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INTRODUCTION Pension plans are available in the market wherein the individual can
choose between the options of taking a pension plan with life insurance
cover inbuilt or just take a pension plan without a life cover built
into it. Pension plans are structured to take care of the financial
needs of an individual after he reaches an age where he no longer wants
to continue to work.
STEPS OF THIS PLAN
The Accumulation / Contribution Phase This is the phase when the individual is contributing to the policy fund
to be able to build up the corpus of the policy. This commences from the
date of taking of the policy and lasts upto the vesting date. In this
period the insured just pays the policy premium every year according to
his desired mode of payment of premium.
The Vesting Date This is the age at which the insured wishes to stop contributing the
premium and decides to buy an annuity with the accumulated funds. At this stage the insured has the option of switching his corpus to any
insurer who manages annuities and choose the annuity plan according to
his choice. At this stage the policy holder can also commute 1/3rd of the total
corpus as tax free commutation withdrawal.
The Annuity Stage This is the stage when the insured has purchased his annuity & gets a
regular income from the annuity fund according to the plan of annuity
which he has chosen. The fund continues to earn interest even at this stage. The fund can also be assigned in favour of the spouse till the lifetime
of the spouse depending on the option of annuity chosen.
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