Pension plans are time-tested and reliable investment instruments that offer flexibility, good returns and several other benefits. It is important for you to understand the key terms associated with pension plans so you can make the most of the opportunities available for maximizing your retirement corpus. Here are a few such terms:
1. Investing Period
The Investing Period is the period of time during which one invests. If you purchase a pension plan with a monthly investment of Rs. 5,000 that you will pay for 30 years, the term of ‘30 years’ is the ‘Investing Period’.
2. Maturity Benefit
Maturity Benefit refers to the amount you will receive when the Investing Period is over. For a pension plan that is equity-linked, the maturity benefit is the higher of the Fund Value or Guaranteed Maturity Benefit.
3. Death Benefit
Death Benefit is the amount payable to the beneficiary when the insured or annuitant passes away while the policy is in-force. This is an important consideration and should be selected carefully. In case of your untimely death, this amount should be able to support your beneficiaries.
4. Loyalty Benefit
Loyalty Benefits are the incentives given by an insurer as an additional benefit to the insured for keeping the policy in-force throughout the term of the contract. The amount depends on various aspects including the overall performance of the insurance company.
A ‘Beneficiary’ (or a nominee) is the person who receives the Death Benefit in case of the death of the policyholder. In case the nominee is a minor at the time of policy start, a Guardian can be appointed. You can also have multiple nominees and specify the share (%) for each of these nominees.
An Annuity is a contract between you (the annuity owner) and the insurance company. In this contract, in return for your payment, the insurance company agrees to provide either a regular income, the right to withdraw up to a certain percentage per year, or even a lump sum payment at some future time.
The person who receives the Annuity is called the ‘Annuitant’. It can be the life assured or another person. In case of the death of the annuitant, the policy proceeds are provided to the beneficiary.
The age at which you start receiving pension in an insurance-cum-pension plan is known as Vesting Age.
9. Equity-linked Plan
“Equity-linked Plan”, as the name suggests, is a type of insurance plan where some part of the premium is invested in the market and the rest is allocated towards the life insurance cover and policy maintenance. Based on your financial risk appetite, you can choose where your money gets invested. Unlike an endowment policy, there is no guaranteed maturity bonus.
For a pension plan that invests in the market, the Fund Value is the current value of all the past investments made. You can read other insurance related FAQs here. You can also feel free to call a financial advisor and learn more about the Max Life Forever Young Pension Plan.
Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and Forever Young Pension Plan(UIN: 104L075V02)is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Past performance of the funds does not indicate the future performance of the funds. You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws.