There are several options available for retirement planning in the market today. Here are a few of them
HDFC Standard Life Personal Pension Plan
The policy is basically a savings contract, which is designed to provide an income for life from retirement. It does this by providing a notional lump sum on retirement, comprising of sum assured plus any attaching bonus. Subject to the prevailing regulations, part of this lump sum can be taken in form o f cash and the rest converted to an annuity at the rate then offered by HDFC Standard Life.
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Alternatively, if it is permitted by the prevailing regulations, the notional lumpsum can be used to buy an annuity with any other insurance company which will accept such business.
How can I pay my premiums?
You can either pay a single premium or pay premiums in quarterly, half-yearly or annual form.
How much will it cost?
The cost of the plan depends on the age, the amount of benefit you have chosen, the premium paying frequency and the term of the policy. Following are the annual premiums payable on policy with assured sum of Rs 1 lakh.
For single premium policies, the premium payable with respect to the basic benefit is equal to the basic sum assured as required by the policy holder.
Am I eligible?
The minimum age of entry for a regular premium paying policy holder is 18 years, while that for a single premium payer is 35. The maximum age for entry is capped at 60 years for both the categories. In addition, the minimum retirement age is 50 years, while the maximum is 70 years.
In the event of early death:
On early death after the first year for regular premium policies all premiums paid to date will be returned with interest at the rate of 8 per cent per annum, subject to a maximum of the sum assured plus bonuses declared to date. For single premiums it is sum assured plus bonuses declared to date. Normally, reversionary bonus is paid once a year.
Reversionary bonuses takes the form of single additions to policy benefits. In Addition, a terminal bonus might be payable. On death, an interim bonus, reflecting the period since the last addition of reversionary bonus, might also be payable.
Surrender value
You can surrender the policy at any time. Subject to prevailing legislation and regulations, you may be paid a surrender value at the company's discretion. If premiums have been paid continually for atleast three years, the surrender value will be subject to a guaranteed minimum.
Guaranteed surrender value
Before retirement, the guaranteed surrender value, including the value of any attaching bonuses, for regular premium policies is: Zero in respect of premiums paid in the first year; and 50 per cent of premiums paid subsequent to the first year in respect of the basic benefit, excluding all additional premiums.
Before retirement, the guaranteed surrender value, including the value of any attaching bonuses, for single premium polices is 50 per cent of the single premium paid in respect of the basic benefit, excluding all additional premiums.
ICICI PRU ForeverLife
ICICI PRU ForeverLife is a deferred pension policy that packs an appealing tax incentive along with insurance cover. Besides giving you tax deduction up to a maximum of Rs 10,000 (u/s 80ccc(i)) on premiums paid every year (all those who have maxed their limit u/s 88 may please sit up and take note) it also provides regular income for life after the vesting age.
Apparently, of the two premium payment options available, the one, where you pay a regular premium throughout the term of the policy and avail of life cover and other riders seems to find favour. Because, the only other option available involves a single premium payment. Besides, benefits of life cover and riders are also not available.
Benefits payable
The benefits payable at vesting, include, sum assured, guaranteed addition and bonus. Annual guaranteed additions at the rate of 3.5 per cent on aggregate sum assured, on a compounded basis, for the first seven years of the term. Also, annual compound bonus is paid at the rate of 4.5 per cent on aggregate sum assured, guaranteed addition and vested bonus after completion of the first seven years.
Spouse benefit
On death during the premium payment phase, a regular income is provided to your spouse. The amount is determined on the basis of sum assured plus guaranteed additions plus vested bonuses, if any, as on the date of death.
Annuity benefit
Depending upon the chosen option, annuity is paid for lifetime after the vesting age. You have the option of taking 25 per cent of the aggregate sum assured, guaranteed additions and vested bonuses as an immediate lump sum. The rest will be used to provide a regular income stream for life.
Annuity options
There are four options, and one of them can be chosen at any time within six months of the vesting date.
Annuity for life.
Guaranteed life annuity for any one of 5, 10, or 15 years term, and for life thereafter.
Life annuity with return of remaining benefits payable(if any)