Single-Premium Policies: Stay Or Exit?
Jiten Kumar, 30, a stage actor, bought a Rs 1 crore endowment plan for a 15-year term from OM Kotak Mahindra.
Since most actors tend to have short careers, Kumar decided to shorten the premium paying term since he could not be sure he would earn a fat salary for the next 15 years. This is possible as many insurance firms offer limited premium payment options.
Today, Kumar regrets his decision to shorten the premium paying term. He is also deliberating on switching to another scheme, since his annual premium outgo for the next three years disqualifies him from receiving any tax benefits.
The Finance Bill, 2003, has done away with tax benefits under section 10 (10D) of the I-T Act on sums received under an insurance policy where the premium paid in any of the years during the term of the cover exceeds 20 per cent of the actual capital sum assured.
Shirin Mehta, who received a good sum when she opted for voluntary retirement from the Central Bank of India. She invested a sizeable amount in SBI Life