Page 38 - Life Insurance Today FEBRUARY 2016

ment, when its total profit stood at Rs Union Finance Minister Arun Jaitley from Odisha particularly senior citi-
32,697.8 crore. The payout for 2014- requesting him to consider establish- zens, women, the physically chal-
15 was 10.39 per cent more than the ment of an LIC zonal office at lenged and those belonging to the BPL
previous year. Bhubaneswar at the earliest to meet category are facing a lot of difficulties
the long cherished aspirations of LIC in communicating with Patna Zonal
LIC opening zonal office in customers in Odisha. Office for redressal of their grievances.
Odisha for customer ben-
efit "Though LIC, because of its brand equity, Corporation Bank gains
has tremendous potential to spread in- from allotment of shares
The Joint Working Committee for De- surance and micro-insurance products at to LIC
velopment in LIC Association has de- the grassroots level in Odisha, it does
manded opening of the Life Insurance not have a zonal office in the State. Ever The shares of Corporation Bank gained
Corporation's (LIC's) zonal office (tier- since bifurcation of LIC's Zonal Office in as much as 4 per cent to touch Rs
II) in Bhubaneswar. A delegation led Kolkata in 2006, the State is being 44.50 as the bank announced issuance
by committee chairman Lalit Das had served by its Eastern Central zonal office of 2.8 crore shares worth Rs 143 crore
made the demand before Union Min- headquartered in Patna," Patnaik had to the Life Insurance Corporation of
ister of State Finance Jayanta Sinha. stated in the letter. India on a preferential basis.
The delegation also demanded open-
ing of a LIC division office in Balasore. Patnaik had further stated that since The shares were issued at price of Rs
there are no direct flights or conve- 50.78, which is a premium of nearly 20
Earlier in January 2014, Chief Minister nient daily train services from per cent close of Rs 42.05.
Naveen Patnaik had written a letter to Bhubaneswar to Patna, policy holders

Pension plan and annuity have to be from the same insurance company

A life insurance company doesn’t sell only insurance poli- All pension plans offered by insurance companies are man-
cies; it also offers pension plans. These plans help you ac- dated to offer a non-zero positive return of premiums to
cumulate a corpus over a period of time and use it to buy the policyholder on maturity or to the beneficiary in case
an annuity on retirement. An annuity gives you pension of death of the policyholder. Due to this rule, ULIPs don’t
for life. Rules dictate that at the end of the tenor, you typically offer pure equity funds for investment.
need to buy an annuity with at least two-thirds of the
corpus, and that too from the same insurer. Thus, a pen- At the end of the tenor, the accumulated retirement cor-
sion policy can be divided into two phases—the accumu- pus becomes available to you and you move to the annu-
lation phase through a pension policy, and pension phase ity phase.
through annuities. You need to start by understanding a
pension plan and how to annuitise the corpus. Annuity rules

What is a pension plan? You can keep only up to one-third of the accumulated cor-
pus; the rest has to be used to either buy an annuity prod-
In a pension plan, you choose to invest your money for a uct or a single-premium pension policy. Annuity is a fixed
particular period of time. To do this, you can choose from sum that you get every year to provide for pension. There
broadly two kinds of pension policies. The first is a unit- are various types of annuities in the market but all of them
linked pension plan (ULPP), which is market-linked, so pre- come at a fixed rate from the beginning. The rate depends
miums get invested in funds of your choice, and the costs on factors such as type of annuity, your age and the cur-
as well as fund performance are made transparent to you. rent economic scenario. But once decided, the rate is guar-
The second is the traditional plan, which comes with an anteed for life.
opaque structure—costs and investment portfolio are not
disclosed. These plans either offer a minimum guaranteed Earlier, you could shop for an annuity—even if you bought
return and peg additional returns to bonuses from the a pension plan from company X, you could annuitise your
participating fund, or offer a guaranteed benefit at the corpus from company Y. But product regulations of 2013
outset. changed this. (Source : Mint)

Life Insurance Today February 2016 37

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