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Shriram Life Assured Income Plan
Shriram has been beautifully marketing their product Shriram Life Assured Income Plan on various TV channels and digital platform with hope of getting assured income. Let’s go in depth and review the same.
It’s a non-participating traditional policy that guarantees periodic payments for a specific period. There are two policy terms: 8 years and 10 years. With a policy term of eight years, the basic sum assured will be eight times the annual premium. With a policy term of 10 years, the sum assured will be 10 times the annual premium. After the policy term is over, you will be entitled to an annual payment during the benefit payout period, which is equal to the policy term.
So, if you choose a policy term of 10 years, you will need to pay an annual premium for the first 10 years during the policy term, and you will get an annual payout in the next 10 years during the benefit payout period. This payout is fixed and depends on your age, policy term and premium. For instance, for a 30-year-old, for a premium of 50,000 and policy term of 10 years, the annual payout will be 162% of the premium—81,000 every year for 10 years. IRR of the plan is roughly 4% which is almost equal to saving bank interest rates.
The policyholder can also opt for a lump sum benefit instead. This would be given as a percentage of the basic sum assured. In the example above, it would be 118% of the sum assured.
If the policyholder dies during the policy term, the beneficiary could opt for the benefit payouts, which, going by the above example would mean that the beneficiary would get 81,000 for 10 years.
The beneficiary could also opt for a lump sum payment. The payment would be higher of the following: five times the annual premium if the policy term is eight years, and 10 times if the policy term is 10 years, and the policyholder is less than 45 years of age. Or, 105% of all the premiums paid till date or the maturity sum assured that the policyholder would get if she had opted for the lump sum payment.
WATCH OUT
If you opt for a policy term of eight years, you will not get any tax benefits, on premiums or on maturity, because the sum assured under this plan is only eight times the annual premium. The sum assured has to be at least 10 times the annual premium to avail tax benefits.
HOW DOES IT WORK?
Say, a 35-year-old male buys this policy for an annual premium of 1 lakh, and a term of 10 years. The annual payout during the benefit payout term of the next 10 years will be 1.61 lakh—a net return of around 5%.
AssuredGain’s review:
The insurance component is insufficient. Even as an investment, this plan returns only around 5%. The only benefit is that the returns are guaranteed, but the returns may be sub-optimal. Another drawback is that this policy does not disclose the net rate of return, something than a guaranteed product should ideally do.
Ask an experienced financial planner for guidance in determining how to manage your funds – and for exploring your options to generate reliable income. They can help you build a rock-solid strategy that lets you enjoy a predictable lifestyle for the long haul.
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