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.
I am part of the human resources (HR) team of an organization, I want 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 employees. All staff can be members. 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 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 investments up to Rs1 lakh per annum in group superannuation schemes by employers for each employee are exempt from fringe benefit tax.
I have bought a life insurance endowment policy and a term plan. I earn close to Rs35 lakh a year. How can I estimate the correct amount of life insurance for me?
Insurance needs are specific, depending on financial responsibilities and liabilities both pre- and post-retirement.
Many recommend purchasing insurance worth 5-10 times the current annual income. This old thumb rule does not take into consideration current assets and special needs of customers or their families.
Are unit-linked product charges clearly displayed on insurance firm 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: 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 email@example.com. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Bert Paterson, managing director and CEO, Aviva India.