INSURANCE

Insurance is a legal agreement between two parties i.e. the insurance company
(insurer) and the individual (insured). In this, the insurance company promises
to make good the losses of the insured on happening of the insured contingency.
The contingency is the event which causes a loss. It can be the death of the
policyholder or damage/destruction of the property.

The insurer and the insured get a legal contract for the insurance, which is
called the insurance policy. The insurance policy has details about the
conditions and circumstances under which the insurance company will pay out
the insurance amount to either the insured person or the nominees. Insurance is
a way of protecting our self and our family from a financial loss. Generally, the
premium for a big insurance cover is much lesser in terms of money paid.

There are two types of insurance available in India namely, Life Insurance and
General Insurance.

1. LIFE INSURANCE :

Life insurance is a contract that offers financial compensation in case of death

or disability. Some life insurance policies even offer financial compensation
after retirement or a certain period of time.

Life insurance not only ensures the well-being of our family, it also brings tax
benefits. The amount we pay as premium can be deducted from our total taxable
income.

Life insurance can be classified into various types :

 Term Insurance :

Term insurance is a type of life insurance policy that provides coverage for a

certain period of time or a specified "term" of years. If the insured dies during
the time period specified in the policy and the policy is active, or in force,
a death benefit will be paid. Term insurance is initially much less expensive
when compared to permanent life insurance.
  Whole life Insurance :

A whole life insurance policy or permanent life insurance provides life coverage
until the death of the life assured. The policy stays in force throughout the life
as long as the life assured pays the premium. The sum assured or the coverage is
decided at the time of policy purchase and is paid to the nominee at the time of
death claim – when the life assured dies. Usually, the maturity age is 100 years.
If the life assured dies before the age of 100 years, the nominee receives the
sum assured. However, if the life assured outlives the age of 100 years, the
insurance company pays the matured endowment coverage to the life insured.

 Endowment policy :

Endowment policy is a life insurance policy which provides you with a

combination of both i.e.: an insurance cover, as well as a savings plan. It helps
in saving regularly over a specific period of time, so that the policyholder are
able to get a lump sum amount on policy maturity, if the policyholder survives
the policy term. The policyholder gets his/her sum assured on a fixed date in
future as per the policy terms and conditions. However, in case of sudden death
of the policyholder, the insurance company will pay the sum assured (plus the
bonus, if any) to the nominee of the policy. 

 Money-back policy :

A money-back policy is a policy which gives money-back at regular intervals.

This money-back is paid during the plan tenure and is a percentage of the Sum
Assured. Money-back pay-outs are called Survival Benefits. These benefits are
paid during the plan tenure and on maturity, the remaining Sum Assured is paid
along with vested bonuses. However, if the insured dies during the plan tenure,
the full Sum Assured is paid irrespective of the Survival Benefits already paid.
This is what makes the plan unique.

 Unit-linked Insurance plans :

Unit Linked Insurance Plan (ULIP) is a mix of insurance along with investment.
From a ULIP, the goal is to provide wealth creation along with life cover where
the insurance company puts a portion of the investment towards life insurance
and rest into a fund that is based on equity or debt or both and matches with the
policyholder’s long-term goals. These goals could be retirement planning,
children’s education or another important event.

 Child plans :

A Child plan is an insurance option to meet the financial needs of a child. The
insurance component is designed to protect the child and help them for their
futuristic needs.

 Retirement and Pension plans :

Retirement policies or pension plans provided by life insurance companies

qualify for tax deduction for the premiums paid. The policyholder can get
annual deduction from total income of up to Rs.1.5 lakh under Section 80CCC
of the Income-tax Act, 1961.

2.GENERAL INSURANCE :

A general insurance is a contract that offers financial compensation on any loss

other than death. It insures everything apart from life. A general insurance
compensates us for financial loss due to liabilities related to our house, vehicle,
health and travel. The insurance company promises to pay us a sum assured to
cover damages to our vehicle, medical treatments to cure health problems,
losses due to theft or fire, or even financial problems during travel.

The various types of general insurance are as follows :

 Health Insurance :

Health insurance is a type of insurance coverage that pays for medical, surgical,
and sometimes dental expenses incurred by the insured. Health insurance can
reimburse the insured for expenses incurred from illness or injury, or pay the
care provider directly.
  Motor Insurance :

Motor insurance is the insurance policy for vehicles.  It could include Car
Insurance and Two-Wheeler Insurance. Vehicles that are used for commercial
purposes, like buses and trucks, are covered by Commercial Vehicle Insurance.
Motor insurance is mandatory in India. It is compulsory to buy auto insurance
when you purchase a vehicle.

 Travel Insurance :

Travel insurance is insurance coverage for risks associated with traveling such

as loss of luggage, delays, and death or injury while in a foreign country. Travel
insurance can usually be arranged at the time of the booking of a trip to cover
exactly the duration of that trip, or a multi-trip policy can cover an unlimited
number of trips within a set time frame.

 Home Insurance :

Home insurance is a type of property insurance that covers a private residence.

It is an insurance policy that combines various personal insurance protections,
which can include losses occurring to one's home, its contents, loss of use
(additional living expenses), or loss of other personal possessions of the
homeowner, as well as liability insurance for accidents that may happen at the
home or at the hands of the homeowner within the policy territory.

 Fire Insurance :

Fire insurance is property insurance that covers damage and losses caused by

fire. The purchase of fire insurance in addition to homeowners or property
insurance helps to cover the cost of replacement, repair, or reconstruction of
property, above the limit set by the property insurance policy. Fire insurance
policies typically contain general exclusions, such as war, nuclear risks.
 SCHEMES THAT ARE MADE AVAILABLE FOR THE
RETIREMENT BENEFITS IN INDIA

Retirement benefits are provided to retired government officials to ensure a

regular income and a secure future. Retirement benefits are benefits payable to
the member of the pension scheme on retirement or earlier withdrawal from
service, including retirement pensions; retirement lump sums or gratuities;
benefits payable following the member’s death in retirement.

Along with these retirement benefits, senior citizens are also entitled to pension
benefits that allow them to live a hassle free life after completion of their job
tenure.

The various retirement benefits that are made available for the working sector
are as follows :

PENSION :

The minimum eligibility period for receipt of pension is 10 years. An employee

retiring in accordance with the Pension Rules is entitled to receive pension on
completion of at least 10 years of qualifying service.

In the case of family pension the widow is eligible to receive family pension on
death of her spouse after completion of one year of continuous service or even
before completion of one year if the Government servant had been examined by
the appropriate Medical Authority and declared fit for the service.

There are various pension benefits offered to the working sector of India. They
are namely,

1.Superannuation pension :

Superannuation pension is meant for those government officials who retire at

the age of 60 years.

2.Voluntary pension :

Voluntary pension is awarded to those who wish to retire three months in

advance after completing 20 years of service.
3.Extraordinary pension :

Extraordinary pension is another pension scheme that is awarded to those

government employees who are disabled or the families of those employees
who lose their lives during the tenure of their job.

GRATUITY :

Gratuity is given by the employer to their employee for the services rendered by
him/her during the period of employment. It is usually paid at the time of
retirement but it can be paid before provided certain conditions are met.
Gratuity is calculated on the basis of years of service and last drawn salary

A person is eligible to receive the gratuity only if he/she has completed

minimum five years of service in the organisation. At times gratuity can also be
paid before the completion of five years in case of death and other uncertainties.

There are various types of gratuity benefits in India they are as follows :

1.Retirement gratuity :

This is payable to the retiring employee. A minimum of 5 years qualifying

service and eligibility to receive service gratuity is essential to get this one time
lump sum benefit.

2.Death gratuity :

This is a one-time lump sum benefit payable to the nominee or family member
of a employee dying in harness.

3.Service gratuity :

A retiring employee will be entitled to receive service gratuity if total qualifying

service is less than 10 years.

PROVIDENT FUND :

A provident fund is a compulsory, government managed retirement savings

scheme used in our country. Workers give a portion of their salaries to the
provident fund and the employers contribute those on behalf of their employees.
The money in the fund is then held and managed by the government, and
eventually withdrawn by retirees.

It has different accounts, as the General Provident Fund (GPF), Public

Provident Fund (PPF) and Employee Provident Fund (EPF) which have
differences in eligibility and maturity periods.

1.General Provident Fund :

General Provident Fund (GPF) is available only for the government employees
in India. It allows all the government employees to contribute a certain
percentage of their salary to the GPF and the total that is accumulated
throughout the employment term paid to the employee at the time of retirement.

2.Public Provident Fund :

The Central Government has established the public provident fund where any
member, either salaried or a businessman shall participate by opening a PF
account at the nationalised banks or post offices. PPF is a voluntary investment
scheme that is open to all Indian citizens

Any amount subjected to a minimum of Rs.500 and maximum of Rs.1,50,000

per annum may be deposited under this PF account, on which a certain sum of
Interest is credited every year, which could be  repayable after 15 years.

3.Employee Provident Fund :

Under Employee Provident Fund (EPF) scheme, an employee has to pay a

certain contribution towards the scheme and an equal contribution is paid by the
employer. The employee gets a lump sum amount including self and employer’s
contribution with interest on both, on retirement.

As per the rules in EPF, employee whose pay is more than Rs.15,000 per month
at the time of joining, is not eligible and is called non-eligible employee.
Employees drawing less than Rs.15000 per month have to mandatorily become
members of the EPF.
EMPLOYEE’S STATE INSURANCE :

The ESI scheme operates under the guidelines of the ESI Act, 1948 and is
managed by the Employee’s state insurance corporation which is an
autonomous body under the Ministry of Labour and Employment. The ESI
scheme is meant for workers earning equal to or less than Rs.21,000 per month.
Under this scheme, the following benefits are provided :

1. Medical benefit

2. Maternity benefit

3. Sickness benefit

4. Pension benefit

5. Dependent benefit

6. Disablement benefit

7. Funeral and confinement expenses

LEAVE ENCASHMENT AT THE TIME OF RETIREMENT :

Encashment of leave is a benefit granted under the leave rules. Encashment of

earned leave or half pay leave standing at the credit of the retiring government
servant is admissible on the date of retirement subject to a maximum of 300
days.

Leave encashment received at the time of either retirement is either fully or

partially exempt depending upon the category that an employee falls under. This
has been stated below :

1. Leave encashment received by Central or State Government employee at

the time of  retirement or resignation is fully exempt
2. Leave encashment received by legal heirs of deceased employee is fully
exempt
3. Leave encashment received by Non-Government employee is exempt
based on the computation provided under Section 10(10AA)(ii) and
balance amount if any is taxable as ‘income from salary’.
POST OFFICE SAVINGS SCHEMES :

India Post offers numerous types of savings instruments for customers to choose
from based on their needs. The savings account with India Post can be opened
with cash payments. The account offers tax benefits for interest amount up to
Rs.10,000. 

The post offices of India offer the following saving schemes for the retirement
benefits :

1.Senior Citizen Savings Scheme :

Senior citizen savings scheme is one of the most popular investment tools,
designed for the senior citizens residing in India. Senior citizen savings scheme
ensures a regular income even after retirement. The rate of interests is also at
the higher side.
 INSURANCE SCHEMES THAT ARE MADE AVAILABLE FOR THE
RETIREMENT BENEFITS IN INDIA

LIFE INSURANCE CORPORATION OF INDIA (LIC) :

1.LIC Pension Plans :

 Jeevan Akshay VI :

LIC Jeevan Akshay VI is an immediate annuity pension plan, which can

purchased by paying a lump sum amount. The plan provides for annuity
payments of a stated amount though out the life time of the annuitant.

 New Jeevan Nidhi Plan :

LIC's Jeevan Nidhi is a with profits Deferred Annuity (Pension) plan. On

survival of the policyholder beyond term of the policy the accumulated amount
(i.e. Sum Assured + Guaranteed Additions + Bonuses) is used to generate a
pension (annuity) for the policyholder. The plan also provides a risk cover
during the deferment period. The USP of the plan being the pension can
commence at 40 years. The premiums paid are exempt under Section 80ccc of
Income Tax Act.

 Jeevan Shanti :

This is a single premium plan wherein the Policyholder has an option to choose
an Immediate or Deferred annuity. The annuity rates are guaranteed at the
inception of the policy for both Immediate and Deferred Annuity and annuities
are payable throughout the life time of Annuitants.

 Pradhan Mantri Vaya Vandana Yojana :

The Plan provides immediate pension for senior citizens of 60 years and above.
It can be purchased by paying a lump sum amount . The plan provides for
pension payments of stated amount for the policy term of 10 years, with return
of purchase price at the end of 10 years. Pension will be paid at the end of each
period as per payment mode chosen starts as early as next month if monthly
mode is chosen. On the death of the pensioner at any time during the term of 10
years, the purchase price will be refunded to the legal heirs/nominees.

HDFC LIFE INSURANCE :

1.HDFC Retirement Plans :

 HDFC Life guaranteed pension plan :

HDFC Life Guaranteed Pension is a participating deferred pension plan that

provides the policyholder assured benefits on vesting or at death. The policy
provides guaranteed additions on an annual basis and a lump sum vesting
addition at the time of maturity. Individuals who seek guaranteed returns on
their investments toward the retirement corpus can greatly benefit from this
plan. The customer has the flexibility to select a premium payment term of 5, 7,
or 10 years, and a policy term ranging from 10 to 20 years.

 HDFC Life assured pension plan – ULIP :

HDFC Life Assured Pension Plan - ULIP is a unit linked plan offered by HDFC
Life that provides returns linked to the market, along with loyalty additions. The
plan is optimum for helping the retirement goals of the employees. HDFC Life
offers the advantages of equity participation with a capital guarantee. The
loyalty additions available as part of the plan are in the form of Pension
Multipliers that are offered every alternate year, starting from the 11th year. The
plan provides the option to start as early as 18 years of age. Single pay and
limited pay options are available for premium payment.

 HDFC Life pension super plus :

HDFC Life pension super plus plan is a unit-linked pension plan which offers
guaranteed death benefit and a minimum maturity benefit. By definition, a
ULIP offers both insurance and investment opportunity. It is relevant to those
who want to build a retirement corpus while being insured during the policy
term. The policy term is 10, 15 and 20 years and the plan is available to all in
the age range of 35-65 years. The maturity age range is between 55-75 years.

 HDFC Life single premium pension super plan :

HDFC Life single premium pension super plan is a Single Premium Unit
Linked Deferred Annuity Plan or Pension Plan. Thus, it is a Non-Traditional
Insurance Plan without Bonus facility. In this plan, premium needs to be paid in
a lump sum while the policy continues for the entire policy tenure of 10 years.
The premium paid, net of charges, is invested in Pension Fund. At the end of
the policy term, the higher of Fund Value or 101% of single premium +Top Up
(if any) is accumulated as Maturity Benefit.

 HDFC Life personal pension plus :

HDFC Life personal pension plus is a participating pension plan that is offered
to customers who are looking to plan ahead for their retirement. Purchasing this
policy assures stable and secure returns on the investment and will serve as post
retirement income. This policy allows the policyholder to choose their
investment term, anywhere between 10 and 40 years. The plan can be purchased
on a single life basis only, with monthly, quarterly, half-yearly, or annual
premium frequencies. The policyholders can also enjoy tax benefits for the
premiums paid.

MAX LIFE INSURANCE :

1.Max Life Retirement Plans :

 Max Life forever young pension plan :

Max life forever young pension plan is a unit linked pension plan which takes
care of income inflows post retirement and ensures good annuity rates through
participation in capital markets and also promises guaranteed returns in case to
protect against market volatility. In this plan guaranteed additions are added
from the end of the 10th year and it increases every subsequent year.

 Max Life guaranteed lifetime income plan :

Max life guaranteed lifetime income plan is an immediate annuity plan which
provides regular cash inflows after retirement to take care of the expenses faced
by the policyholder. It is an immediate annuity plan with single premium
option where the annuity starts immediately after premium payment from the
next chosen date.

 Max Life life perfect partner super plan :

Max Life life perfect partner super plan is a traditional savings plan which gives
out a guaranteed maturity benefit. Despite being a traditional plan, the plan
allows liquidity wherein the accumulated bonuses can be withdrawn by the
policyholder for any financial emergencies. Premium payment is flexible and
bonus additions can also be used in flexible ways. The coverage is extended till
the age of 75 years, survival benefits are paid every year after reaching the age
of 61.

SBI LIFE INSURANCE :

1.SBI Life Retirement Pension Plans :

 SBI Life – Saral Pension scheme :

SBI Life Saral pension scheme is a pension plan which allows the employee to
take care of their post retirement financial needs through substantial life cover
and bonus options. On maturity, the sum assured with accrued simple
reversionary bonus and terminal bonus is paid in the form of annuity
immediately.

 SBI Life – Retire Smart :

The retire smart by SBI Life a non-participating unit linked pure pension plan
by SBI, which offers guaranteed returns to the policyholders. Through this plan,
they can get the benefits of investing and savings both at the same time for a
small premium amount. A minimum of 105% of all premiums paid is
guaranteed on earlier death.

 SBI Life – Annuity Plus :

SBI Life - Annuity Plus Plan is an immediate annuity, non-participating, non-

linked plan that offers a wide range of annuity options that are readily available
for customers of SBI Life Insurance. Under this plan, a policyholder will be
required to make a one-time payment towards the premium paid to immediately
avail an annuity for a single or for two lives. This plan works best for people
who are 40 years old and above as this plan acts as a pension that is paid
depending on the mode of payment that you have selected which could be
monthly, quarterly, half-yearly, and yearly.

ICICI PRUDENTIAL LIFE INSURANCE :

1.ICICI Pension / Retirement Plans :

 ICICI Pru easy retirement :

ICICI prudential easy retirement plan is a unit-linked insurance plan, designed

to take care of post retirement income. The product helps to build the corpus as
per policy holder risk appetite, the policyholder pays the premium for maximum
10 years, and reap the benefits during the income phase, through any of the
vesting age option. It also takes care of market volatility through an assured
benefit.

 ICICI Pru immediate annuity :

ICICI prudential immediate annuity plan is a traditional pension plan, where

annuity starts immediately. It can be availed by individuals and group of
members. Annuity pay outs will be paid as per the frequency chosen
immediately after the premium is paid by policyholder.

AVIVA INSURANCE :

1.AVIVA Retirement Plans :

 Aviva Next Innings insurance plan :

Aviva Next Innings Pension Plan is a traditional Deferred Annuity Pension Plan
wherein the policyholder can accumulate his retirement corpus through the plan.
Thus the plan helps in building a retirement fund for the policyholder.
Premiums under the plan can either be paid for a limited tenure or in one lump
sum. On death during the period, the death benefit is paid ; on maturity, the
vesting benefit is paid.

 Aviva annuity plus :

Aviva Annuity Plus Plan is a Single Premium Immediate Annuity Plan.

This is a Traditional Annuity Plan. In this plan, pension starts immediately
after the plan starts from the next instalment. This plan is an immediate
pension plan. There are 7 annuity options in this plan. Annuity may be paid
quarterly, half yearly or yearly intervals.

BAJAJ ALLIANZ LIFE :

1.Bajaj Allianz Retirement Plans :

 Long life goal :

Bajaj allianz life long life goal, a non-participating, individual regular premium
payment Unit Linked Insurance Plan, is one such product. It invests the
policyholder’s money in an investment portfolio selected by them and provides
for market linked returns over long-term, to help them accumulate a healthy
retirement corpus. From the end of 5th year till the 25th policy year, the plan
gives a certain percentage of one annualized premium as loyalty additions every
year.

BHARTI AXA LIFE :

1.Bharti Axa Retirement Plans :

 Bharti Axa dream life pension plan :

Bharti axa dream life pension plan is a traditional policy where the policyholder
can choose to get bonuses offered. There is an accumulation phase where the
policyholders pay premiums until the vesting period. In case of premature death
of the insurer, the nominee gets 108% of total premiums.

 Bharti Axa future secure pension plan :

Bharti axa life future secure pension is a plan that gives the freedom, flexibility
and much more. It assures the insurer of a dream retirement life by giving
options like long-term investment, partial withdrawal options and many other
features to suit their needs. In case of the unfortunate event of death during the
Policy term, the nominee will receive entire Policy Fund Value and the Policy
will cease to exist.

 Bharti Axa Life wonder years retirement plan :

Wonder Years Retirement plan from Bharti Axa Life Insurance is a

traditional pension plan where the policyholder can choose to participate in the
bonus that is declared by the company. In this plan, the policyholder would pay
premiums in the accumulation phase till the vesting date, i.e. the date from
which he/she would like to receive pension or annuity. If he/she dies in the
accumulation phase before the vesting date, i.e. before he/she starts to receive
pension, then the nominee would receive 108% of the total premiums paid till
date as death benefit.