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Max New York Life Smart Invest Pension

Suresh Parthasarathy

Simple as it may sound, retirement planning usually requires working towards multiple needs — life-cover, health insurance, inflation, taxation and changes in the target based on changing life-styles. Recently, Max New York Life Insurance launched a unit-linked product Smart Invest Pension. A look at the features:

Retirement planning consists of two phases. One is the accumulation of savings (deferment period) and the second is earning an annuity from these savings. Smart Invest covers the accumulation period. The maturity value of this plan can be used to subscribe to any annuity payout of your choice.

You can choose the accumulation period by selecting your age when you wish to retire, between the ages of 50 and 70.

The deferment period will be from the effective date of coverage till the opted retirement age. During this period, you must pay an annual target premium (ATP) as chosen by you.

After deducting applicable charges, the ATP will be allocated to your unit account. You have the option to pay your ATP annually, semi-annually, quarterly or monthly.

The policy will continue as long as the fund value is not below the one ATP. If the fund value of the policy is less than one ATP, the policy will terminate and the surrender value will be paid.

Eligibility: The minimum age of entry to the plan is 18 years and maximum is 60 years. Deferment period is 10-52 years. The options for vesting age are between 50 to 70 years. The regular premium payment is Rs 10,000 per annum and single payment is Rs 1,50,000.

Commutation: On vesting, you can commute a maximum of one-third of your maturity value. The balance can be used to buy an immediate annuity from the same insurer or another approved by the IRDA.

The annuity will be based on your age, the annuity option chosen by you and the applicable annuity rates prevalent at that time, and will be payable to you annually, semi-annually, quarterly and monthly as per your choice. The three annuity options are:

Annuity for life

Annuity guaranteed for 5/10/15/20 years and for the life thereafter.

Life annuity with return of annuity purchase price.

Liquidity: If you have the regular premium options, you may surrender the whole (but not part) of this policy at any time after the completion of the first anniversary, provided an amount equal to one ATP has been paid by you. In case of single premium, the policy can be surrendered any time.

The surrender value shall be paid only after the completion of three years. Do note that u/s 80ccc(2) of the IT Act, surrenders are taxable as income in your hands.

Dynamic Fund allocation: You may opt for this feature at the proposal stage. This ensures that your funds are managed to suit your risk profile.

Switch across funds: This plan allows you to switch between funds and change the risk return profile of the existing investments. The switch options provide good flexibility in the sense that money from one fund can be switched to multiple funds in a single switch and 6 free switches are available in a year. This facility is not available for Dynamic Fund Allocation.

Points to remember: In selecting a pension plan, one has to keep a watch on the recurring expenses. As the investment is for the long term, recurring expenses can have the effect of reducing your returns over the long term.

(This column is intended to acquaint investors with features of new insurance products and is not a recommendation to invest. Investors are advised to compare each product with similar ones already available before making a decision.)

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