How do I invest in a pension plan of a life insurance company and how should I decide on the annuity?

Gurinder Singh

Currently, insurers are recalibrating pension products (categorised as products that have the mandatory annuitisation feature) in their portfolio to conform to new Irda guidelines.

As per the new guidelines, at the time of vesting, policyholders will have to buy annuity from the insurer they purchased the pension plan from. The choice to switch to an insurer offering better rates at vesting is not available. In such a situation, it becomes crucial to evaluate the insurer from whom you choose to buy the pension product.

Consider its track record in managing money, customer service history, charges and fees being levied, etc. Also bear in mind that the annuity rates offered now need not be the same that will be offered when it is your turn to purchase annuities.

After the Budget, does it still make sense to invest in Ulips?

Sunder Subramanian

Yes, it does. The appeal of Ulip lies in its nature, which combines protection, tax benefits and market-linked returns. This enables the investor to benefit from India?s economic growth story, while keeping his tax outflows lower and financially protecting his loved ones from life?s uncertainties.

Over the longer term, there is perhaps no comparable financial product which offers such value.

Budget 2012-13 proposes to increase service tax from 10 to 12% on those components in a premium that are taxable, such as fund management, premium allocation, mortality and administration charges.

While this will impact premiums slightly, the value proposition of Ulips remain as strong as ever.

Can I take a joint term plan ? (for self and my wife) and how is it better than taking one only on my own name?

Ram Sehgal

Joint covers normally come with reduced mortality charges and you could find such plans in the traditional and Ulip variety. However, if you are looking specifically for term plans, it is recommended that both of you opt for term plans individually and with spouse as the nominee.

Annual premiums will depend on factors such as age, health status, etc.

Some life insurers offer special discounted rates for non-tobacco users, women, etc; hence, a comparative study between features of term plans offered by different insurance companies is recommended.

*The author is executive vice-president, Kotak Mahindra Old Mutual Life Insurance

* Send your queries at fepersonalfinance@expressindia.com