A Plan that fetches Tax Free Returns All Your Life
Retirement Plans of all the insurance companies/ MFs and NPS fetches pension which is taxable and not guaranteed after retirement. It is a challenge for many who are in private job to create a corpus for good 30+ years of job and especially when you face crisis like Covid-19 in this long working life. Any investment option that gives tax free returns is always a delight for all of us, but if it is guaranteed for life long on regular basis it certainly is icing on the cake. Now imagine a plan/scheme which can give you decent tax free return all your life that can beat inflation and substitute a requirement of a Pension plan. Moreover, the plan could cater to 3 generations of family giving tax free returns. The scheme which is an Insurance plan can be ideal for any long term financial planning with the following features:
Lump Sum Amount to Family in case of early Death.
Guaranteed Tax Free Income up to age 100.
Huge Capital for family in case of Death at old age.
Let’s examine how this plan can benefit 3 generations i.e. Legacy from Parents to Children:
Take Policy in name of Child and get it conditionally assigned to parent as soon as child becomes major.
Parents will get the income as long as they live and on their death the policy will be transferred back to child and he will get Guaranteed Tax Free income up to age 100.
On death of Child, Grand Children of parents will get the death benefit.
The above is a methodology which needs a planning to be executed with a long term vision. We are sure such a plan offered to a 40-45 year old father who has a child aged 10-15 years might not understand the importance of long term planning. However, his 60-65 years old father who has seen life closely would understand the importance of planning with a long term view specially which gives certainty of cash flow should help his son to execute such a plan.
Following other situations could be possible for the family to consider the plan:
Ideal gift from parents to Daughters to insure regular income for lifetime even after marriage.
Anniversary Gift for Spouse every year.
Gift to Parents: Youngsters can take policy on their life and conditional assign to parents for their retirement income.
The plan also can be ideal for all youngsters who don’t have pension in their job and part of the saving can be set aside for an investment that can generate long term tax free pension for them. Moreover, with such a flow of income one can enterprise in any business without worrying for meeting household expenses. The payment terms can be flexible and liquid by way of loan or pre-payment by encashing at Cash Value after paying all the premium payments.
Many insurance companies have floated these plans one has to examine the suitability and guaranteed returns offered not considering the variable component. It would be appropriate to sit with your financial advisor or Insurance Broker to examine the feasibility of the plan best suited for your family and financial goal.