How Insurance Can Help You Be Retirement Ready

  • Retirement Planning Articles


The PGIM India Mutual Fund Retirement Readiness Survey 2020 revealed a worrying state of affairs - over 51% of Indians who participated in the survey had not planned for their retirement at all. In a country where life expectancy is increasing, this is definitely concerning.

And if you count yourself among the 51% of people unprepared for retirement, you may be having trouble getting started. After all, there are several different investment options that are useful for retirement planning. Like Public Provident Fund, the National Pension System, mutual funds, real estate and more.

Making a choice can be tough. Fortunately, for anyone who is unsure of where to begin, there's one product that can help you become retirement ready, while simultaneously helping you meet various other life goals too. And that product is life insurance.

Here's a closer look at the many ways in which life insurance can help you prepare for retirement.

  • It secures an alternate source of income

    Once you've retired, you will no longer have access to your primary stream of income. Instead, you'll need to rely on the income from your investments and other sources. So, the number priority to be retirement ready is to ensure that you have an alternate source of income to rely on.

    Life insurance plans - particularly, retirement plans - can help you here. Also known as pension plans or annuity plans, they give you guaranteed benefits in the form of lump sum payouts, periodic payouts, or a combination of the two. The ABSLI Guaranteed Annuity Plus, for example, is a retirement plan that gives you guaranteed lifelong income with multiple annuity options to choose from. With a retirement plan, you can rest assured that you will always have a dependable source of income to rely on.

  • It gives you guaranteed financial benefits

    If you would rather have a lump sum corpus to create a sizable retirement fund, savings plans or endowment plans can help you. In addition to the signature life cover, these life insurance plans offer guaranteed benefits on maturity of the plan or death of the policyholder. This kind of lump sum payout may be just what you need to start off your retirement life on the right foot.

    You can schedule your purchase and choose a policy term in such a way that the plan's maturity coincides with your retirement age. This way, you can enjoy the guaranteed maturity benefits on the threshold of your retired life. In addition to these payouts, many endowment plans also offer guaranteed additions that boost your retirement corpus.

  • It can be used as a tool for wealth creation

    In case you want to build a significant corpus for your retired life, you'll need to look for an insurance plan that can help you create that kind of wealth. Here's where Unit Linked Insurance Plans (ULIPs) come in. These plans offer you a life cover, as expected. But in addition to that, they give you the advantage of market linked returns.

    This is because through ULIPs, you can invest in different funds like equity funds, debt funds, or a mix of the two. That's not all. ULIPs also come with a fund switch feature, through which you can switch your money from one fund to another for a specified number of times each year.

    Here's how the combination of these features can help you.

    At 25 years of age:

    Say you've purchased a ULIP at 25 years of age. You're young and willing to take on a higher risk in return for possibly higher returns, so you choose to invest in the following manner:

    • 80% in equity funds
    • 20% in debt funds

    At 35 years of age:

    A decade later, you have a good career and a reliable source of income. However, you have more financial obligations and a slightly decreased risk appetite. So, you switch your funds so the new combination of funds is as follows:

    • 70% in equity funds
    • 30% in debt funds

    At 45 years of age:

    By this point, you are closer to retirement, so you decide to reduce your equity exposure further. Here's how your ULIP funds will now look.

    • 50% in equity funds
    • 50% in debt funds

    At 55 years of age:

    At this age, you are ready to retire in another year or two. So, to preserve the wealth your created, you increase your allocation to debt as follows:

    • 30% in equity funds
    • 70% in debt funds

    In this manner, ULIPs help you create wealth across different phases of life. You can make use of these life insurance plans to be retirement ready.

  • It protects against rising medical costs

    Owing to inflation, healthcare costs were already on a rise before the pandemic came knocking. Now, after the COVID-19 outbreak, the costs of medical treatments may further rise in the future. And even for people who are healthy today, life after retirement could come with rising medical expenses. That's because once they're past the age of 60, many people develop ailments and medical conditions that may require medical treatment or surgery. You may not have accounted for these expenses in your retirement fund.

    Fortunately, life insurance protects your finances against these costs, thanks to the optional add-on riders it comes with. You can make use of riders like a critical illness rider, a surgical care rider or a hospital care rider to take care of these need-based expenses.

    Here's how life insurance riders can help you financially.

    • Say you've purchased a life cover today, at age 30.
    • Alongside the basic life cover, you've also opted for a hospital care rider with a cover worth Rs. 20 lakhs.
    • 30 years later, when you're 60, you suffer an unexpected illness that requires extensive hospitalization.
    • By the time you recover and are ready to go home, your medical bills come up to Rs. 7 lakhs.

    Shelling out a huge sum like this could put a dent in your savings. But thankfully, your rider takes this blow, leaving your finances intact.

  • It protects your dependents

    A major part of being retirement ready is securing the future of your loved ones.  For instance, if you have a dependent spouse or a dependent child, you'll no doubt want to ensure that they are well-protected in case something happens to you. A life insurance plan helps take care of this.

    With the death benefits they offer, life insurance policies provide a financial safety net for your loved ones. You can rest assured knowing that no matter what happens, your dependents will have no financial worries.

Summing up

All things considered, life insurance helps secure your future in more ways than one. Every kind of life insurance plan contributes to your retirement in one way or another. By planning well, you can secure this major milestone easily, and lead a carefree life after you've retired.


The Guaranteed Milestone Plan from ABSLI can help you plan for your future life goals - including retirement, which is the biggest of them all. Want to know more about how it works? Our blog has all the details.

Read it here


The ABSLI Guaranteed Milestone Plan may be just what you need. As its name indicates, this plan gives you guaranteed benefits that help you fulfill all your major life goals without any trouble.

Goals like buying a house of your own, paying off your debts, or creating your retirement fund - this plan helps you check off all these goals!

Know More

ABSLI Guaranteed Annuity Plus (UIN: 109N132V01) is a Non-Linked, Non-Participating, Single Premium General Annuity Plan
ABSLI Guaranteed Milestone Plan (UIN: 109N106V10) is a non-participating traditional insurance plan.


Trending Articles

Popular Articles
View All

Retirement Plans

ABSLI Empower Pension Plan

This plan ensures that you remain in control of your destiny even during the second innings of life. UIN: 109L078V02

  • Guaranteed Additions
  • Financial protection for your family
  • Tax benefits1

ABSLI Empower Pension- SP Plan

A single premium plan that ensures you enjoy a much deserved comfortable retirement. UIN: 109L094V02

  • Guaranteed additions
  • Regular income
  • Vesting benefit as per plan option chosen

ABSLI Saral Pension

A single premium plan that provides guaranteed regular income for lifetime UIN: 109N130V01

  • Guaranteed regular income for life
  • No medical tests
  • Financial protection for your family

ABSLI Guaranteed Annuity Plus

This plan guaranteed income for life which enables you to enjoy a dream retirement life. (UIN: 109N132V02)

  • Guaranteed Lifelong income with a choice of multiple annuity options
  • Deferred Annuity option to build regular income stream for future with deferment period upto 15 years
  • Option to increase annuity through Top-up option

Need help in buying life insurance?

I agree to the Terms of Usage and Privacy Policy and authorize Aditya Birla Sun Life Insurance Company Limited and its associates to call/SMS/Email/WhatsApp me.

Thank you for your details. We will reach out to you shortly.

1800-270-7000 or reach out to us on this number.

Thank you for your details. Currently we are facing issue in our system.

1800-270-7000 or reach out to us on this number.