With an investment discipline and adequate life insurance coverage, all your dreams can become a reality. These two can act as a cushion & eliminating the fear of uncertainty.
Will ABSLI Assured Savings Plan create a cushion & fulfill all your dreams?
What are the advantages(pros) and disadvantages(cons) of this ABSLI Assured Savings Plan?
What are the calculated returns of this policy in the long run?
Is the result of IRR calculation and analysis good or bad, compared to Term Insurance + PPF or ELSS combo?
This article will analyse the product & will answer all your questions.
Let’s get started!
Table of Contents:
1.)An Overview of ABSLI Assured Savings Plan
2.)ABSLI Assured Savings Plan- Analysis of Important Features
3.)Eligibility Criteria of ABSLI Assured Savings Plan – Analysis
4.)Review of Benefits under the ABSLI Assured Savings Plan
- Death benefit- Review
- ABSLI Assured Savings Plan Joint Life Protection Option – Review
- Maturity Benefit- Analysis
- Loyalty Additions- Analysis
5.)The grace period, Discontinuance, Reduced paid-up & Revival review of ABSLI Assured Savings Plan.
6.)Free-Look Period of ABSLI Assured Savings Plan.
7.)Surrendering ABSLI Assured Savings Plan
8.)Advantages of ABSLI Assured Savings Plan – Analysis
9.)Disadvantages of ABSLI Assured Savings Plan – Analysis
10.)Research methodology of ABSLI Assured Savings Plan
11.)Benefit Illustration of ABSLI Assured Savings Plan with IRR(Internal Rate of Return i.e. Interest Rate) Analysis
12.)ABSLI Assured Savings Plan vs other investment products
- ABSLI Assured Savings Plan Vs. Term Insurance + PPF / ELSS
- ABSLI Assured Savings Plan vs ABSLI Vision Endowment Plus Plan
- ABSLI Assured Savings Plan vs ABSLI Wealth Assure Plus Plan
An Overview of ABSLI Assured Savings Plan
It is a Non-Linked Non-Participating Individual Savings Life Insurance Plan. It provides life insurance cover and savings benefits to safeguard your family members from financial crises in case of an unfortunate event. At the same time, it will assist you to accumulate a lump sum amount to achieve all your dreams.
Please refer to the official brochure of the ABSLI Assured Savings Plan for more policy details.
ABSLI Assured Savings Plan – Analysis of Important Features
- ABSLI Assured Savings has a Choice of various Premium Payment Terms, Policy Terms, and Sum Assured Multiples to suit your requirements.
- It provides comprehensive risk cover in case of the death of the life insured.
- Lump sum benefits to cater to your life’s milestones.
- Loyalty Additions are added to your ABSLI Assured Savings policy to boost your maturity corpus.
- Flexibility to cover your spouse by choosing Joint Life Protection is available in ABSLI Assured Savings Policy.
- Get higher maturity benefits with higher premium-paying policies.
Eligibility Criteria of ABSLI Assured Savings Plan – Analysis
|Age of the Life Insured at Entry||Single Life: 30 days
Joint Life: 18 years
|Single life: 65 years
Joint Life: 50 years
Single Pay Option B: 50 years
|Maturity Age of the Life Insured||18 years||85 years
Single Pay Option B: 70 years
|Annualized Premium||Single Pay: Rs.100,000
5 Pay: Rs.20,000
6-12 Pay: Rs.30,000
|Premium Payment Frequency and Frequency Loadings||Premium Payment Frequency||Loading|
|Premium Payment Term (PPT) & Policy Term||Premium Payment Term (PPT)||Policy Term (Minimum – Maximum)|
|Single Pay||5 to 20|
|5||10 to 35|
|6||12 to 35|
|7||13 to 35|
|8||14 to 35|
|9||15 to 35|
|10||16 to 35|
|11||17 to 35|
|12||18 to 35|
|Premium Bands||Single pay||Limited pay|
|Band 1||NA||Up to 49,999|
|Band 2||NA||50,000 to 99,999|
|Band 3||100,000 to 199,999||100,000 to 199,999|
|Band 4||200,000 to 499,999||200,000 to 499,999|
|Band 5||500,000 to 24,99,999||500,000 to 24,99,999|
|Band 6||25,00,000 & above||25,00,000 & above|
Review of Benefits under the ABSLI Assured Savings Plan
ABSLI Assured Savings Plan Death Benefit – Review
In the event of the death of the Life Insured during the ABSLI Assured Savings Policy Term and provided that the ABSLI Assured Savings Policy is In-force, the Death Benefit will be payable to the Nominee(s)/ Legal heir(s).
A lump sum guaranteed “Death Benefit” consisting of,
the Sum Assured on Death plus Accrued Loyalty Additions (if any), in the event that the Life Insured passes away,
Any time up to the 25th ABSLI Assured Savings Policy Year.
Any time after the 25th ABSLI Assured Savings Policy Year, the life insured dies.
Higher Sum Assured on Death or Guaranteed Maturity Benefit; plus – Accrued Loyalty Additions (if any)
Where The Sum Assured on death is: For Single Pay ABSLI Assured Savings policies:
- Sum Assured
For Limited Pay ABSLI Assured Savings policies, the sum assured is Higher of,
- 150% of the Total Premiums Paid up to the date of death of the ABSLI Assured Savings policyholder.
- Sum Assured
ABSLI Assured Savings Plan Joint Life Protection Option – Review
This option is available only for Limited Pay ABSLI Assured Savings Policies. This decision must be made at the beginning of the policy and cannot be made later. 20% of the Sum Assured of the Primary Life Insured will be used as the coverage for the Secondary Life Insured.
If the primary life-insured person passes away before the secondary life-insured person, the Sum Assured on Death will be paid to the Secondary- Life Insured as a lump sum and all future due Instalment premiums, if any, under the ABSLI Assured Savings Policy will be waived.
The Secondary- Life Insured will become the sole ABSLI Assured Savings Policyholder.
On the subsequent death of the Secondary- Life Insured before the Maturity Date, the Sum Assured on death will be paid to the Nominee(s)/ Legal heir(s) as a lump sum and the ABSLI Assured Savings Policy will continue to be In-force till the Maturity Date.
The Loyalty Additions will continue to accrue at an unchanged Loyalty Additions Rate.
On the Maturity Date, the accrued Loyalty Additions and Guaranteed Maturity Benefit will be paid to the Nominee(s)/ Legal heir(s).
Maturity Benefit – Analysis
On Survival of the Life Insured till the end of the Policy Term provided the ABSLI Assured Savings Policy is in force and all due Instalment Premiums under the ABSLI Assured Savings Policy have been paid, you will receive lumpsum Maturity Benefit which shall be: –
Guaranteed Maturity Benefit; plus – Accrued Loyalty Additions
Loyalty Additions – Analysis
Accrued loyalty additions are paid in lumpsum at ABSLI Assured Savings policy maturity. Loyalty Addition % varies- as per the age bands
Loyalty Additions accrue under the ABSLI Assured Savings policy as % of Total Premiums Paid at the end of each Policy year after the Premium Payment Term until Maturity (only if all due premiums are paid).
For Single Pay Policies, Loyalty Additions will accrue from the end of the 2nd Policy Year.
The Grace period, Discontinuance, Reduced paid-up & Revival review of ABSLI Assured Savings Plan.
For Limited Pay Policies, in case you do not pay the premium by the premium due date, you will be given a Grace Period of 30 days (15 days for monthly mode) from the date of the first unpaid premium to pay the due premiums under the policy.
In case premiums are not paid for two full years, then all benefits under the policy will cease immediately.
In case premiums have been paid for at least two full years, then your policy will continue on a Reduced Paid-Up basis.
Reduced Paid-Up of ABSLI Assured Savings Policy, reduces your sum assured and sum assured at maturity in accordance with the number of premium payments made in comparison to the total amount of premiums due during the premium-paying term.
Within five years following the initial unpaid premium’s due date, you can revive your ABSLI Assured Savings policy for full coverage by paying all outstanding premiums plus interest.
Free-Look Period of ABSLI Assured Savings Plan.
You will have the right to return your policy within 15 days (30 days in case the policy is issued from the date of receipt of the policy, pursuant to the terms of the IRDAI Guidelines on Distance Marketing of Insurance Products.
Surrendering ABSLI Assured Savings Plan
Once all due premiums for at least two complete policy years have been paid, the ABSLI Assured Savings policy will obtain a surrender value. The surrender value payable will be the higher of Guaranteed Surrender Value or Special Surrender Value. Surrender Value is accessible for Single Pay policies at any point following policy issuance.
Advantages of ABSLI Assured Savings Plan – Analysis
- All the benefits are guaranteed.
- Loyalty additions from the end of the premium paying term.
- Premium waiver benefit is an inbuilt option under the joint life cover option.
- For added protection, you can enhance Your risk coverage by adding riders at a nominal extra cost.
- Once your ABSLI Assured Savings insurance policy has reached a Surrender Value, you are eligible to take a loan against the policy. The minimum ABSLI Assured Savings policy loan can be Rs. 5,000 and the maximum 80% of the then applicable Surrender Value.
Disadvantages of ABSLI Assured Savings Plan – Analysis
- Though you get assured benefits, the return is meager.
- The sum assured is low to cover the basic needs of the family.
- The lock-in period is 2 years for surrendering or for getting a loan.
Research methodology of ABSLI Assured Savings Plan
The return component under ABSLI Assured savings plan is neither linked to the market nor participates in the company’s profit (non-linked & non-participating). So, the benefits are assured.
These assured benefits including loyalty additions are payable only at maturity (except death benefit).
Let us calculate what would be the return under the ABSLI Assured Savings plan. This return can be compared with other investments. This analysis helps you figure out the suitability of the product.
Benefit Illustration of ABSLI Assured Savings Plan with IRR(Internal Rate of Return i.e. Interest Rate) Analysis
The Internal rate of return is calculated for a quote taken from the ABSLI portal. A 35-year-old male invests in ABSLI Assured Savings Plan, and chooses the following at inception: Premium Paying Term: 10 years, Policy Term 16 years, Premium Payment Mode – Annual, Annualized Premium: ₹ 100,000.
|Male||35 years old|
|Policy term||20 years|
|Premium paying term||10 years|
If he pays the premium regularly for the first 10 years, he would be receiving a maturity benefit of ₹ 25.92 lakhs at the end of 20 years.
|ABSLI Assured Savings|
|Age||Year||Annualised premium / Maturity benefit||Death benefit|
In the above illustration, the IRR of the ABSLI Assured Savings Plan is calculated at 6.23%.
The IRR for the given cash flow is 6.23%. Any long-term investment should fetch higher returns compared to the inflation rate. And also, the liquidity is not favorable, as you have to wait for the full policy term to get the benefits.
Though the investment is long, the return is not appropriate. ABSLI Assured savings plan will not be beneficial to those who are looking for long-term investments that fetch better returns.
ABSLI Assured Savings Plan vs Other Investment Products
In the previous segment, the standalone return of the ABSLI Assured savings plan is calculated. The plan is not satisfactory for various reasons. So, let us find figure out what are the options to get life cover for the same sum assured & to invest for the life goals.
ABSLI Assured Savings Plan Vs. Term Insurance + PPF / ELSS
For life cover, a pure-term policy will be affordable. For a sum assured of ₹ 12.5 lakhs, the premium would be around ₹ 10,800. The policy term is 20 years & the premium paying term is 10 years.
In the earlier for the same metrics, the annual premium is ₹ 1 lakh. Here you are left with 89,200 after premium payment. This could be invested in wealth accumulation.
|Pure Term Insurance|
|Policy term||20 years|
|Premium paying term||10 years|
For investment, debt or equity that sits your risk profile holds the best. Here we have taken both to showcase the returns under each scenario.
Debt Investment: PPF – It has a lock-in period of 15 years with a minimum contribution. The premium-paying period in the illustration is 10 years. So, adjustments were made in the next 5 years. A minimum contribution of ₹ 500 is adjusted in the 10th-year contribution.
Equity Investment: ELSS – They are subject to capital gains tax only at the time of redemption. post-tax value is taken for IRR calculation. ELSS tax calculation is given below for your reference.
|Term Insurance + PPF||Term insurance + ELSS|
|Age||Year||Term Insurance premium + PPF||Death benefit||Term Insurance premium + ELSS||Death benefit|
In the above illustration, the IRR of Term Insurance + PPF is calculated at 6.34% and the IRR of Term Insurance + ELSS is calculated at 10.64%.
ELSS tax calculation
|Maturity value after 20 years||54,45,138|
|Long-term capital gains||45,53,138|
|Tax paid on LTCG||4,45,314|
|Maturity value after tax||49,99,825|
The above comparison clearly shows what your choice should be. The Term Insurance + PPF combo earns an IRR calculated of 6.34% & Term insurance + ELSS combo earns an IRR calculated of 10.64%.
The corpus accumulated in these investments will aid you in fulfilling your dreams.
ABSLI Assured Savings Plan vs ABSLI Vision Endowment Plus Plan
This ‘Vision Endowment Plus Plan’is a Non-Linked, Participating, Life Insurance Plan whereas The ‘Assured Savings Plan’ is a Non-Linked Non-Participating Individual Savings Life Insurance Plan. ‘Assured Savings Plan’ has a plan option called Joint Life Protection Option and ‘Vision Endowment Plus Plan’ two different Death benefit policy options.
Please read and watch our reviews below for more information.
ABSLI Vision Endowment Plus Plan Review |Holistic Investment|Youtube Review|
ABSLI Assured Savings Plan vs ABSLI Wealth Assure Plus Plan
‘Wealth Assure Plus plan is a non-participating unit-linked life insurance plan (ULIP) whereas The ‘Assured Savings Plan is a Non-Linked Non-Participating Individual Savings Life Insurance Plan. another interesting aspect of the ‘Wealth Assure Plus Plan is that when you have extra savings, you can add a top-up premium.
Please read and watch our review for a comprehensive analysis of the good and bad aspects of this plan.
ABSLI Assured Savings Plan vs Other Investment Products – Review Conclusion
As we have discussed earlier, we have proved with illustration that,
the Term Insurance + PPF combo earns an IRR calculated of 6.34% & Term insurance + ELSS combo earns an IRR calculated of 10.64%.
The returns from Other Investment Products such as Term insurance + ELSS or PPF are far higher and safe to invest than ABSLI Assured Savings Plan.
Final Verdict on ABSLI Assured Savings Plan – Good or Bad?
As the name suggests, the ABSLI Assured Savings plan ensures a guaranteed or assured benefit. Usually, anyone who is risk-averse will look for assured returns.
But this assured return will not be beneficial down the lane as the expenses are increasing at rocket speed.
The assured benefits under ABSLI Assured saving plan are not appealing for an investor, due to the following reason: Sum Assured is too low, liquidity is missing & the return is not able to beat the inflation.
Pure-term insurance policy offers high coverage with affordable premiums. And you can build a separate investment portfolio for your life goals.
There are better policies in the bazaar which combine insurance & investment than the ABSLI Assured Saving plan.
Have you ever wondered why insurance agents try to push you into buying the ABSLI Assured Saving plan? Just for the high agent commission that they get for selling you this plan. simple!
The takeaway from today’s analysis is Insurance cum investment products will not be beneficial for any investor.
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