Money Matters

Money Matters
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First Published: Sun, Feb 08 2009. 09 32 PM IST

Updated: Sun, Feb 08 2009. 09 32 PM IST
The premiums of my two life insurance policies are due in January every year. Can I shift the premium due date? Or can I pay the premium in advance?
Life insurance policies, once issued, have to be renewed by paying premiums periodically. The interval at which the premium is to be paid is determined at the time of issue of policy. Therefore, it is not possible to shift the due date of payment of premium under a life insurance policy after the commencement of the policy. Life insurance companies, however, give a grace period of 30 days for depositing the premium after the due date without charging interest.
You can pay the premium before the due date also. But since the payment will be made without the issue of renewal notice, please ensure that you quote the policy particulars so that your premium is credited correctly to your policy account.
I am 34 and my monthly salary is Rs28,000. Which pension plan should I take? I plan to retire between 45 and 50. How much should I invest in the plan to create a retirement corpus?
As you plan to retire between 45 and 50 years of age, you have effectively 10-15 earning years remaining. Since you intend to retire early, you will need to contribute the maximum amount possible in pension plans. There are basically two kinds of pension plans—endowment and unit-linked. In an endowment plan, you will contribute a fixed sum annually for the chosen tenure, which shall then be invested in a combination of various fixed income products as per the policy.
Unit-linked insurance plans (Ulips) invest primarily in the stock market, that is, in equity. Lower-risk options such as balanced and debt funds are also offered. You can choose from between different funds or a mix. Ulips also have an option that allows you to stop contributing after, say, 10 years, and the fund keeps compounding your corpus till the vesting date. An equity Ulip pension plan has the potential of giving good returns, but it’s also risky. Though insurers may try to sell you a life cover bundled with your pension plan, stay with your pure term policy and buy a pure pension plan as it will maximize your post-retirement benefits. Select a fund that gives the maximum maturity value. The ultimate value of your pension fund corpus will depend on initial costs, fund management and market performance.
What is a double accident life insurance policy? How can one get the benefits of double accident in the existing policy?
Double accident benefit in a life insurance policy provides for the payment of an additional amount equal to the sum assured in case of the death of a policyholder owing to an accident. The death claim under the double accident benefit becomes double the normal sum insured. If, owing to an accident, a permanent and total disability occurs to the life assured, all subsequent premiums are waived off and the policy is still kept in full force.
You can opt for double accident benefit by paying an additional premium payment of only Re1 a year against an assured sum of Rs1,000 (this can vary with different insurers). Some additional benefits are also given in case of partial and total disability. This, too, varies for different life insurers. For example, the life insurer will pay the policyholder an additional amount equal to the original sum assured through monthly instalments spread over 10 years. When the policy matures, the sum assured and the accumulated bonus amount is payable as well. To be eligible for this benefit, the policy should be in full force for the full sum assured before the policy anniversary and the life assured must not be over 70.
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First Published: Sun, Feb 08 2009. 09 32 PM IST