Group Insurance

Published in Mint on 17 November, 2015, Written by Abhishek Bondia
I am part of a large charitable trust. Can we buy life insurance policy for all members? We are not employees of the trust.
—Karunesh Walia
The Insurance Regulatory and Development Authority of India has defined eligible groups for the purpose of group insurance. The regulator permits groups other than employer-employee groups to also buy group cover. The primary restriction is that the group should not be formed primarily for the purpose of buying insurance. If it is a trust with a track record, then there is no complication. You are entitled to all the advantages of group insurance i.e., customized benefits, lower prices, and so on.
I am 48 years old. My aim is to get a pension of Rs. 1 lakh a month when I am 60 years old. I have no debts , contribute the maximum to the Public Provident Fund and provident fund and have systematic investment plans . I have a pension plan from a life insurer. It will vest in 2018, when I am 52 years. The plan allows me to defer the starting of the pension to a later date. It also allows me to distribute the premiums into preserver, maximiser, balancer funds. I have around Rs. 15 lakh in this. I am likely to have some money through Kisan Vikas Patra and other salary savings.
My aim is to contribute the maximum to this plan so that the corpus reaches Rs. 70-75 lakh by the time I am 52 years. Hopefully, this can reach Rs. 1.4 crore by the time I am 60 years. The life insurer tells me that since my contributions are predominantly in the preserver option, I earn around 8-9% on my funds per year. The pension rate is around 8.75%. Is it wise for me to maximize contributions to the lifetime pension?
—Kejal Shah
You have set your milestones appropriately. If you are able to get a pension corpus of Rs.75 lakh by the age of 52, you will comfortably reach your pension goal of Rs.1 lakh a month without additional contributions. Since you have a long investment horizon of 12 years, you should consider moving a part of your pension corpus from the preserver fund (which seems primarily a debt-focused fund) to the maximiser fund (which seems primarily an equity-oriented fund). This will give you a higher overall return and put less pressure to accumulate the corpus by 52 years. Considering that equity funds give upwards of 12-15% in the long run, redirecting 20% of your funds to the maximiser option will reduce your corpus requirement to Rs.70 lakh.
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