Kotak Life Pension Plans

Kotak Pension Plans

Kotak Life Insurance sells a variety of annuity plans to its customers each with great benefits. Let us see what the pension plans offered by Kotak Life in terms of their benefits:

Kotak Premier Pension Plan 

A traditional pension plan by Kotak Life Insurance which provides a considerable corpus through bonus participations. Some important points are:

• It is a with-profit plan which earns bonuses declared by Kotak Life Insurance

• The policyholder can choose any mode of premium payment from regular, limited or single pay options offer by Kotak Life Insurance

• Guaranteed Additions expressed as a percentage of the Sum Assured are added in the first 5 years of the Kotak Life policy depending on the premium mode chosen. For regular and limited premium options, the rate is 5% and for single premium option the rate is 2%.

• Reversionary bonuses accrue from the 6th policy year till maturity or death under this Kotak Life plan

• Under this Kotak Life pension plan, in case of death of the insured during the plan tenure, the benefit paid will be 105% of all premiums paid till the date of death plus the vested reversionary bonuses and the accrued guaranteed additions

• The nominee can withdraw the entire amount as a lump sum or choose to avail immediate annuity from Kotak Life Insurance with that amount

• On completion of the term of this Kotak Life pension plan, the vesting benefit is payable which is the Sum Assured plus the accrued reversionary bonuses and accrued guaranteed additions subject to a minimum of 105% of the sum of premiums paid

• The Vesting Benefit can be put to different uses. It can be withdrawn up to a limit of 1/3rd of the accumulation in cash. Another deferred annuity Kotak Life plan can be purchased using the benefit provided the Kotak Life plan entails a single premium. Lastly, the date of vesting can be further delayed provided the age of the policyholder is not more than 55 years.

• Kotak Accidental Death Benefit Rider and Kotak Permanent Disability Benefit Rider is available which can be added to the base policy of this Kotak Life Insurance pension plan for increased coverage

• Discounts are allowed in premiums for choosing higher Sum Assured levels of Rs.5 lakhs and above under this Kotak Life pension plan 

Eligibility Details

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Kotak Lifetime Income Plan

It is an immediate annuity plan from Kotak Life Insurance which is different from other Kotak Life plans in the sense that payments begin soon after the single premium. Other features are:

• Policyholder can buy this Kotak Life plan either on a single life or on a joint life basis

• This Kotak Life pension plan offers multiple annuity options of Lifetime Income, Lifetime Income with cash back wherein the Purchase Price is returned on annuitant’s death, Lifetime Income with a Term Guarantee wherein the annuity payouts are guaranteed for 5, 10, 15 or 20 years and thereafter payable for the annuitant’s lifetime and Last Survivor Lifetime Income wherein the annuity payouts are paid for the annuitant’s lifetime and post his death, the annuity payouts continue till the death of the spouse

• Section 80CCC exempts the premiums paid under this Kotak Life plan

Eligibility Details

Kotak e-Lifetime Income Plan

This is an immediate annuity plan from Kotak Life Insurance where there is no deferment concept and the pension payments begin right after the premium is paid. Other features include:

• This Kotak Life plan can be bought online thus reducing the unnecessary hassles involved in manually buying the plan

• This Kotak Life pension plan offers multiple annuity options of Lifetime Income, Lifetime Income with cash back wherein the Purchase Price is returned on death of the annuitant, Lifetime Income with a Term Guarantee wherein the annuity payouts are guaranteed for 5, 10, 15 or 20 years and thereafter payable for the annuitant’s lifetime and Last Survivor Lifetime Income wherein the annuity payouts are paid for the annuitant’s lifetime and post his death, the annuity payouts continue till the death of the spouse

• The premium paid to buy this Kotak Life plan is exempt from taxation under Section 80CCC of the Income Tax Act

Eligibility Details

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

What do you mean by Pension Plans?

Insurance companies sell various types of plans to their customers. While some plans are designed to provide for the child’s future, other plans help in providing insurance cover. Some plans are meant for the purpose of wealth creation while others provide the feature of savings along with insurance protection. Pension plans also form the variety of plans sold by an insurance company. These plans are meant to provide for retirement funding after the individual retires from active employment. The plans are designed in such a manner that from a specific date, which is chosen by the policyholder, the insurance company will pay pensions or annuities regularly till the policyholder is alive. Pension plans have some important characteristics which require a detailed explanation for a better understanding and clarity. The following points will elaborate and explain the features of a basic pension plan.

Pension plans have two variants. One is a Deferred Pension Plan and the other is the Immediate Annuity Plan.

• Deferred Plans can be offered either as a traditional insurance plan or as a unit linked insurance plan. Immediate Annuity Plans, on the other hand, are always issued as a traditional insurance plan.

• Deferred Annuity Plans are called thus because these plans defer or delay the annuity payments. The payments start after the deferment period of certain years, the choice of which rests with the policyholder. These plans have two distinct phases. One phase is called the Accumulation Phase while the other phase is called the Annuity Phase. As the name suggests, Accumulation Phase is where the individual pays premiums regularly. These premiums paid accumulate into a fund which also earns interest. After the accumulation phase is over, the annuity phase starts immediately or after some time. The policyholder may want to wait for some years before he chooses to receive annuity payments. Thus, after the waiting or the deferment period is over, the policyholder will become eligible to receive annuity payouts. The date from which the annuity payouts are paid is called the Vesting Date. Thus, from the Vesting date, the annuity phase also starts where the customer receives annuity.

• Under deferment plans, on vesting, the customer can exercise his choice on the different options available to him in the context of annuity payouts. If the policyholder wants, he can withdraw a certain part of the corpus as allowed. This withdrawn part will not attract taxation and can be taken in a lump sum for any requirements. However, the remaining part of the corpus has to be used compulsorily to receive pension from the company as it cannot be taken otherwise. If the option of withdrawal which is also called commutation is not exercised, the customer can also choose to receive annuity from the entire accumulated amount. Another option that the policyholder has is to invest the entire accumulated amount in another deferred annuity plan but where the premium payment should be done in one lump sum. In this case, he will receive annuity but after another deferment period or waiting period. Many insurance plans also allow the customer to delay the Vesting age from the one chose earlier if the policyholder is aged below 55 years.

• Immediate Annuity plans, as their name suggests, offer payment of annuities immediately. The policyholder does not wait for any time before he receives annuity payouts. Under these plans, the policyholder should first pay a Single premium which forms the corpus and choose the frequency in which he wishes to receive the payouts. Any frequency can be chosen whether monthly, half-yearly, quarterly or annually. The corresponding annuity will be paid from the following frequency i.e. month, 6 months, quarter or a year.

• Immediate annuity plans usually have different types of options which the customer might choose to receive annuity. They are:

• He might get annuity for his complete life

• He might get annuity for his complete life and on death the Single Premium he paid for buying the annuity will be returned

• The annuity will be paid for a guaranteed period of 5-20 years as chosen even if the policyholder dies. If he remains alive for the guaranteed period, further annuity will continue to be paid for his entire life

• The annuity amount paid will increase every year at a specified rate of interest

• The amount of annuity will be paid for his lifetime and after his death till the lifetime of his spouse

• The annuity will be paid till the annuitant’s lifetime and after his death till the spouse’s life and when the spouse also dies, the single premium paid will also be returned to the nominee

• Either an equal amount of annuity can be paid to the spouse or a part thereof as specified.

• Either the complete single premium is returned after the spouse’s death or a part thereof.

• Annuity options where the spouse is also paid after the death of the annuitant are called joint life last survivor annuities.

• The tax treatment of annuity plans is different. In case of Deferred Annuity plans, the premiums paid are exempt from tax, the death benefit is also exempt from tax and so is the part of corpus withdrawn. However, the pension which the policyholder receives is taxable in the hands of the annuitant under normal rates of taxes as the amount of pension is treated as an income.

• In case of immediate annuity plans, the single premium paid will be exempted from tax under Section 80CCC which deals with the payment of premium for pension plans.

• Annuity plans are available at very lenient terms of underwriting because the insurance company does not bear any extra risk. It is the corpus accumulated from the premium paid by the customer from which annuity payouts are made and the company does not stand to lose anything if the annuitant faces pre-mature death.

• Immediate annuity plans do not have any provision for death benefit. The annuity payments simply stop and the Purchase Price will be returned (if promised).

When should you buy a pension plan?

To build a sufficient corpus for retirement, a pension plan should be invested in at an earlier date. Usually, your pre-retirement stage, which starts after you cross 40 years of age, is ideal for starting a pension plan. Since, retirement would happen after 20 or more years later, you can easily build a good corpus by paying an average premium yearly. A pension plan with a longer tenure is desirable because the power of compounding works on longer tenures and yields a higher amount of fund.  For those of you who are planning an earlier retirement, you should start planning early. There should be at least a gap of 15-20 years in the date from which you buy a deferred annuity plan and in the date from which you start receiving pension. In today’s age of rising costs, a tiny amount of pension will not be sufficient to meet the rising costs. To receive a higher amount you would need a bigger corpus and to build a bigger corpus, you would need to save small amounts of money over a longer period or large chunks of money over a small period. The choice is yours depending on your affordability but investing early is better.

Advantages of Pension Plans

Life expectancy has been consistently increasing over the years primarily due to better nutrition and better healthcare-medical facilities. Pension plans from Kotak Life help to offset the effects of inflation and escalating medical costs. They allow one to live comfortably even after retirement and adjust to the current standard of living. The need for retirement planning and consequently, the importance of pension plans in now more than ever.

A sound retirement-pension plan from Kotak Life Insurance offers the following advantages:

Retirement with Dignity

Pension plans from Kotak Life ensure that one has sufficient funds post retirement to not only meet day-to-day expenses but also to continue living the same lifestyle that one is accustomed to before retirement. These Kotak Life plans allow one to live with dignity even after active work life.

Financial Independence

Retirement insurance plans from Kotak Life enable one to be self-reliant and financially independent even after retirement so that one does not have to depend on others for money.

Post-Retirement Income

The Kotak Life plans provide an optimum post-retirement income to lead a comfortable, stress-free life. One can pursue hobbies, do things that one always wanted to do, live one’s dream after retirement, without any worries.

Develop the Habit of Saving Regularly

The very nature of a Kotak Life pension plan involves saving some money at regular intervals to create a substantial post-retirement corpus. Committing a small amount every month in a Kotak Life plan systematically inculcates the habit of savings whose benefits become evident during emergencies and eventually in one’s golden years.

Being Well Prepared for Medical Emergencies

Insurance plans from Kotak Life ensure that adequate funds are available to meet rising medical treatment costs. They allow one to be better prepared financially to handle medical contingencies whose incidence will increase in twilight years.

Tax Benefits

Investment in Kotak Life pension plans offers tax benefits under Section 80C and 10 (10D) of the Income Tax Act, 1961.

Provide the Option of a Life Cover

Pension plans not only free one from financial worries related to retirement, but also give the flexibility to opt for a life cover.

Offer Better Financial Security through Riders

Riders are optional clauses in insurance policies which offer additional financial security by payment of a nominal extra amount over and above the premium to cover disability, death etc. They significantly enhance the benefits of a pension plan.

Grow Money with Time

Pension plans from Kotak Life help in increasing money over a period of time so that the effects of inflation can be contained. This way one will have adequate savings after retirement.

Applying for a Pension Plan from Kotak Life Insurance:

Online

Kotak Life Insurance offers specific plans which are available online only. The customer only needs to log into Kotak Life’s website, choose the required Kotak Life plan, choose the coverage and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card or net banking facilities and the Kotak Life policy will be issued.

Intermediaries

Kotak Life plans which are not available online can be purchased from agents, brokers, banks, etc. where the intermediaries help with the application process.

Applying For Pension Plans through PolicyBazaar

• On the PolicyBazaar homepage, click on Retirement under the Personal tab.

• Click New Quotes to compare and choose from top insurance providers.

• Fill your date of birth (DOB), whether you are a smoker/non-smoker, and the payout amount. On the basis of your payout amount, you will get an estimate of your premium. Next click Continue.

• Fill in your name, email address, city, country code, and mobile number. Click Continue.

• You will be taken to the Life Insurance quotes page where you will see life insurance quotes of more than 10 insurers. Next, choose the plan as per payment schedule – One Time Payout and Monthly Payout Plans.

• After reviewing and comparing each life insurance quote, click the premium amount to buy the desired plan.

Kotak Life Pension Plans - FAQ