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Difference Between Retirement Plan, Savings Plan, and Investment Plan

  • Highlights

  • A retirement plan gives you benefits after retirement

  • A savings plan helps you save and earn assured returns

  • Investment plans give you insurance benefits and returns

  • Compare coverage, premium, maturity and tax benefits

Insurance policies perform a range of financial tasks. Even though all of them allow you to gain tax benefits and offer security to you and your family, the commonly available insurance policies can be grouped into these 3 segments based on their functions.

What is a retirement plan?

A retirement plan, also known as a pension plan, is an investment plan that enables you to allocate your savings for a certain period. This allows you to enjoy its benefits after retirement. It gives you regular income till you attain 100 years of age and guarantees a payout to your family in case of your demise.

What is a savings plan?

A savings plan gives you insurance benefits as well as assured returns on maturity for as many years as you choose. It is the perfect combination of life insurance and guaranteed returns. You can also make the most of advanced rider add-ons and enjoy a rebate on the premium for female policyholders or lives insured.

What is an investment plan?

You can earn high returns when you allocate funds towards an investment plan. This is insurance cum investment plan where most of your premium is invested into high-return investments of your choice. It also gives the facility for partial withdrawal and lets you pay premiums as per your choice of frequency. It also allows you to pick how to receive the maturity benefits, either in instalments or a lump sum.

Now, that you know the details about these 3 insurance plans you can choose a Retirement Plan, Savings Plan or an Investment Plan from trusted aggregators like Bajaj Finserv. Here you can gain from pre-approved insurance offers and hassle-free application procedure to expedite your investing process.

In order to make your choice between these, read on to check the difference between the 3 in terms of their features and benefits.

Based on benefits received

While a savings plan gives you assured returns, the pension plan gives you a guaranteed death benefit. An investment plan allows you to generate more wealth from your savings as it allows you to choose funds to create a diversified portfolio. The premium payment for a pension plan is fixed, a savings plan is fixed for a few years, flexible for an investment plan.

Based on coverage

Retirement plans give you coverage for 100 years and after your demise, your family can avail the payout. In a savings plan, you will get the assured returns and in the investment plan, you will receive the returns from your investment along with insurance benefits.

Based on premium

Investment plans give you an option to select the frequency of premium payment as per your convenience while savings plans, give you fixed premium payment for few years only. A pension plan requires you to pay annual premiums until retirement.

Based on tax benefits

For investment plan, you can claim deductions under section 80C and the amount received on maturity is fully exempt from tax. Under Section 80CCC, contributions made to a pension plan are exempted from tax up to a maximum of Rs.1 lakh. However, the withdrawals and payouts are not tax-free. Only one-third of the total pension payout is tax-free while the remaining amount is subjected to being taxed according to the tax rate during your time of retirement.

Use the information above to make an informed selection of the ideal insurance policy for your and your family’s needs. Remember to use pre-approved insurance offers from Bajaj Finserv to expedite and ease your application process while being able to view customised deals.

Disclaimer - *Conditions apply. This product is offered under the Group Insurance scheme wherein Bajaj Finance Limited is the Master policyholder. The insurance coverage is provided by our partner Insurance Company. Bajaj Finance Limited does not underwrite the risk. IRDAI Corporate Agency Registration Number CA0101. The above mentioned benefits and premium amount are subject to various factors such as age of insured, lifestyle habits, health, etc (if applicable). BFL does NOT hold any responsibility for the issuance, quality, serviceability, maintenance and any claims post sale. This product provides insurance coverage. Purchase of this product is purely voluntary in nature. BFL does not compel any of its customers to mandatorily purchase any third party products.”

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