In this fast paced world, everything
is being done either earlier or late. In 20th century, jobs were provided
only by government sector by which all educated people struggled till late 30’s
to get a government posting. This has changed and led by a mushroom growth of
private sector jobs, and opening of markets to foreign investments. Graduates
were settling in early 20’s itself. People who have invested in different
financial products and failed to realize benefits from them, finally give a try
with insurance products. It may take a little more time to realize the importance
of insurance. But, if you reach 40’s and then realize that insurance is
important, choices will be limited, but not exhausted.
plans will provide optimum results for people who want to start investing in
their 40’s. This pension funds will provide pension as monthly salary after the
vesting date of the policy. Pension plans are necessary as they will keep life
style intact even after retirement.
We will understand this by an example.
Mr. Gaurav Arora
Annual Income: Rs. 10 Lacs
Marital status: Married
Retirement age: 58 yrs
Based on his
requirement he can invest only for 16 years and need monthly pension for his
Given below is the recommended plan for pension.
Plan: New endowment plan
Sum Assured: Rs.18 Lacs
Monthly premium: Rs. 10,035
This policy will provide a lump sum of Rs. 36 lacs after 16 years of policy
completion. This amount can also be used to generate a monthly pension.
Monthly pension: Rs 21,240
Pension: Till death of policy holder
death of policy holder the whole lump sum amount of Rs. 36 lacs will be given
to their nominee.
policy will have tax exemptions for the premiums being paid and also the lump
sum being received. Pension received was not tax exempted and it will be added
to the income of the policy holder.
Jeevan Nidhi was promoted as flagship pension plan by LIC. But, it has many
cons compared to New endowment plan. The amount can’t be taken as lump sum,
only pension option can be opted. Tax exemption is unavailable for pension
which we receive, which will result in huge tax cuttings. The premiums paid and
returns will be less compared to New endowment plan. Taking all the advantages
into consideration, endowment plan is a breather for late enrollers of insurance,
which can still provide great returns without huge investment and risk being
insurance in 40’s is not late, if sufficient funds are being allocated and
right product was selected.