Page 36 - Insurance Times October 2020

4. In case of death of the policyholder before completion Increase in Seniors:
of 10 years term, invested amount will be returned to
nominee of the policyholder.
5. Interest rate for policies purchased beyond 2020-21 will
be revised by Ministry of Finance on the beginning of
each financial year.

2. Senior Citizens Savings Scheme (SCSS)
This scheme is also available to the people above 60 years
of age. The amount deposited will have a fixed rate of
interest for 5 years and can be renewed for another 3 years.
However, the interest rate will be as per the prevailing rates
at that time. The SCSS rate of interest for April to June 2020
has been set at 7.4%. Maximum amount that one can Those who are in their 30s now will reach their 60s by 2050
invest is Rs.15 Lakhs only. and they live longer than those who are in their 60s now.
Hence, if they want to live peacefully even after their

However, the amounts received under this scheme are retirement at the age of 50 or 60, they need to plan for a
taxable like annuity. regular income now. For such people deferred annuity plans
are suitable. They can invest for about 20 years or more and
Need for Pension: they can get a regular income on the basis of accumulated
corpus and prevailing annuity rates at that time.
Regular Income : Any person would like to have a regular
income as long as he is alive. Planning for the same can During 1881, the average life expectancy of Indians was
make the person live a comfortable life all through. 25.44 years!! In 2019, as per our world in data website, it
Otherwise, at a particular age, income stops as the person is 69.56 years. If someone is planning for retirement goal
may not be able to work or carry on with his business due and his age is 30 years at present, and planning to retire at
to both external and personal family reasons. At that time 50 years of age, then the life expectancy with 0.5% inflation
also, he will need a regular income to maintain his basic would be 83 years when this guy turn 50 years of age.
needs. Whether you planned your retirement planning with 80
years or 90 years of life expectancy?
How Longevity affect your life and income :
Longevity of people is increasing every decade. If we look Conclusion
at the longevity in India, from the year 1900, it has been
increasing and in 2015 it stands at 68.3 years. In both the government schemes shown above, the maturity
period is limited. It is 5 years (extendable by another 3 years)
in SCSS and 10 years in case of PMVVY.
In case the interest rates go down,
which is very likely in future, the senior
citizens invested in these schemes have
to suffer a lower returns as the age
increases. This will be a serious cause
of concern for those who invest in
these schemes. You will also find that
there is no option to enrol spouse in
these schemes. This means that in case
the person dies, the amount will be
given to the nominee or legal heir and
if the legal heir is above 60 years of
age, they can again invest in these
schemes as per the interest rates
prevailing at that time.
The Insurance Times, October 2020