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Tuesday, August 23, 2022

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5 Best Investment Options for Senior Citizens in India

What are the Best Investment Options for Senior Citizens 2022 in India

Enjoy your golden age without any worry of stable income with these 5 best investment options for senior citizens in India. Read the blog to know more about each of these plans in detail.

Retirement is truly called the golden age because it’s that time of your life when you’re done working hard and wish to reap its benefits now. Travel, business, or simply enjoying the yield (savings) of your effort all these years – the choice is purely yours. And yes, there is the added advantage of earning a regular income post retirement by way of investment schemes. The government of India has launched several investment options for senior citizens, which are provided by a number of insurance companies in the country.

This blog details the 5 best investment options for senior citizens that can ensure stable and regular income for them even after retirement.

Best Investment Options in India 2022 for the Elderly

1. Pradhan Mantri Vaya Vandana Yojana:

This is one of the best investment options for seniors in India that was launched in 2017 by Life Insurance Corporation (LIC) of India. The scheme also serves as a pension plan ensuring a fixed amount of income to the elderly after they have chosen to invest a lump sum amount in the scheme.

Eligibility criteria: The scheme is exclusive to only senior citizens aged 60 years and more, with no maximum age limit. Also, it is valid only for citizens of India and not NRIs.

Validity: Initially launched for 3 years, this plan has now been extended for 3 more years and will be valid up to March 31, 2023.

Also Read about Other Schemes: Pradhan Mantri Atmanirbhar Swasth Bharat Yojana | Pradhan Mantri Ayushman Bharat Yojana

2. Senior Citizen Fixed Deposits:

Fixed deposits have always been the most preferred form of investment options in India for a large number of people. The elderly of the country too find it a safe bet, considering that the interest payout can be chosen to be monthly, quarterly, half-yearly, or annual. The scheme is meant for senior citizens who are 60 years and above.

Eligibility: The Fixed Deposit Scheme for Senior Citizens is applicable to both Indian citizens and NRIs over 60 years old. Besides, some banks and financial institutions also permit people over 55 years old to apply for this scheme, provided they have opted for early voluntary retirement.

Amount to be invested: Senior citizens can open a Fixed Deposit at a bank of their choice with a minimum investment of Rs. 5,000 (in case of online) and Rs. 10,000 (if opening an FD at a physical bank branch). The maximum limit for investment under this scheme varies from bank to bank, not exceeding Rs. 2 crore though.

Know More: 1 Crore FD Interest Per Month | 2 Crore FD Interest Per Month

3. Senior Citizen Savings Scheme:

Yet another of the best investment options in India for the elderly population, this scheme has been offered by the Indian government since 2004. It is also usually regarded as one among the safe investment options in India, owing to its backing by the central government. Hence, there is no risk involved in this investment plan and 100% income assured to the investor throughout the term of the plan.

Eligibility: All senior citizens 60 years and over are eligible for the SCSS; however, not NRIs. Besides, those aged between 55 and 60 years of age can only apply if they have chosen VRS or are retired from the Indian defense forces.

Amount to be invested: Minimum investment of Rs. 1,000 and maximum of Rs. 15 lakh

Plan term: Maximum tenure of the scheme is 5 years, with the option for further extension of up to 3 years more. However, this can only be done one time.

Must Read: Senior Citizens Savings Scheme in India | LIC Senior Citizen Scheme

4. Post Office Monthly Income Scheme:

Yet another safe investment option with considerably lower risk involved for the elderly. This scheme is backed by the Finance Ministry and guarantees a fixed amount of interest to the senior citizens every month. This is why this scheme is highly preferred by the elderly citizens for the time post retirement.

Eligibility: This scheme is slightly different from the others mentioned in this post because it is not exclusively meant for only senior citizens. Any person 10 years old and above stands eligible to opt for this plan. The application process is also fairly simple, which can be completed at a post office near you.

Amount to be invested: The minimum amount required to open an account at the Post Office is only Rs 1,500, which makes it highly favorable among the rural population as well. The maximum limit for investment is Rs. 4.5 lakh.

Plan term: The scheme demands an investment for at least 5 years.

5. National Pension Plan:

This scheme is open for all employees from the public and commercial sectors who can choose to invest in a pension account to enjoy its benefits post their retirement. The plan allows for withdrawal of a certain amount after retirement. The remainder is paid out as a pension every month.

Eligibility: The scheme was initially launched for only the employees of the central government; however, now all residents of India can apply for this plan.

Know More: Top Pension Plans in India | Guide to Retirement Pension Plans in India

To Conclude

The retirement phase is one of relaxation but can also become a cause for worry, especially over the loss of stable income. Hence, the investment options detailed in this post can help senior citizens enjoy this stage without a hassle. One of the prime advantages of choosing these investment plans for retirement is that they offer fixed and assured returns to the investor throughout the term of the scheme. This allows the elderly to fulfill all their ambitions and aspirations post retirement without a worry. However, make sure to check the details of each plan before investing in it. The details of all these schemes are easily available online.

Also Read: Senior Citizens Savings Scheme in India – Eligibility, Features and Tax Benefits

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Difference Between Insured and Assured – Are You Insured or Assured Under Health Insurance Policy?

Insured and Assured in Health Insurance Policy

It can often get difficult for a layperson to understand certain terms so commonly used in insurance. Do you really get insured under a policy or assured? What is the difference? This blog throws some light on both to help you understand better.

Insured and assured both are common terms used in insurance jargon. However, they aren’t so common for the common man, who often tends to get confused between both. When they buy a health insurance policy, some fail to understand whether they are now insured by that plan or assured. Here in this post, we discuss both these terms in detail to help you understand better what each stands for and whether you really are insured or assured under your health insurance plan.

What Does Insured Mean in Health Insurance Policy?

Let’s begin by explaining what exactly is the meaning of insured in case of a health insurance policy. The whole objective of buying health insurance for you or your family is that you intend to secure their and your future health. This simply means that in the event of an unforeseen medical emergency that may require a huge spend on healthcare, you need not put a heavy burden on your pocket.

For this purpose, you buy a health insurance policy that would offer you insurance coverage for the total amount borne on healthcare expenditure. This means that you are now “insured” under your health insurance plan and will be covered by your insurer (the insurance company) in case of any hospitalization or huge spend on healthcare needs.

Note: There’s yet another reference to the term insured when speaking of insurance in general. The term insured commonly refers to the policyholder who has bought the insurance policy. He/she now becomes the “insured party” under the specific plan, while the insurance company or the service provider is referred to as the insurer.

What Does Assured Mean in Health Insurance Policy?

Now let’s discuss what exactly does the term assured stand for when speaking of insurance policies. We already understood in the section above the two common connotations for the term insured. Assured, on the other hand, is more commonly used with regard to life insurance policies or endowment plans. The person who is “assured” is entitled to be compensated by the insurance company in the event of an unfortunate mishap which may result in either disability or death of the person.

Besides that, the added benefit is that the ‘assured’ still stands a chance to receive monetary benefit under life insurance even if he/she has outlived the term of the policy. This is why Assurance Policies generally have a longer validity and tenure than General Insurance Plans.

In short, assurance is what your insurer would give you to compensate you or your beneficiary(ies) in the event of a sudden unfortunate life event resulting in disability or death. Let us now try and understand the difference between the two terms ‘insured’ and ‘assured’ in the next section.

What is the Difference Between Insured and Assured?

The prime difference between these two terms, both commonly used with reference to insurance, is as defined below:

Insurance simply means providing coverage or compensation for a specific loss incurred, whether in terms of accident or damage to property, such as in the case of house or vehicle), or loss incurred in terms of healthcare costs, such as the one in case of health insurance. The insurer in this case is then obligated to provide insurance coverage to the insured for the loss incurred by the latter.
Assurance, as the name literally translates to, means that the insurance company (more specifically life insurance providers) offer a certain assurance to provide monetary benefit to you or your beneficiaries in your absence in case of any eventuality or mishap. This may involve critical illness, temporary or permanent disability, or death. In this event, the person covered under the life insurance plan is “assured” of certain monetary death benefits.

Insured vs Assured in Health Insurance Policy – The following table details these differences more clearly:

Category or Parameter	Insured	Assured
Common Usage	General or Health Insurance	Life Insurance
Type of Policy Issued	Health Insurance Plans, Motor Insurance, Mobile Insurance	Life Insurance, Endowment Plans, Term Insurance, ULIP
Coverage Offered	Medical expenses, property loss, home theft, motor damage	Disability and death benefits
Payment for Claim	Almost as much as the total amount of loss incurred	Predetermined amount provided to cover a specific life event, such as critical illness or death of the policyholder
Total Number of Claims Permissible Under the Plan	Multiple claims allowed	Only one single claim allowed
Number of People Insured Under the Policy	Can be one or more based on the nature of the policy	Only one person assured
Policy Renewal	Annually or on term expiry	N/A
Risks Covered	Unforeseen events such as theft, natural calamities, fire, accidents, or damage	Uncertain but predictable risks such as death
Who is Insured Under the Plan	Person and/or property	Only people

Importance of Being Insured

In case of uncertain, unforeseeable situations, insurance comes to your rescue as your biggest savior. It helps compensate you for your loss which can be difficult to deal with at the time. Whether it is loss to your physical property (house or vehicle) due to a natural calamity or man-made disaster such as fire, or it is loss to life in the form of death or disability, insurance can be of great help.

At a time when you’re struggling to cope with these mishaps, insurance can help take care of your finances to reduce the burden on you to a considerable extent. It is essentially a financial backup for your family and you, your true friend in time of need. You can check up a number of life, health and general insurance plans online and after thorough research, pick the one that best suits your needs. Health insurance is definitely a must in today’s times, especially the post-pandemic era, when we learned that life can really be unpredictable.

Also Read: What are Network Hospitals in Health Insurance?

Choose the best health insurance policy in India and free yourself from the worry of healthcare expenses for you or your loved ones.

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Can a Life Insurance Policy be Transferred?

Buying a life insurance policy means you are securing the future of your family. The best thing about term life insurance is that it comes with maturity benefits. And if the policyholder passes away within the policy tenure, the nominee of the policy will get the death benefit. Either way, the policy gives something to the policyholder and his/her loved ones. However, if you buy a life insurance policy and if the need arises for it, you can also choose to transfer your policy. Yes, you read the totally right! Please read on to know how.

Transferring a life insurance policy to someone else

Although many policyholders are not aware of this, transferring your life insurance policy to someone else is very much possible. As you are transferring your life insurance policy, you also transfer title, rights, and interest.

One of the most common reasons for transferring a life insurance policy to some other person is to provide security for a loan. In one such case, the borrower assign allocates the policy to the lender. And in this case, the lender is called the assignee. As the life insurance policy is transferred, the assignee receives all the benefits from the policy.

How to transfer a life insurance policy in India – Step by Step Guide?

To know the actual steps of transferring your life insurance policy to someone else, you have to contact your life insurance provider. Every life insurance company has its own set of procedures. Nevertheless, here is a general step-by-step guide mentioned below that will give you an idea about it.

The first thing you need to do to transfer the policy is to download the necessary form from the website of company. You can even get it from the branch office of the insurance company.
At this point, you have to duly fill the form with relevant details. The details may include the name, address, signature of the assignee, your relationship with the assignee, and the reason for which you are transferring the policy.
As the form is completely filled, you have to submit it to the insurance company either online or by visiting their branch office.
You need to ensure to submit all the other documents that the insurance company may need, apart from the form that you will fill out.
Once the application for transfer is submitted, the insurance company may take some days to process the request. Once it is approved, the transfer process will be completed.

Also Read: Documents Required to Buy a Life Insurance Policy in India

What are the documents you need to transfer your insurance policy?

Although it may vary from one insurance company to the other, some of the common documents that are mostly asked by all insurance providers are mentioned herein below:

KYC documents
Original policy documents
KYC documents of the assignee

Why do you need to transfer your insurance policy?

The reason for transferring insurance policies can be many. Here are some of them mentioned below:

Advantageous for Income Tax

The income tax payout due to the death of the policyholder is exempted from any kind of income tax to be levied on the amount. In case, the policy is surrendered by the policyholder, the cash payout of the policy will incur tax that is payable. In such cases, transferring the policy may allow the policyholder to receive the cash payout without burdening themselves with paying additional income tax.

Loan collateral

An income tax policy can be used by the policyholder as collateral for securing a loan from a bank. While the bank may need traditional collateral such as real estate or investments, in lack of these an income tax policy can be used as collateral for a loan. As a term of the bank offering the loan, the income tax policy may be transferred to the name of the bank. In case the policyholder dies before the loan is completely paid off, the insurance payout for the death would be first paid to the bank which can then use it to close the loan by paying off the outstanding loan amount. After that, the remaining amount would be transferred to the nominee of the life insurance policy.

Need of money

Another reason to transfer a life insurance policy could be that you are in urgent and dire need of money. By transferring the policy to someone else, you give away the rights to make changes to the policy that would usually be reserved for the policy owner.

An insurance policy is a real asset that can help you a lot in securing your and your family’s financial future. You can head to the website of your insurance provider to find more details about how can you make the most of your existing policy by transferring it to someone else.

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Is Critical Illness Cover Included in Term Insurance Plans?

Critical Illness Cover in in Term Insurance Plans

Being diagnosed with a critical illness can not only be an extremely difficult life event for an individual but also the beginning of a stressful period for their entire family. Some critical illnesses such as cancer and brain surgery have a high morbidity rate making the treatment very complex and the recovery a time taking process. This is why while buying a term insurance plan, many insurance providers and agents suggest taking a critical illness insurance cover as well.

How does critical illness insurance cover work?

Before you buy a critical illness insurance cover, you need to know how it works. When you buy an insurance policy with a critical illness cover, there is a list of critical illnesses that are mentioned in the policy. Upon the policyholder being diagnosed with any of these, they are offered a lump-sum amount. However, in some of the policies, the insurance companies may decide to make the payout after 30 days of survival from the date of the first diagnosis.

What to consider while buying a critical illness plan?

Here are some of the points to consider before opting for a critical illness plan.

If the plan is for 30 years, the life cover will continue even after the benefit of selected critical illnesses is claimed
Under a critical illness rider category, you will be able to get the full benefit amount for a critical illness cover
The total sum insured is paid when the policyholder has passed away or in case of a total permanent disability
You can settle the claim within 21 days of receiving the required documents
You will be eligible to save taxes under Section 80C and 80D of the Income Tax Act on the premium paid for the insurance policy
In some of the cases, a few critical illnesses are not covered for claims if they are diagnosed within 90 days from the starting date of the policy.

Types of critical illnesses covered by term insurance

The critical illness list that is covered by most term insurance is mentioned herein below:

Angioplasty
Alzheimer’s Disease
Aplastic
Apallic Syndrome
Anaemia
Major Burns
Brain Surgery
Coma
Cancer
Parkinson’s Disease
Deafness
Blindness
Encephalitis
Heart Surgery

What are the benefits of term insurance plans with a critical illness cover?

Here are some of the benefits that you get when you buy a term plan with critical illness insurance.

Covers high medical expenses

Healthcare costs are at their peak in India. In one such scenario, getting admitted to the hospital for any illness can result in paying high medical bills. The expenses are endless as it includes tests, medication, surgery, and hospitalization. This is when a critical illness cover helps along with your term insurance plan. The lump sum amount you will receive can cover your medical bills.

Premiums do not change

When you buy term insurance with critical illness cover, there will be no change in the insurance premium amount for the entire tenure. Even if you are diagnosed with a critical illness during the tenure of your policy, the premium will not change.

Makes up for the loss of income

It could be really unfortunate if the sole earning member of the family is diagnosed with a critical ailment and because of which he/she cannot work anymore. Well, during one such time, a critical illness cover can be of real help. This cover will act as a replacement for the lost income. The kind of money the policyholder will receive can be used for undergoing the required treatment.

Getting tax concessions

Buying a term plan with a critical illness cover will enable you to get extra tax benefits. Term insurance plan is covered under Section 80C of the Income Tax Act, 1961; and critical illness cover is exempted under Section 80D of the Income Tax Act. From these aspects, the proceeds of a term insurance plan are exempted under Section 10(10D).

You can recover well

When you have undergone medical treatment and you have been asked to take rest for recovery, you need to take rest mentally as well. And with worries of paying bills and meeting ends cannot really let you be at peace. However, when you have term insurance with critical illness cover, you do not have to worry about the finances. You can rest assured that your medical bills will be paid.

Also Read: Best Critical Illness Plans in India Their Benefits and Features

Who should buy a critical illness cover?

Critical illness cover can be bought by anybody. However, if you fall in any of the below-mentioned categories, you must buy one.

Those with a history of illness

Many people have illnesses that run in their family and at some point in their life, they also develop them. In one such case, it is wise to opt for a critical illness cover while buying a term insurance plan.

People aged more than 40 years

People usually start developing illnesses after 40. Therefore, if you are advancing towards 40, you should buy it.

The sole earning members

If you are the only earning member of your family and have dependents on you, it is time you should get a critical illness cover along with your term plan.

Thanks to the convenience of buying policies online, you can now compare the term insurance plans from various insurance providers and select the one that suits your needs the best. For most buyers, taking a critical illness cover with their term life insurance plan is a very prudent decision.

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