Using Bajaj Life Insurance SISO for Retirement Planning

Why Retirement Planning Needs Structure

You might choose different types of avenues to create a retirement corpus. At the time of redemption, if you take out the entire sum at once, it might prove difficult to manage. You may overspend the full amount or make random withdrawals that might exhaust your savings pretty fast.

Bajaj Life Insurance offers an investment strategy-SISO that can easily solve this issue. In case of ULIPs, it allows you to average the purchase price through systematic investments, even during market fluctuations, subject to applicable terms and conditions. However, it is important to note that this strategy is applicable on select plans only.

 

What is SISO and How it Works for Retirement

SISO, short for Systematic In, Systematic Out, is an innovative strategy introduced by Bajaj Life Insurance Limited, to make investments and withdrawals structured.

 

1. Systematic In

During your active working life, you can choose deferred annuity plans for retirement planning. You can pay a fixed premium every month to build a retirement corpus. Regular premium payments instil disciplined savings and help you create a good corpus. If you choose market-linked ULIPs, you can get the benefit of rupee cost averaging wherein you do not have to worry about timing of the financial market.

 

2. Systematic Out

Once you retire or are nearing retirement, you can opt for systematic withdrawals from the policy. This would give you a steady regular payout instead of taking out the entire policy proceeds. This creates a regular source of income with no financial stress.

 

Benefits of SISO in Retirement Planning

Mentioned below are some perks of using SISO in retirement planning:

 

1. Predictable Cash Flow

SISO ensures that you receive a consistent income after retirement to manage day-to-day needs easily.

 

2. Market Protection

If you choose ULIPs, SISO can give you the benefit of rupee-cost averaging which frees you from the effort of timing the financial market. You can pay the premiums regularly in a disciplined fashion without worrying about the ups and downs of the financial markets.

 

3. Discipline Accumulation

When you’re regular with your monthly premium payments, you can build a healthy retirement corpus which can also be affordable on your pockets.

 

4. Flexibility

You can choose how often you need redemptions - monthly, quarterly, or yearly, based on your financial goals.

 

5. Life Insurance Protection

Since SISO is available with select life insurance plans, you get the dual advantage of life cover and corpus creation.

 

How to Plan Retirement Using SISO (Step-by-Step Guide)

Given below is a detailed guideline to plan retirement using the SISO strategy:

1. Step 1: Set Your Retirement Goal

   Calculate how much you’ll need to manage daily expenses. You should take healthcare expenses, standard living costs, and inflation into consideration for better planning.

2. Step 2: Choose the Right Plan

   Choose from the variety of plans offered by Bajaj Life Insurance under SISO category. Choose a plan that matches your financial goals and risk appetite.

3. Step 3: Decide the Accumulation Period

   It’s always good to start early to get the benefit of compounding returns over a long-term horizon. Assess your retirement age to find the policy tenure over which you can pay the premium and build up the retirement corpus.

4. Step 4: Select Payout Mode

   Based on your requirements, choose how you want to receive the payment, whether monthly, quarterly, or annually.

5. Step 5: Review and Adjust

   Check your plan regularly to ensure that it is on track to create the desired retirement corpus. If you have chosen ULIPs, you can review the fund’s past performance^** and switch between funds or pay top-up premiums to keep your retirement planning on track.

 

Example Scenario

For eg- Let’s take the case of 35 years old Raj. He starts investing ₹10,000 every month into a ULIP for the next 25 years. When he reaches retirement age (60 years), Raj has invested ₹30 lakhs. At an assumed rate of return of 8% p.a., he would have built a corpus of ₹95.10 lakhs.

Instead of taking out the entire fund value, he chooses the SISO mode of withdrawal, wherein he opts for ₹50,000 per month as payout for the next 20 years. This steady cash flow can give him regular funds to help him handle his financial needs smoothly.

 

Common Mistakes to Avoid in Retirement Planning

1. Never assume that you can plan for retirement later. The later you begin, the higher would be the savings required to create an optimal retirement fund.
2. Your monthly expenses will go up with the passing years because of inflation. Not taking this factor into account can lead to the creation on an inadequate corpus.
3. If you take out a larger proportion of money in the beginning, you’ll have a much smaller amount in the later years to manage expenses.
4. With rising age, you’ll need medical attention. Ignoring the rising health care expenses can disrupt your monthly retirement income.

 

Conclusion

Retirement may put a pause on your monthly salary, but it should not make you financially dependent on others. A disciplined method like SISO ensures that you invest a fixed premium regularly during working years to get a steady cash flow afterwards. With disciplined investments and systematic withdrawals, SISO can make the golden years of your life smooth and secure.