Rising longevity, for investors, is a risk too. It is a very live risk for this generation, because life expectancy in India is rising rapidly. The average life expectancy has climbed from 52 years in the 1980s to 66 years by 2012 (Census data) — that’s roughly five years added to the average life-span every decade.
Women and more affluent people should expect to live much longer. Therefore, if you are in your thirties today, you can reasonably expect to live on to your mid-eighties.
That means planning for 25 years of post-retirement life. This calls for four changes to your financial plans.
Beware of risk of living too long:
When they retire, most people without a pension don’t have a concrete plan for regular income in their post-retirement years. They plan to invest in fixed deposits or bonds. But assuming you live on for 25 years post-retirement, this strategy will subject you to substantial re-investment risk.
Re-investment risk is the risk that your returns (interest rates) will get reset lower every time your deposit matures, and you need to re-invest that money.
Just think of a long-living retiree 20 years ago, who decided to rely on bank fixed deposits for his pension needs. In 1995, he would have received 11 per cent annual interest from his five-year bank FDs.
As those matured in 2000, the rates were down to 10 per cent. In 2005, he would have had a nasty shock in store, as bank FD rates plunged to 5.75 per cent. In 2010 and 2015, he would have been able to lock in at 7.50 and 8.75 per cent respectively.
These swings in interest rates would have made for wild fluctuations in his monthly income. Reinvestment risk can really dent your income if interest rates trend down over the long term.
Given that the long-term trajectory of rates in developing economies like India is expected to be down, today’s retirees have even more reason to worry about reinvestment risk. To avoid such unpredictable income, the best bet for a retiree would be to lock into fixed income options for as long a tenure as possible.
Unfortunately, India does not have too many fixed income options that go beyond five years. Tax-free bonds (10 and 15 years) are one option. Immediate annuity plans are another.
LIC OF INDIA’s LIC Jeevan Akshay VI plan no T-810 can be the best option available in the current market. The detail as follows:
Annuity Option : Annuity for life with return of purchase price on death
Age :60
Sum Assured : 100000000
Single Premium : 101500000
Annuity :
Yearly : 7545000
Halfly : 3667500
Quarterly : 1811250
Monthly : 598333
We all want to see INDIA as Developed Nation the effect of Developed nation will as follows:
2. INSURANCE PLANNING THE TERM INSURANCE:
One can have risk cover Sum Assured of 1,00,00,000 ,Premium 30,000 per year Age at 35 years for 35 years term with return of premium at the end of the term.
3.ESTATE PLANNING WITH LIC OF INDIA :
One's estate is comprised of everything one own— his car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or how modest, everyone has an estate and something in common one can’t take it with him when one dies.
When that happens—and it is a “when” and not an “if”—one probably want to control how those things are given to the people or organizations one cares most about. To ensure his wishes are carried out, one's need to provide instructions stating whom he wants to receive something of his, what he wants them to receive, and when they are to receive it. One shall, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.
That is estate planning—making a plan in advance and naming whom he wants to receive the things he owns after he dies. However, good estate planning is much more than that.
4.CHILDREN EDUCATION AND MARRIAGE PLANNING WITH LIC OF INDIA:
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