To help readers keep ahead of developments in this business,Mint features a Q&A on insurance every Monday.
What is a group pension scheme? Do life insurance companies offer such a scheme?
A group pension scheme is a product which an employer sets up for the benefit of his employees. All staff can become members of the same scheme. Most life insurance companies offer group superannuation products.
A well-structured group superannuation plan helps to create an irrevocable fund during the working lifetime of the employees for their pension benefits after retirement.
The employer can make a contribution of up to 15% of the basic salary of the employee towards this fund. The employee can also make voluntary contributions to the superannuation fund.
Now, investment up to Rs1 lakh per annum in group superannuation schemes by employers for each employee is exempt from fringe benefit tax.
I have invested in a unit-linked insurance plan (Ulip). With the current fluctuations in the stock market, do you think I should switch to a secure fund, or move over to traditional plans?
The advantage Ulips have is that they are long-term investment products as opposed to most other financial products, which are short-term innature.
Market fluctuations do not have an impact on long-term investments as these can be controlled for the investors in the long run.
If we review the historical data for the Bombay Stock Exchange’s benchmark index, Sensex, it can clearly be seen that probability of loss reduces if you have invested for a long term.
How often should I update my life insurance?
It is advisable to periodically review your insurance portfolio—especially after a major event in life—to ensure it continues to provide the protection you need.
Over a period of time, your investment needs also undergo a change.
I am looking at buying a life insurance policy. The agent who has approached me has given me a lot of forms to fill. What are the things I need to keep in mind when filling in the details?
Life insurance is a very serious business and you need to be careful when filling in details in the insurance form. Any misleading or incorrect information can result in your claim being rejected in future. You need to ensure that you fill in the form yourself and are completely honest in entering details regarding health, income and family background. These help the underwriters to determine the medical tests you need to undergo and calculate the policy premium.
Readers are welcome to write in with their queries to firstname.lastname@example.org. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Bert Paterson, managing director, Aviva India.