LOVELY PROFESSIONAL UNIVERSITY

Course Code: FIN 352 Course Title: Personal Finance

Course Instructor: Dr. Anil Kumar

Academic Task No.: 03 Academic Task Title:

Date of Allotment: 22-11-2021 Date of submission: 05-12-2021

Student’s Roll no: RQ1909A12 Student’s Reg. no: 11913067

Evaluation Parameters: Content & information collection--10 marks, Analysis - 10 marks

Comparison & Discussion—10 marks

Learning Outcomes: To get understanding of types retirement/pension plans offered by

insurance/mutual fund companies

Declaration:

I declare that this Assignment is my work. I have not copied it from any other
student’s work or any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.

Student’s Name: Tushar Halder

 Retirement Planning

What Is Retirement Planning?

Retirement planning determines retirement income goals and the actions and
decisions necessary to achieve those goals. Retirement planning includes
identifying sources of income, sizing up expenses, implementing a savings program,
and managing assets and risk. Future cash flows are estimated to gauge whether
the retirement income goal will be achieved. Some retirement plans change
depending on whether you’re in, say, the United States or Canada, which has its
unique system of workplace-sponsored plans.1

Retirement planning is ideally a lifelong process. You can start at any time, but it
works best if you factor it into your financial planning from the beginning. That’s
the best way to ensure a safe, secure—and fun—retirement. The fun part is why it
makes sense to pay attention to the serious and perhaps boring part: planning how
you’ll get there.

Need for Retirement Planning

It is easy to cover your expenses as long as you are earning your monthly salary.
But post retirement, you need to have enough money set aside to live the rest of
your life and maintain a good lifestyle.

1. To cover daily living expenses

All of us have to bear the necessary living expenses even after retirement.
Because life moves on and the absence of our monthly income could
become a nightmare.

Retirement planning is working towards avoiding this nightmare from

becoming a reality. Not many people get pensions or gratuities post
retirement and even for those who do receive them; the amount is
generally not big enough to cover all of their expenses.

By planning and building a sizeable retirement corpus, you can ensure

that your family's standard of living is not compromised post retirement.
2. To cover medical expenses

As one's age progresses, the number of health issues and emergencies

also increase. And as you might be aware, medical expenses bear the
potential to create a huge hole in your pocket. In fact, these days even
dental treatments can cost you a small fortune.

Mediclaim or health insurance policies sometimes may not cover all your
medical expenses.

Therefore, your retirement corpus must be large enough to cover your and
your family's medical expenditure to avoid a financial crunch in the later
years of life.

3. To fight inflation

Inflation refers to the rise in the prices of goods and services. It erodes the
purchasing power or value of your hard-earned money.

You see, there has been constant rise in price of goods and services and
it will continue to be on a rise until you reach the retirement age.

This means that you would have to pay more for everything in the future.
From grocery to travel to accommodation, it is all going to cost you
relatively more in the future.

Without a sound retirement plan, that aims to establish an adequate

retirement corpus accounting for inflation, life expectancy, rate of return,
and so on; it would be impossible for you to achieve all your retirement
goals.

4. To deal with uncertainties

Life is quite unpredictable and uncertain. It can sometimes throw us in

adverse situations and circumstances which we may not have expected.

Some situations have the power to create a financial as well as emotional

turmoil in your life such as natural calamities, loss of loved ones, financial
difficulties in the life of family members, and so on.

Having a significant sized corpus to take care of such contingent events

can always come to your rescue.
 Thus, while you approach retirement, it is imperative that you have a
sufficient contingency fund, so that the intermediate period of turbulence
and turmoil can be managed better and not hinder your long-term goal of
retirement.

5. To meet your retirement goals

Retirement goals are the objectives that you wish to achieve in your
retirement years. These could be travelling and exploring new places or
taking up hobbies that you have always wanted to pursue.

However, if you do not plan and save for all these retirement goals in your
working life, they cannot become a reality in your post retirement years.

Hence, it is absolutely essential to have a strong Retirement Plan that will

make you aware where you stand today, and what steps you need to take
to achieve this goal.

Life Insurance Company (LIC)

LIC Pension Plans take care of the financial needs and requirements that
arise after the retirement of a person. The pension policies offered by Life
Insurance Corporation of India are tailored to meet the needs of senior
citizens who wish to secure their future so that they do not have to worry
about money in the golden years of their lives.

1. Pradhan Mantri Vaya Vandana Yojana

The Government of India has come up with the Pradhan Mantri Vaya Vandana
Yojana. It is designed for the senior citizens who are above the age of 60 years.
This scheme is provided only by the Life Insurance Corporation of India.
Benefits of Pradhan Mantri Vaya Vandana Yojana:
• The policyholder can avail pension arrears if he/she survives the 10 year
policy term.
• In case the policyholder encounters death in an unfortunate event during the
10 year policy term, purchase price is refunded to the nominee.
• In case the pensioner survives till the policy term’s end, purchase price along
with the pension instalment is payable.
Plan Name Pradhan Mantri Vaya Vandana Yojana

Minimum entry age 60 years

Maximum entry age No limit

Term of the policy 10 years

Minimum pension Rs.1,000 every month

Maximum pension Rs.5,000 every month

LIC's Jeevan Akshay – VI

The Jeevan Akshay – VI is an annuity plan that can be bought by paying a lump
sum amount. This policy offers annuity payments of a specific amount throughout
the entire life of the annuitant. There are several options for mode of payment and
type of payment under the LIC Jeevan Akshay – VI.
Benefits under the Jeevan Akshay – VI
• The annuity payable under this plan is uniform throughout the entire term.
• In case of the annuity’s demise, the purchase price is returned.
• The annuity can be paid at yearly, half-yearly, quarterly and monthly intervals.
The insured can choose any of these modes for annuity payment.
• Surrender under this policy is allowed after completion of 1 policy year for the
following circumstances:
• Myocardial infraction
• Open Chest CABG
• Cancer of specified severity
• Kidney failure requiring regular dialysis
• Open Heart Replacement or Repair of Heart Valves
• Major Organ / Bone Marrow Transplant
• Stroke resulting in permanent symptoms
• Permanent paralysis of limbs
• Motor Neurone Disease with permanent symptoms
• Angioplasty
• Multiple Sclerosis with permanent symptoms
• Blindness
• Benign Brain Tumour
• Deafness
 • End stage lung failure
• Loss of speech
• End stage liver failure
• Major head trauma
• Loss of limbs
• Third degree burns
• Primary (Idiopathic) Pulmonary Hypertension
• This particular policy does not need any paid up value.

Plan Name

Medical examination

Purchase price

Minimum purchase price for online sale

Minimum purchase price for all other distribution channels

LIC’s New Jeevan Nidhi

This plan is a conservative and profits pension plan with a blend of saving and
protection features. This particular insurance policy offers death coverage during
deferment period and also provides for annuity upon survival to the vesting date.
Benefits under the LIC’s New Jeevan Nidhi
• The life assured can avail basic sum assured along with simple reversionary
bonuses and accrued guaranteed additions upon vesting. However, the plan
must be in full force to avail these benefits.
• The nominee can avail the death benefit upon the insured person’s demise.
• Guaranteed Additions of Rs.50 per Rs.1,000 can be availed under the policy
every year, for the first 5 policy years.

Plan Name LIC’s New Jeev

Guaranteed Additions Rs.50 per Rs.1

Minimum Accidental Benefit Sum Rs.1 lakh

Maximum Accidental Benefit Sum Rs.50 lakh