Conventional Plans

Conventional Plans

1. Pension Plans
   

Retirement is a natural progression and only if you are financially secure during these years can you hope to live a comfortable retired life. Pension plans are designed to accumulate your savings during your earning years and thereafter provide you with a regular income after retirement so that you don't have to depend on your children or society.

Further, the premium payment in the case of pension plans can be made as recurring payments for a fixed period of time (regular premium) or once as a lump sum (single premium). Either way, the amount and returns thereon are cumulated and paid out to the policy holder at the retirement date as a lump sum. Part of this lump sum is then used to purchase an annuity which provides post retirement income

Benefits:

• These plans are flexible as they allow you to choose your investment period, the premium amount and the premium frequency.
  
• Reversionary bonuses are usually declared by the insurance company annually and once declared are guaranteed.
  
• There are tax benefits under various sections of the Income Tax Act, 1961. A deduction is available from the total income up to Rs 1 lakh under section 80 CCC and 80 C.
  

2. Money Back Plans

When you plan for your future, ideally you should set out with specific goals and these should have costs and deadlines attached to them. Once this is done, money back plans provide an excellent vehicle to take you to the fulfillment of these goals.

Money-back plans are insurance products which pay out pre-defined benefits at periodic times during the entire term of the policy. For instance, in a money-back plan with a 20 year term, 25 per cent of the sum assured could be paid out after every five years (i.e., at the end of the 5th, 10th and 15th year) and the remaining 25 per cent of the sum assured along with the bonus, if any, would be paid out at the end of the 20th year. However, in the case of the unfortunate death of the insured person, the total sum assured (100%) and bonuses will be paid.

Benefits:

• Since a part of the sum assured is received periodically, this plan combines short term financial goals with long term savings and insurance.
  
• Tax benefits under Section 80C are applicable on the premium paid.
  
• The periodic lump sums as well as maturity amount is tax free.
  

3. Children's Plans

Your children are your pride and joy and you would like them to have the best that money can buy. And with a sound financial plan, you can make sure that the materializing of their dreams is not hindered for want of funds. Children's insurance policies and products are designed with this specific aim in mind.

These plans set out to secure you financially against the back drop of constraints such as inflation and the rising cost of education. They help you to fund various aspirations like an overseas education, extra curricular activities, sports training, supplementary vocational education, marriage celebrations, etc. by providing a lump sum amount at a specified future date.

An additional feature offered by children's plans is that they continue to offer financial protection even in the event of the loss of the premium paying parent. This ensures that the amount envisaged is actually delivered even in the event of unforeseen eventualities.

Benefits:

• Children's insurance plans enable the parents to save money for child's future without any disturbance to the family budget. This is because the premiums can be chosen to suit the parent's convenience.
  
• There are a number of options and customized products to choose from for the child's future.
  
• Reversionary bonuses are usually declared by the insurance company annually and once declared are guaranteed.
  
• Tax benefits under Section 80C are applicable on the premium paid.
  
• Certain plan options also allow the plan to continue after demise of insured parent and the insurance company continues paying the premium.
  

4. Endowment Plans

Life is full of risks – both financial and non financial. While it is difficult to eliminate the non- financial risks, insurance helps you to minimize the financial ones. Endowment plans are one such product. They ensure that you receive an assured amount at the end of the policy term plus bonuses, if any. If, due to unfortunate circumstances, the insured person expires during the term of the policy, the sum assured and bonuses go to the nominee. Endowment plans can be taken in the name of minors too.

Benefits:

• This plan helps one plan for the future of their loved ones and rest assured that finances will not be an obstacle, even in case of the insured persons demise.
  
• Reversionary bonuses are usually declared by the insurance company annually and once declared are guaranteed.
  
• Tax benefits under Section 80C are applicable on the premium paid.
  

5. Term Plans

As the breadwinner of the family, even the best financial plan that you create can go out of gear if you are not around to meet the financial commitments it entails. With term plans, you can be sure that in the event of your unfortunate demise your family will be compensated for the financial loss to the extent that you see fit.

Term Assurance Plans are those plans where the sum assured is paid out only if the insured person dies. There is no maturity benefit under these plans. Due to this feature, the premium amount is relatively low.

The premium can be paid regularly or even in a lump sum, according to the design of the plan. Such policies can be taken either on a single basis or on joint basis.

Benefits:

• These plans are ideal for individuals who have dependents to be taken care of. In the unfortunate event of the insured person's death, the dependents are left financially secure.
  
• The premium for such plans is very low, especially if the insured in young.
  
• The plan can be topped up with add additional features (known as riders), such as accident death cover or critical illness cover.
  
• There are tax benefits for the insured person.
  

6. Whole Life Plans

Insurance has become a necessity, particularly in India where most families are dependent on a single earning individual. Further, since there is no social security available in India, the financial interests of the family have to be protected through other sources. Whole life insurance policies are designed to provide lump sum payments to a family in the event of the death of the insured person.

Unlike term insurance, a whole life insurance policy covers you for your entire life and not just for a specific period of time.

Benefits:

• The policy stays in force as long as the insured individual continues to live and benefits remain constant during the entire coverage period of the policy.
  
• There is no need to undergo future medical examination once the policy is in force.
  
• There is also an element of tax-saving in these policies.