We as an Investors are always interested in the financial instruments that fetch us the maximum return in terms of money. However, apart from earning a higher interest on the savings, there are other needs of individuals which demands equal attention. Life Protection Products and Pension Products are instruments which equally need the attention of individuals when they are planning of securing their future.
Below are some of the schemes which are providing the specific plan for Life Protection and Retirement needs of an individual. Most of you may or may not be familiar with all of these. However, it is always good to be an informed and aware individual.
Life Protection Products:
Life Insurance:
In this, the individual and the Insurance company (insurer) form a contract. Here the individual pay a certain amount of money for a period of time. The insurer in return agrees to pay a substantial sum assured (usually 6-7 times more than the individual pays) in case or death or a severe misshaping.
Term Life Insurance:
It is the same as the life insurance with the only difference that the insurer pays the assured sum only in case of the death of the individual.
Endowment policy:
In this the insurer in lieu a premium for a period of time agrees to pay the assured sum either in case of the death of the Individual or at the time of maturity of the policy.
Units Linked Insurance Policy (ULIP):
It is a product in which some part of the premium paid by the individual is kept for the insurance cover while some part is invested in the various debt and equity schemes so that the individual also gets the benefits of the amount invested. Thus, under one integrated plan, it gives the advantage of both insurance and investment.
Pension Products:
Employee Provident Fund (EPF): This is a provident fund provided for the salaried employees under registered private and public organization. In this type of fund, a part of your salary is kept in an EPF account. This account earns a rate of interest. It is usually between 8-10 %. The same amount is also contributed by your employer toward the fund.
As a rule, any company having more than 20 employees has to register with the EPFO. EPFO is Employees’ Provident Fund Organization of India). The employees need to have an EPF account for that. Self-employed personnel cannot invest in this kind of fund.
Public Provident Fund (PPF):
This type of fund is similar to the EPF. Here the individuals whether salaried or self-employed makes the contribution. However, this is a very good tax saving instrument and the interest earned varies from 8.5 % to 8.7 %. Government of India regulates PPF.
National Pension Scheme (NPS):
This type of scheme is a voluntary contribution made by the individuals. It allows them to invest a certain amount of money every year. However, it gives them market linked returns post retirement (after attaining the age of 60). Government of India introduced this scheme. Pension Fund Regulatory and Development Authority monitors it.
Annuities/Pension Policies:
Nonetheless, this product is generally offered by the Insurance companies and banks offering insurance product. In this, the insurer guarantees a systematic and regular payment of a certain sum of money post retirement. This is in lieu of the agreed payment of the sum of money by the payer. It does not involve any insurance cover.
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