I am 34 years of age and earn Rs 28,000 a month. I plan to retire around 50. I need a substantial corpus to take care of all my expenses after retirement. For this, I plan to take a pension plan. How much should I invest to create a retirement corpus? Which plan should I opt for?
No doubt, you need a substantial corpus if you wish to retire at 50. However, it’s good you are planning for retirement at an early age of 34 and, hence, have sufficient time to accumulate the desired sum. The sum needed will depend on a number of factors, such as the amount of pension you need, the annuity rate at the time of your retirement and the type of annuity plan you will need (for example, with or without spouse pension, increasing pension, etc). If you want your pension to be linked to your final salary, say 50 per cent of your final salary, the amount will depend on your salary growth. However, in this case, the required contribution may also be linked to your salary and the same may be worked out by considering your salary growth.
In case you want a fixed amount of pension, the sum needed for investment every year may be worked out by considering future investment returns, annuity rate and so on. Whatever option you choose, a periodical review is essential so that the target pension is achieved on retirement.
Considering your long-term horizon, you can invest in a unit-linked pension product which may give you better returns. Initially, you may opt for a fund with high equity content. However, as you approach retirement, you would need to switch to long-term fixed interest securities fund.
I plan to buy a life cover. Under what circumstances can a life insurer refuse to make payment for death claims?
Life Insurers generally try to settle genuine claims at the earliest. They also have to protect the interests of honest policyholders, who may be required to pay higher premiums if fraudulent claims are honoured. If you present the relevant documents and if the claim is made within the stipulated time period from the death or accident of the insured, there is no reason why it will be rejected.
The rejection of a claim generally occurs within two years of buying or renewing the policy, on account of non-disclosure of material facts like pre-existing health conditions. It is in view of Section 45 of the Insurance Act, 1938. If a claim is rejected after two years, the insurer is required to prove that the non- or wrong disclosure of important facts about the policyholder(s) was fraudulently made and the same was known to him/her at the time of purchasing or renewing the policy.
The writer is the managing director and chief executive director at Future Generali India Life Insurance. The views expressed are his own. You can send your queries to yourmoney@bsmail.in
