The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
As a member of the HR team of an organization, I wanted to know if there 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 basic salary of the employee towards this fund. The employee can also make voluntary contributions into the superannuation fund. Now investment up to Rs100,000 per annum in group superannuation schemes by employers for each employee is exempt from fringe benefit tax.
I have bought a life insurance endowment policy and one term plan. I am earning close to Rs3,500,000 per annum. How can I estimate the correct amount of life insurance for me?
Insurance needs are specific to each individual, depending on his financial responsibilities and liabilities both pre- as well as post-retirement. Many experts recommend that one should purchase insurance worth five to 10 times the current annual income. This is an old thumb rule that does not take into consideration current assets and any special needs the customer or their family may have.
Are charges for unit-linked products clearly displayed on insurance companies’ websites/sales literature?
All costs for unit-linked products are mentioned upfront in the policy documents, websites as well as product brochures. The costs attached to different policies vary. Some of the expense heads include fund management charge, mortality charges, administration charge, surrender charge and processing fee on partial withdrawals and reinstatements.
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.