Ch. 3: What are the Different Types of Pension Accumulation Plans

Types of Non-Linked Pension Accumulation Plans

• Single-Premium Non-Linked Pension Accumulation Plans

  You just need to make a single premium payment under this type of non-linked pension plan. So, you pay the entire premium when purchasing the policy. Then, you can enjoy the benefits for the rest of the tenure.
  
  Keep in mind - These plans are comparatively quite expensive, since you pay the entire premium in one go.



• Regular Premium Non-Linked Pension Accumulation Plans

  You need to pay the premiums regularly for the entire policy duration. The premium amount is calculated on the basis of the policy duration you choose and other factors like your age, gender, etc.
  
  Keep in mind - The premium amount remains constant throughout the policy duration.
  
  For example, Simi buys a Level Payment Non-Linked Pension Accumulation Plan for a period of 22 years. The annual premium payable under her policy is Rs 1.5 Lakhs. So, she will have to pay Rs 1.5 Lakh on an annual basis for the entire policy tenure, i.e., 22 years.



• Limited Premium Non-Linked Pension Accumulation Plans

  You can finish off your premium paying liability a fewer year, instead of paying till the end of the policy duration. So, you can pay off all your premiums quickly and still enjoy the benefits for the rest of the duration.



• Participating Non-Linked Pension Accumulation Plans

  This type of Non-Linked Pension Accumulation Plans lets you participate in the profits of the insurance company. It periodically declares a specific share of the profits that it will pay to its customers - as bonuses or dividends.
  
  So, you or your nominee will receive a bonus or dividends along with the maturity benefit or death benefit.
  
  Keep in mind - These bonuses or dividends depend on the insurance company’s performance, and there’s no guarantee they’ll be paid every year.



• Non-Participating Non-Linked Pension Accumulation Plans

  These plans are exactly the opposite of Participating Non-Linked Pension Accumulation Plans. They only offer a maturity benefit or death benefit. You do not get a share of the profits made by the insurer in the form of bonuses or dividends.
  
  So, these are the various types of Pension Accumulation Plans available with insurance companies today. Before you pick one, make sure you understand how the plan works - to avoid any issues later on. The next important step is to tailor the plan to your needs; read about the various customisation options available - in the next article!