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I started working two years ago. I will have to pay tax from this year. My father is advising me to buy life insurance to save tax. What policy should I buy?
Since you are young, it will be a good idea to invest in a unit-linked insurance plan (Ulip) for the long term (15-20 years). In a Ulip, the money is invested in stock markets and is subject to market risks but the long-term investment horizon will take care of the market fluctuations. You will also get life cover for the entire term of investment. If you do not want to invest in a Ulip, you can invest in the traditional savings life insurance policies.
All life insurance policies are of long duration - 15 years, 20 years, etc. What is the guarantee that the company will pay my money after such a long period? If something happens to the company during this period, how will I get back my money?
Life Insurance companies are in the business of providing long-term benefits. Insurance companies are strictly regulated with prudent reserving norms, especially in maintaining solvency ratio, which indicates whether a company has enough money (cash flows) to meet long-term liabilities. Hence, customers should not worry about receiving their money after a long period.
In a pension plan will I get pension only after I complete 60 years? If I want to start receiving pension earlier, is it possible?
Yes, you have the flexibility to choose your vesting age (age at which you will start receiving pension/annuity). Vesting age varies from one insurer to another. Most insurers provide the option to choose your vesting age between 35 and 80 years. You will have to select the policy term such that the maturity of the policy coincides with the age at which you need the income. You can choose your annuity option based on your requirement. You can choose a lifetime annuity, lifetime annuity with return of purchase price or lifetime annuity increasing at a specified percentage.
Amitabh Chaudhry, managing director & chief executive officer, HDFC Life
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
