Ch. 4: What Customisation Options Are Available in Pension Accumulation Plans?

We live in a world of customisation. You would be aware of how streaming platforms like Netflix, Amazon Prime, etc. share customised recommendations based on what movies and TV shows you’ve already watched. Then, many cafes have started a build-your-own dish option where you can add the vegetables, sauces, etc. and customise your own meal.

Similar to this, insurance companies, too, offer several options so that you can customise a Pension Accumulation Plan exactly as per your needs. We discuss these customisation options in this article.

Let's dive right in!

Limited Pay Option

Under a Pension Accumulation Plan, you can customise the premium payment term, i.e., for how long you want to pay the premiums.

With limited pay, you can finish paying all your premiums in a 'limited' number of years and get the burden off your chest. It is an option that allows you to complete your premium payments in bigger and faster instalments. Based on

your convenience, you can choose a payment term of 10 years, 20 years, 30 years, and so on.

For instance, let’s assume Ankita, 40, decides to invest Rs. 1 Lakh (without tax) in a Unit-linked Pension Accumulation Plan to save for her retirement. She plans on retiring when she reaches the age of 65 years. Hence, she chooses a policy term of 25 years. Now, say she wants to finish paying the premiums in the next 10 years - instead of paying the premiums for the policy term of 25 years. In this case, she can choose the 10-year limited pay option.

Just like you can customise the premium payment term, you can also customise the premium payment frequency. Under Pension Accumulation Plans, you can choose to pay your premiums on a yearly, half-yearly, quarterly, or monthly basis.

Say two friends, Rishabh and Sudhir, decide to buy a Non-Linked Pension Accumulation Plan. Rishabh is a businessman and can afford to pay large amounts every year. So, he can choose the annual premium payment frequency option. Sudhir, on the other hand, is a salaried employee - and can't afford large payments. So, he can choose to pay the premiums monthly, quarterly, or half-yearly.

Riders are extensions to your base policy that can be bought by paying a certain extra cost. They provide additional benefits on the occurrence of specific events.

Suppose Simran buys a Non-Linked Pension Accumulation Plan. She opts for a Waiver Of Premium On Accidental Disability Rider along with it. A few years after buying the plan, she meets with a major accident and is permanently disabled. In this case, the insurance company will waive off all future premiums under Simran's policy.

You can buy riders without going through any extra documentation or medical tests - besides the ones you already undergo while buying the Pension

Accumulation Plan. This is why, riders are considered as one of the most convenient customisations.

Some common types of riders available with a Pension Accumulation Plan include -

• Critical Illness Rider
• Accidental Death Benefit Rider
• Accidental Disability Rider
• Hospital Cash Rider
• Surgical Care Rider
• Waiver Of Premium On Critical Illness Rider
• Waiver Of Premium On Accidental Disability Rider

You can read more about Riders in the next article Click Here

Please note: With some Pension Accumulation Plans, there may not be any rider options available at all. So, if you want to opt for riders with your base Pension Accumulation Plan, make sure you check with your insurance company or financial advisor before investing in one.

There are three main customisation options available under Unit-linked and Non Unit-linked Pension Accumulation Plans

• You can customise how quickly you want to finish paying the premiums.
• You can customise how frequently you want to make the premium payments.
• You can enhance the scope of your base coverage with the help of riders.

With these customisation options, you design the Pension Accumulation Plan in a way that it perfectly fits your goals and preferences.