Star Union Dai-ichi Life Insurance Co Ltd (SUD Life) and Union Bank of India (UBI) present to you Reverse Mortgage Loan-enabled Annuity Plan (RMLeA). The two signed a memorandum of understanding (MoU) yesterday.
For easy interpretation, let’s take a look at what the term RMLeA means and who can benefit from this. RMLeA is a pension plan for home-owning citizens aged between 55-85 years. It is a combination of Reverse Mortgage Loan and Life Annuity to provide a monthly income (financial security) to the annuitant for life time. Under this plan, the spouse of the annuitant / beneficiary also benefits by receiving a monthly income or a lump-sum amount on death of the annuitant.
How does the scheme work? UBI will provide RMLeA to its potential home-owning senior citizen customers on their house property. The loan amount is utilized by UBI to purchase Life annuity from SUD Life. The annuity will be disbursed monthly by UBI. Senior citizen home-owner is relieved of his/her obligation to pay the loan until he passes away, after which the house can be sold by the bank. Incase there are legal heirs, they can reclaim the property by way of repaying just the interest portion. The principal amount will be paid by SUD Life.
Kamalji Sahay, CEO of SUD Life told the reporters “RMLeA is a unique plan which they want to extend pan-India. We expect to collect around Rs 100 Crores by way of premium by the end of 2012”
RMLeA is approved by the Insurance Regulatory and Development Authority (IRDA) and is designed in association with National Housing Bank (NHB). NHB is promoted by the Reserve Bank of India (RBI).