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Nath Balakrishnan

WITH the salaried class increasingly realising the importance of having to plan out their finances for their post-retirement days, pension plans are gaining in prominence. One such plan is that of HDFC Standard Life. Let us examine its features.

Plan specifics

The policyholder is required to pay premiums over the plan duration. A single and regular premium option is available. On maturity, the sum assured, the reversionary bonuses and a terminal bonus (if any) can be used by the policyholder to take an annuity with either HDFC Standard Life or any other annuity provider. Alternatively, the policyholder can withdraw a part of the accumulated corpus as a lumpsum and take an annuity with the remaining amount.

Payout on death

Should the policyholder die during the first year of the policy, the beneficiary will receive 80 per cent of the premium paid in case of the regular premium plan and 90 per cent in case of the single premium plan. (Under the latter, the premium paid is equal to the sum assured.)

If death occurs after the first policy year of a regular premium plan, the beneficiary will receive all the premiums paid with an annual interest of 8 per cent, subject to a ceiling of the sum assured and the bonuses declared till that date. The payout to the beneficiary will be the sum assured plus the bonuses declared till death in the single premium plan.

Bonuses

Bonuses declared under the plan are on sum assured, reversionary, and not compounded. The company may also declare a terminal bonus on maturity. In case death occurs, an interim bonus to account for the period between the declaration of the last reversionary bonus and the date of death may also be paid out.

Loans and surrender value

No loans are available against the policy. If premiums are paid for three years continuously, the policy acquires a guaranteed surrender value. In the case of the regular premium plan, the surrender value is 50 per cent of all premiums paid, excluding the first years' premium. Under the single premium option, the surrender value is 50 per cent of the premium paid.

After a policy acquires a surrender value and the policyholder stops paying premiums, the policy becomes paid-up. Then the sum assured will be proportionately reduced and the policy will cease to participate in future bonuses. Bonuses declared till that date will be retained.

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