Skip to main content

Unit Linked Pension Plans Fit Early Retirement Better Than NPS

 


Planning for early retirement requires an investment approach that offers flexibility, growth potential, and accessibility before the conventional retirement age. While the National Pension System (NPS) is designed for income security after sixty, it may not be the best option for those aiming to retire in their forties or fifties. In such cases, a unit linked pension plan offers better alignment with early retirement goals.

A unit linked pension plan combines life insurance with market-linked investment opportunities, enabling individuals to build a retirement corpus while also ensuring life cover for their dependants. In comparison, NPS does not offer life insurance protection.

Why unit linked pension plans suit early retirement better:

  • Purpose: ULIPs serve dual objectives — wealth creation and life cover — while NPS focuses solely on building retirement savings.

  • Returns: ULIP returns depend on market performance, offering the potential for higher gains. NPS generally provides moderate returns, also linked to market trends but with conservative allocations.

  • Lock-in period: ULIPs have a shorter lock-in period of five years, allowing partial withdrawals after this period. NPS locks funds until the age of sixty, with only partial withdrawals allowed after three years.

  • Flexibility: ULIPs allow investors to switch between equity and debt funds to manage risk and returns effectively. NPS has limited switching options.

  • Risk profile: ULIPs carry higher risk due to equity exposure but offer the potential for higher long-term returns, suitable for growth-focused early retirees. NPS investments are comparatively lower risk.

  • Withdrawals: ULIPs permit partial withdrawals after five years, providing access to funds if needed before retirement. NPS restricts full withdrawal until sixty.

  • Best for: ULIPs suit those seeking both life cover and high-return potential. NPS is better suited for individuals aiming for a steady pension post-retirement.

Additionally, unit linked pension plans provide tax benefits under Section 80C and potential exemptions under Section 10(10D) (old tax regime). While NPS also offers deductions, including an extra benefit under Section 80CCD(1B), its restrictive withdrawal rules make it less practical for early retirement.

Conclusion

For investors targeting early financial freedom, flexibility, fund accessibility, and growth potential are key. Unit linked pension plans meet these needs effectively, making them a more suitable choice than NPS for achieving early retirement.

Comments

Post a Comment

Popular posts from this blog

Quick Guide For Zero Depreciation In Car Insurance

Some parts of your car face wear-and-tear faster than the others and these parts are often referred to as depreciated parts. Once you file for an insurance claim, the insurance company deducts a value equal to the depreciated value of all such parts and does not settle your claim in full. The parts that are made up of rubber, plastic, fiber, etc. fall in this category. If you want to avoid this deduction from the final claim amount, you can avail of a zero depreciation car insurance cover. It is also known as nil depreciation cover as it nullifies the deduction from the claim amount due to the deprecated components of your vehicle. The benefits of a zero depreciation car insurance policy are stated below: Comes at a reasonable price  If you have already purchased a comprehensive car insurance policy, you can avail of a zero depreciation car insurance cover at a nominal price. It is because it is an add-on insurance policy that only enhances your claim amount to reduce the part of ...
Post a Comment
Read more

Stay Protected on the Road- Understanding the Importance of acko car insurance

  Having a car insurance policy is essential for every car owner. It not only provides financial protection in case of any damage or loss but also ensures a safer driving experience. Acko is one of the leading car insurance providers in India, offering a wide range of insurance plans to suit the needs of all car owners. In this article, we will be discussing the importance of Acko car insurance in India and how it helps to stay protected on the road. We will also look at the various benefits and features of Acko car insurance policies that make them an ideal choice for car owners. Understanding the Importance of Acko new car insurance in India As the number of vehicles on Indian roads increases, so does the number of accidents and other related incidents. Traffic jams, road rage, and bad driving habits are some of the major causes of accidents. It is important for drivers to stay safe on the road, and to do so, they must have a car insurance policy. Acko new car insurance is one...
4 comments
Read more

Necessary Information On Hospital Cash Insurance Plan

Medical treatments these days are a matter of the huge amount of money. And if you need quality treatment facility from the super-specialty hospitals and clinics you need a medical insurance plan for you and your family. If you are planning for the medical insurance plan with hospital cash cover , then be sure to consult with the best insurance plan provider.  Let us discuss in details. Financial companies such as reputed NBFC Bajaj Finserv and other insurance companies have their own health insurance policies that range from smaller amounts of bigger amounts. All these medical policies fall under the pocket insurance policy scheme. It gives clients the facility to get benefits with minimum investments. The procedure is quick and does not require lengthy documentation. You can get a higher amount of money with such hospital cash insurance to continue medical treatments even for critical patients. Just make sure you read the policy details clearly before yo...
Post a Comment
Read more