It's hard to think about retiring when it seems so far away. But time flies and before you know it you'll be hanging up your boots.
So start putting away something so that you can enjoy your retired life playing with your grandchildren. Especially when the government is encouraging you to do so by giving you a tax-break.
| HOW YOUR PREMIA WILL GROW Policy with cover for a 35-year male for a 25-year term | |||
| Premium (Rs) | Benefit offered (Rs) | Value of investment (Rs) | |
| @6% | @10% | ||
| 10,000 | 2,90,000 | 3,95,200 | 7,20,300 |
| 15,000 | 4,35,000 | 5,92,900 | 10,80,500 |
| 20,000 | 5,80,000 | 7,90,500 | 14,40,700 |
For instance, you could check out the Kotak Retirement Income Plan (unit-linked). If you invest, say, Rs 10,000 in this scheme, this amount is deducted from your income under section 80C of the Income Tax Act.
You can, of course, put in larger amounts, the ceiling being Rs 1 lakh in a year. If you are paying tax at the rate of 30 per cent, your tax liability will come down by Rs 3,000 on an investment of Rs 10,000. On maturity, the amount you receive is tax-free.
Persons aged between 18 and 45 years can invest in this plan. The scheme combines a term insurance with an investment plan and you can choose from three options: with cover, without cover and single premium.
The first option gives you the protection of a term insurance - it means that in the event of your death, your family will receive either the sum assured or the value of the units (investments) in the main account - whichever is higher - plus the value of units in the supplementary account.
To give you an idea, if you are 35 years old and put in a premium of Rs 10,000 every year for 25 years, the sum assured will be around Rs 2,90,000. This is the minimum that your family will receive. Your family can also choose to purchase an annuity for the amount.
| WHAT CHARGES YOU PAY | |
| Age |
35 |
| Term | 25 years |
| Sum assured | Rs 2,90,000 |
| Fund | Balanced |
| Plan | Unit-linked (with cover) |
| Premium | Rs 10,034 |
| Sales charges | Rs 1,316.96 (13 per cent in the first year, 2.8 per cent in subsequent years) |
| Offer spread | Rs 21.80 - gilt fund (0.10 per cent), bond (0.22 per cent),FRF* (0.22 per cent), balanced (0.5 per cent), MMF** (0.01 per cent) |
| Administrative charges | Rs 1,304.40 (13 per cent for premium upto Rs 20,000 per annum; in excess of that it would be 3 per cent for the first year. For subsequent years: 8 per cent upto Rs 20,000 and Rs 2000 in excess of that |
| Underwriting charge | Rs 580 (depending on the age of the individual) |
| Mortality | Rs 469.34 (the mortality charge is equal to the basic sum assured less premia due for the balance tenure less investment value of units multiplied by the mortality charge for your age |
| Fund management charges | Rs 88.37 - gilt fund (1 per cent), bond (1.2 per cent), FRF (1.2 per cent), balanced (1.3 per cent), MMF (0.6 per cent) |
| Total charges | Rs 3,780.37 |
| As a percentage of the premium, the charges work out to 37.6 per cent in the first year. In the second year, the charges come down to around 17 per cent and further down in subsequent years. * FRF - Floating rate fund ** MMF - Money market fund | |
When you retire you will receive one third of the total amount (either the sum assured or the value of your units in the main account -- whichever is higher) plus the value of units in the supplementary account as cash.
For the remaining two-thirds you can buy annuities from either Kotak or any other insurer.
For the second option, without cover, there is no benefit to the family in the event of your death. When you retire you receive the value of units in the main unit and in the supplementary units.
This amounts to investing in a mutual fund; so it's a better idea to opt for an equity-linked savings scheme where the charges will be lower.
There is also a single premium option where you pay Rs 50,000. In the event of your death your family gets a sum assured of 102 per cent of the premium amount or the value of units in the main account -- whichever is higher -- plus the value of units in the supplementary account.
The premium that you pay, after deducting all the expenses, is invested in an investment fund. You can choose from one of the following funds based on your risk appetite:
|
PLAN FEATURES Retirement options Premium Value additions Surrender value |
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