I want to invest in pension plans that give regular payouts after retirement. Which are the plans I should look at?

Santosh Kumar

Most insurance companies are recalibrating their pension plans or deferred annuity products as they are called to conform to the new pension guidelines. Such products accumulate money over the chosen term and, at vesting, pay out one-third and invest the remaining two-third for annuity.

However, if you intend to invest immediately in an annuity product, you could select from a variety of options. Based on your need, you could choose the ?lifetime annuity? option that gives a pension payout throughout your life. You could also opt for either ?with refund? or ?without refund? of purchase price. In the former, one gets monthly annuity during lifetime, and, on death, the family gets back the purchase price, viz., the amount invested in purchasing annuity. The latter offers no such refund but gives out a higher monthly annuity payout. Compare competing products and buy the one that gives the highest monthly annuity.

If I buy a term insurance policy for my wife now, can its premium change in the future?

Kamaljit Singh

Under normal circumstances, the premium is locked in at the policy commencement stage. Assuming all disclosures are in order, there is no reason for the premium to change. Some term policies offer a step-up option wherein one can increase the sum assured in between the policy term to reflect changed life circumstances, in which case the premiums increase commensurate to the increase in sum assured, but calculated at original prices.

I have taken a term policy as a non-smoker three years before. But since the last year, I have been smoking. Do I have to disclose it now to the insurer and will my premium change?

Ramu Kumar

In a regular term plan, the insurer would have factored in all possible risks while calculating the premium at the time of policy issuance. In such cases, it may not be required. However, if you have availed a special non-smoker rate, you would have signed a declaration on your non-intention to smoke even in the future. In such a case, go back and declare the change in your smoking status. Even otherwise, refer to the terms and conditions of your individual policy contract, as there could be specific clauses in the policy.

Is it advisable to take two term policies from two insurance companies to spread the risk?

Santosh Tiwari

Assuming that all your disclosures are correct and documentation is in place, there is no reason to fear that your claim will be repudiated. All insurers are governed by well laid down norms from which there is no scope of deviation. Term products are pure risk products where the sole differentiator is price. Compare suitable offerings across insurers and go for the one that is cheapest.

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

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