Retirement is what most people look forward to all their life. They build a corpus so that they can enjoy a peaceful life at their retirement. Most people buy an insurance policy for retirement to secure the finances after they have stopped working. Read on to know more about insurance for retirement.

How does insurance for retirement work?

Usually, retirement-centred plans are a type of life insurance and it can come in a form of a rider or a term plan. The term life insurance plan comes with 3 options or more. When you choose a longer term, you get a higher income from the plan.
Most life insurance plans available in Malaysia are endowment plans and they offer monthly or yearly income. This promised income comes after a year or so after you have started the plan. You can earn extra in the form of dividends. This is not guaranteed and it depends on the insurance company’s performance. Some plans will ask you to deposit money as a form of saving while other plans will let you withdraw the total sum assured.
For instance, Sam will be eligible to withdraw money at his retirement and his EPF statement reveals that he will get RM300,000. Sam is unsure as to what he must do with the money. He can put it in fixed deposit, but it will not earn him a good interest. He is also afraid that the easy access to the huge amount might tempt him to spend on irrelevant things. What he can do is invest in an annuity. An annuity provides income in exchange for a lump sum payment.
There are two types of annuities that you can choose from. One is the immediate annuity and you will start to receive income within 12 months from the date you purchase the annuity. The deferred annuity income payments will start after 12 months of purchasing the annuity.
In order to build the corpus fund, you must start saving in your early working years. If you want a lump sum payment of RM100,000 for an immediate annuity, you must pay RM400 for life every month.

What is the right time to apply?

You can start the plan as early as 14 days, but most people start the annuity plan when they are 18 years old and the payments end when they are 50 years old.
The retirement plans come with death benefits, critical illness coverage, and total and permanent disability coverage. Some plans come with Funeral Expense Benefit. Your coverage decreases if you have made any withdrawals or claims.

Author's Bio: 

I am Henry Lee an avid reader and a prolific writer. I did my financial course in Sunway University. I love writing short stories and playing X-box.