Kotak Premier Pension Plan – What are the hidden factors?

Kotak Premier Pension Plan ReviewKotak Premier Pension Plan Review

Couple of weeks back, Kotak Life has launched a traditional retirement plan named Kotak Premier Pension Plan. This Kotak Premier Pension Plan is traditional participating pension plan. Kotak Life indicates that this plan was floated to help and accumulate retirement kitty. Kotak Life Premier Pension Plan comes with assured death benefit and vesting benefits. Should you consider this plan for your retirement? What are the hidden factors in this Kotak Premier Pension Plan? What are the alternative investment options available?

Features of Kotak Premier Pension Plan

  • Guaranteed Sum Additions of %age of basic sum assured for first 5 years of the plan. This would be accrued and paid on death or on vesting which ever is earlier
  • Bonus starts accruing from 6th year onwards.
  • Maturity Guaranteed Benefit of 105% of premiums paid on vesting.
  • Additional 2 protection riders.

Also Read: Aegon Religare iSpouse Joint Life Insurance Plan – Should you consider such plans?

Who is eligible to take this Kotak Premier Pension Retirement Plan?

Kotak Premier Pension Plan--eligibility

Download Kotak Premier Pension Plan Brochure at this link

What are various benefits available in Kotak Premier Pension Plan?

a) Guaranteed Additions

Guaranteed additions for first 5 years of the policy term as a %age of basic sum assured.

  • Regular premium plans – 5% per annum of basic sum assured (BSA)
  • Single premium plans – 2% per annum of basic sum assured (BSA)

b) Assured Benefit

This is the minimum guaranteed benefit paid on death or onvestingwhich is equal to 105% of the Total Premiums till date.

c) Maturity / Vesting Benefit

At the end of the policy term, maturity / vesting benefit would be the following:

  • Basic Sum Assured PLUS
  • Accrued Guaranteed Additions PLUS
  • Accrued reversionary Bonuses and Terminal Bonus (if any)

d) Death Benefit

In case of unfortunate demise of policy holder, nominee would get the following:

  • Assured Benefit PLUS
  • Accrued Guaranteed Additions PLUS
  • Accrued reversionary Bonuses and Terminal Bonus (if any)
  • Nominee can purchase annuity from Kotak Life at current annuity rates or can withdraw entire proceeds.

How vesting benefit issue proceeds can be taken by policy holder?

  • Take up to 1/3 of the benefit as tax-free cash lump sum as per the current tax regulations. The rest of the amount must be converted to an annuity at prevailing annuity rates.
  • You can purchase single premium deferred pension product from Kotak Life.

Is it possible to defer Maturity Date / Vesting Date?

This retirement plan allows you to defer maturity / vesting date. However life insured should be less than 55 years of age. When you postpone the maturity date, Assured Vesting Benefit and Death Benefit would continue at same level.

What Riders are Available in this plan?

This plan is available with 2 riders for increased protection level. These are optional riders.

Kotak Accidental Death Benefit: This benefit would be paid in case of accident of policy holder.

Kotak Permanent Disability Benefit: Due to disability due to accident, this benefit would be paid.

Are there any High Sum Assured Discounts on premiums?

If one opts for Rs 5 L and above policy, they would get below discounts on premium:

  • Regular premium payments – 0.2% of total premiums paid
  • Single Premiums – 0.8% of premiums paid.

How does this plan work exactly?

Below example shows benefits available, for a person aged 35 years for a Basic Sum Assured of 10 lakhs and with a policy term & premium payment term of 20 years.

Kotak Premier Pension Plan-illulstration

Also Read: HDFC Life Click 2 Retire ULIP Plan – Should you invest in this retirement plan?

Should you opt for Kotak Premier Pension Plan?

This looks little complicated retirement plan. This is not complete protection plan. You would get just 105% of premiums paid in case of death of life insured apart from guaranteed additions. It provides 5% guaranteed additions for first 5 years, but later if company declares bonus, it would be added. Even if we assume that bonus would be anywhere between 0% to 5% per annum, the maximum you would get is 5%. Means you are investing your money for 5% returns that too it is not guaranteed. Your first priority should be taking term insurance plan. If you are low risk investor, try to invest in plans like HDFC Click 2 Retire ULIP plan where atleast, there is some scope to get returns. Alternatively, like I said earlier, you caninvest in equity mutual fundswhich can provide you 12% to 15% annualized returns in the long run of 10 to 15 years.  

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Kotak Premier Pension Plan – What are the hidden factors


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