Can life insurance contribute to your retirement planning?
As we envision our golden years, most of us dream of a retirement filled with comfort, security, and the freedom to enjoy the fruits of our labour. We want to spend time with loved ones, travel to new places, and pursue long-held passions without worry. Yet, for many, this vision remains elusive.
Financial security in retirement requires thoughtful planning. Many of us think of covering the basics like food, bills, and shelter, but often overlook the considerations for the joys that make life meaningful like traveling, pursuing hobbies, or helping loved ones.
Retirement planning should go beyond survival. It should give you peace of mind and freedom to live your retirement years on your own terms.
The Preparedness Gap: Expectation vs Reality
Even though awareness about retirement planning is increasing, the gap between expectations and actual preparation remains wide. With better healthcare and longer life expectancy, many Indians today will spend 20-30 years in retirement, and most people underestimate how much money they will actually need to maintain their lifestyle through those decades.
At its core, what looks like a big amount today may feel alarmingly small in the future, as inflation quietly eats into savings. For example:
- A corpus of ₹10 lakh today could shrink to just ₹2.6–3.7 lakh in real value after 20 years, if inflation stays between 5-7%.
- On this basis, the widely held belief that ₹1 crore is “enough” for retirement is misleading. By 2045, it may have the buying power of only ₹20-23 lakh, which means a diminished lifestyle compared to our expectations.
A lack of understanding around retirement planning affects people across income levels. A study by Grant Thornton Bharat found 74% of individuals are saving 1-15% of their income toward retirement, which reflects the trend of low retirement contributions and reliance on limited savings tools.
Alongside better planning is diversification. Employees’ Provident Fund (EPF), gratuity, and National Pension System (NPS), trusted instruments that the vast majority of us rely on. But for a comfortable retirement, we need to consider diverse instruments aligned to our risk appetites and our lifestyle aspirations.
This trend points to a hard truth: while most people know retirement planning is important, very few are truly prepared. To close this gap, planning must focus not just on survival but on long-term financial independence and this is where life insurance becomes vital.
The Financial Toolkit: Life Insurance at the Core
When people hear “life insurance”, they usually think of protection after death. But in reality, life insurance can be the backbone of a smart retirement plan as well, offering both security and structured income.
- Guaranteed income plans offer structured payouts, helping create a steady income stream post-retirement removing uncertainty around timing or availability.
- Annuities provide income for life, ensuring you never outlive your savings.
- Participating policies (PAR) combine protection with potential growth, offering balance between long-term investment outcomes, safety and structured planning.
In short, life insurance isn’t just a safety net for your family. It can also be a financial cushion for you, funding your retirement goals with predictability and peace of mind.
More Than Just Death Benefits
Modern life insurance products provide living benefits, income replacement, long-term financial stability and low-risk, predictable returns.
For middle-class Indians in particular, these benefits make life insurance an attractive choice. Unlike purely market-linked investments, which rise and fall with volatility, retirement plans can bring reliability.
Over the years, disciplined contributions can build into a solid retirement fund, ensuring stability even when markets are uncertain.
Making the Golden Years Truly Golden
So, what does a strong retirement plan really look like? It starts with just starting, whatever age you’re at, make the commitment now.
Even small contributions, if made consistently, can grow into substantial wealth over time. The next step is to balance traditional tools like EPF, NPS and Public Provident Fund (PPF) with other products like the variety of life insurance products available, depending on your risk appetite, to create a healthy mix of liquidity for short-term needs and stability for long-term income.
Practical planning also means being realistic: estimate future expenses carefully, account for inflation, and review your portfolio regularly as life changes. By diversifying and making life insurance the foundation, you build a plan that can withstand uncertainties.
Ultimately, life insurance isn’t about limiting your choices, it’s about expanding them. It gives you certainty, confidence, and control. With awareness and discipline, retirement can truly be about thriving, not just surviving a chapter that reflects your aspirations, not your compromises.
Sudeep P.B. is chief distribution officer – proprietary and pnb channel at PNB MetLife.