Some insurers have launched capital guarantee ULIPs. Such products aim to guarantee the premiums paid by the individuals (net of expenses) plus the bonus declared, on maturity. Individuals, who fear ‘loss of capital’ in a ULIP, will find such products attractive.
However, capital guarantee ULIPs have lower equity exposure which could dampen returns for the aggressive investor.
‘With cover’ and ‘without cover’ plans
Pension plans are also classified as ‘with cover’ and without cover’ plans. The ‘with cover’ pension plans offer an assured life cover (i.e. sum assured) in case of an eventuality.
Under the ‘without cover’ pension plan, the corpus built till date (net of deductions like expenses and premiums unpaid) is given out to the nominees in case of an eventuality. There is no sum assured in this case.
‘Immediate annuity’ plans and ‘Deferred annuity’ plans
Pension plans are also classified as ‘immediate annuity’ plans and ‘deferred annuity’ plans. In case of immediate annuity plans, the annuity/pension commences within one year of having paid the premium (which is usually a one-time premium).
The premium paid for the immediate annuity policy is also known as the purchase price. Currently in India, very few life insurance companies offer immediate annuity plans. LIC’s Jeevan Akshay II is an example of an immediate annuity pension plan.
In case of deferred annuity, the annuity/pension does not commence immediately; it is ‘deferred’ up to a time, which is decided upon by the policyholder. For example, if an individual buys a pension plan with tenure of 30 years (also known as the ‘deferment period’), then his annuity will begin 30 years hence.
Deferred annuity premiums can be paid as a ‘single premium’ or as regular premium. Presently, most pension plans available are deferred annuity plans.
Possibility Related Posts:
Tags: Business, Financial Services, India, Individual, insurance, Life annuity, Pension, Retirement