For many, this insurance is one of the least known but perhaps the one that we should all take out if we want to enjoy a full old age, without financial worries. Here we share 5 points to understand how retirement insurance works.
What is Retirement Insurance?
Retirement insurance is a fixed savings financial instrument offered by insurance companies. Its popularity is increasing because it has the advantage that you choose how much you want to receive at your retirement age, according to a fixed payment.
Benefits:
- From the first day of the contract, you know how much you will receive.
- You designate beneficiaries: if you die, they can receive the amount that has accumulated according to the contract.
- It is tax free: if you withdraw your money at 65, you will not pay taxes, and you can withdraw it in a single exhibition or in a monthly rental plan, and the money will continue to be managed by the insurer to generate more returns.
- Your payment is fixed throughout the contract: you can pay per month or per year. It is
usually convenient to pay annually.
You better hire it while you are young
Because that way, you will have many years to save with less effort, and even hire a larger amount, because you can comfortably meet your payment.
How to take retirement insurance
Retirement insurance is contracted with the insurers that offer it; some have different processes that make the hiring time change, usually, from when you contact a company until you review various quotes and are sure how much to hire, it can take 15 days or more.
What if you can no longer afford your retirement insurance?
If you can no longer pay your insurance at any point in your contract, you will have two options to be able to recover as much of your money as possible or stop your payments and receive another amount at age 65. In any case, you can continue taking advantage of the insurance.
Option 1: Pay off your insurance (recommended)
- If you can no longer pay, you can choose to pay off your insurance. That is, notify the insurer that you will no longer make payments, and wait for your 65 years to withdraw what you have accumulated until that year.
- When you purchase your insurance, you receive a table of values with the projection of all the years of the contract. There are several columns, one of them is “paid insurance” there you will see the amount that corresponds to each year of your contract.
Option 2: Withdraw the Redemption Value money
- In that same table of values, you will see another column “Redemption value,” that amount will be the one that you can withdraw if you decide to withdraw the money from your insurance. The insurance will give you the highest amount: either the redemption value or the total of your payments so far.
Your payments are protected if you die
If you die, the beneficiaries you assigned at the beginning of your contract will receive the largest possible amount of your contract. That is why it is important that when you purchase insurance that includes beneficiaries, you inform them about the collection process, and have a copy of the important documents to be able to carry out the process if necessary.
