULIP Pension Plan is tax free
6:08 In case of annuities, there are many options. For instance, one can take annuity for life or till the person is alive
6:15 One can use the ULIP Plan money to take annuities from a different company than the one used in the accumulation phase
6:40 Annuity can be for a certain period, say, 20 years. If the person dies before that the annuity will be given to the nominee
6:54 There are options for joint life annuity, annuity for life and annuity certain and life thereafter
7:02 Annuity certain could be for 10 years and on survival it will be converted to annuity for life. Such options exist
7:28 ULIP Pension plans help you save regularly for retirement and inculcate the investment discipline
7:38 Of course, one has provident fund but that is not enough to meet retirement needs
8:06 In ULIP Pension Plan you can put your money in an ULIP equity fund to get long term growth and then use switching facility to secure gains near vesting age
8:43 You also get tax deduction for your ULIP Pension Plan investments
8:54 With ULIP Pension Plan you don't need to work hard to ensure regular income out of retirement savings
9:25 Commutation gives you tax free lump sum at the beginning of retirement
9:30 You will need to compare ULIP Pension plans with other retirement savings options
9:46 What will work for one will not work for another
