Is the financial future of you and your family secure?
Are you someone who works hard to earn and satisfy your loved ones’ dreams?
Are you looking for an insurance plan that might protect the future of your family in your absence?
As an option, you came across Aditya Birla Sun Life Insurance Guaranteed Milestone Plan.
But you’re worried about this plan’s competence?
Well, you’ve landed in the right place.
Table of Contents:
4.) Other Benefits of ABSLI Guaranteed Milestone Plan
5.) ABSLI Guaranteed Milestone Plan: Benefit Illustration
6.) ABSLI Guaranteed Milestone Plan: Disadvantages
7.) Is the ABSLI Guaranteed Milestone Plan good or bad?
8.) ABSLI Guaranteed Milestone Plan Returns Vs PPF and Term Insurance Plan
9.) ABSLI Guaranteed Milestone Plan Returns Vs ELSS Mutual Fund and Term Insurance Plan
10.) Is the ABSLI Guaranteed Milestone Plan better than PPF and ELSS mutual funds?
This article will provide you with an honest and in-depth assessment of the plan’s worthiness.
Before jumping on to the review part of this plan, let’s start the ABSLI Guaranteed Milestone review with…
ABSLI Guaranteed Milestone: Plan Eligibility and Key Features
Individuals between the age group of 30 days to 60 years can purchase this policy. It also offers a range of policy terms, starting from 12 years to 26 years.
The table below shows the eligibility conditions of the ABSLI Guaranteed Milestone Plan.
Key Features of ABSLI Guaranteed Milestone Plan
i)It is a traditional non-participating endowment policy that helps secure your life goals (milestones).
ii)Fully guaranteed benefits on both death or maturity.
iii)Guaranteed Additions that boost your corpus year after year.
iv)Flexibility to cover your spouse by paying an additional premium for Joint Life Protection.
v)Flexibility to choose the policy term & premium paying term.
vi)By paying an additional premium, you can enhance your insurance coverage with appropriate rider options.
- ABSLI Accidental Death and Disability Rider (UIN: 109B018V03)
- ABSLI Critical Illness Rider (UIN: 109B019V03)
- ABSLI Surgical Care Rider (UIN: 109B015V03)
- ABSLI Hospital Care Rider (UIN: 109B016V03)
- ABSLI Waiver of Premium Rider (UIN: 109B017V03)
- ABSLI Accidental Death Benefit Rider Plus (UIN: 109B023V02)
Note: Joint life protection option does not include Riders.
Download ABSLI Guaranteed Milestone Policy Brochure here to get more information.
ABSLI Guaranteed Milestone Plan – Review Methodology
In the previous sections, we have seen all the key features and eligibility of this plan.
However, this information is incomplete to get a 360-degree perspective of this plan.
Now we will conduct a detailed review ABSLI Guaranteed Milestone Plan.
Let’s discuss the benefits and returns of this plan with other alternative options.
This will help us discover whether ABSLI Guaranteed Milestone Plan is good or bad for your needs.
ABSLI Guaranteed Milestone Plan: Review of Key Benefits
1.) Death Benefit
On Death, the Sum assured will be paid to the nominee in 10 equal annual installments.
If the nominee wants to get a lump sum payment instead of the annual installments, the discounted value (@ 8.25%) of the outstanding annual installments will be paid as a lump sum.
The Sum Assured on Death will be the highest of
- Sum Assured(15 x annual premium); or
- 105% of the total premiums paid as on the date of death (excluding loadings for modal premiums, applicable taxes, any applicable rider premiums, and underwriting extras, if any); or
- Maturity Sum Assured
The sum assured applicable for your spouse shall be equal to 20% of your applicable sum assured (subject to the attained age of primary life insured & secondary life insured being less than or equal to 50 years).
a)Death of primary policyholder
- Same as in single life
- The secondary life insured will become the lone policyholder and will be eligible for the maturity benefit.
- The policy continues without any future premiums to be paid.
- On subsequent death of the secondary policyholder, death benefit & maturity benefit will be paid to the nominee.
b)Death of the secondary life insured before the primary life insured
- The Applicable Death benefit will be paid immediately as a lump sum to the primary life insured.
- The policy continues for the primary policyholder where premiums are to be paid when due.
2. Maturity Benefit –
In the event, that the life insured survives to the end of the policy term, the maturity benefit is:
Maturity Sum Assured + Accrued guaranteed addition
In the later section of this article, we’ll look at an illustration that determines the ABSLI Guaranteed Milestone Plan’s actual maturity benefit.
3. Guaranteed Addition
Guaranteed Additions will accrue to the policy every month until maturity, provided all due premiums have been paid. It will be payable in the event of the life insured’s death or policy maturity, whichever comes first.
Guaranteed Addition depends on many factors such as the premium amount you commit to paying, premium band, sum assured, entry age, Joint Life Protection option, and the policy term chosen.
Other benefits of ABSLI Guaranteed Milestone Plan
- The policy can be surrendered after all due premiums are paid for at least two full years.
- Once the policy has acquired surrender value, a loan option is available.
The minimum loan amount is 5,000 and the maximum is up to 85% of your surrender value.
- A grace period of 30 days (Annual) & 15 days (Monthly)
Free lookup period – 15 days
Revival – 5 years from the due date of the first unpaid premium.
- Tax benefits under Section 80C, 80D, and Section 10(10D) of the Income Tax Act, 1961.
ABSLI Guaranteed Milestone Plan: Benefit Illustration
Let’s take an illustration to understand this
Mr. Varun who is 35 years old purchases the ABSLI Guaranteed Milestone Plan with the policy term of 20 years.
He is paying an annual premium of Rs.50,000 for 10 years.
The sum assured in this case is Rs.7,50,000.
When the policy matures, Karan will receive ₹5,00,000 as the Sum Assured on Maturity plus ₹6,24,000 as Guaranteed Additions.
The total guaranteed maturity benefit will be ₹11.24 lakhs.
While receiving guaranteed benefits and additions seems appealing, the rate of return on this policy is unknown. If only you have an annual rate of return, can you compare this policy to better options?
The illustration table below shows the calculation of IRR from the ABSLI Guaranteed Milestone plan.
After paying a total premium of 5 lakhs over 10 years, you would receive a maturity benefit of Rs.11.24 lakhs after 20 years.
Also, the plan offers an IRR or actual return of around 5%.
The return of 5-6% might look attractive to you today, but it might not be the same in the future.
With the help of the ABSLI Guaranteed Milestone Plan Calculator, you can easily calculate the premium, Money-Back amount, and maturity amount as per your age, policy term, and sum assured.
Now, let’s look at some of the disadvantages of this plan to evaluate this plan better.
ABSLI Guaranteed Milestone Plan: Disadvantages
- It is an Insurance cum Investment plan. Here neither the insurance nor the investment is beneficial to the insurer.
- The maturity amount may not be sufficient to meet the life goals due to inflation.
- The Lock-in period is 2 years for paid-up/surrendering/loan. There will be a huge capital loss if you surrender your insurance before that.
These disadvantages ultimately contradict the purpose of investing in this Plan.
Moreover, the projected pros of the ABSLI Guaranteed Milestone Plan overshadow its cons.
Is the ABSLI Guaranteed Milestone Plan good or bad?
Will the guaranteed benefits of this plan guarantee financial security to you and your family?
- Whenever you are going to buy an insurance plan, your focus should be on how much coverage you need rather than focusing on how much premium you have to pay.
- Returns of 5-6% from the ABSLI Guaranteed Milestone Plan may not keep up with the inflation and solve your purpose for investing your money in this plan.
- A person with poor investment discipline or with discretionary expenses is more likely to invest here.
- Suppose you buy ABSLI Guaranteed Milestone Plan at the age of 30 years for the maximum policy term of 26 years. In this case, you can avail the benefits of the policy only till the age of 56 years.
If you opt for this plan just because of its guaranteed returns or better returns.
In that case, it is always better to explore better plans before making any financial decision.
Exploring other alternatives will help you discover better plans with higher returns with the same or lesser risk.
So, we will evaluate and compare ABSLI Guaranteed Milestone Plan with PPF and ELSS Mutual Fund.
Also, it will be prudent to compare this plan’s insurance component to term insurance.
Why Term Insurance?
With Term Insurance you can get the same or higher life cover at a very lesser premium.
For example, ABLSI Guaranteed Milestone Plan offers you a Maturity Benefit of 11.24 lakhs with an annual premium of Rs.50,000. But with Term Insurance you can get a life cover of approximately 1 crore just by paying an annual premium of around Rs.10,600 – 12600.
Let’s compare the ABSLI Guaranteed Milestone plan against PPF + Term Insurance followed by an even better alternative choice.
ABSLI Guaranteed Milestone Plan Returns Vs PPF + Term Insurance Plan
PPF is a well-known investment instrument that provides guaranteed profits. Since the ABSLI Guaranteed Milestone Plan also offers guaranteed returns, it would be good to compare its performance against PPF.
Let’s calculate the actual returns (IRR) from PPF by investing the same amount for the same period as we did in the Guaranteed Milestone illustration above.
The only change is that Rs.4200 goes towards the Term Insurance premium.
Note: A portion of the investment capital—Rs.4200—is removed to pay for a separate 20-year Term Life Insurance policy.
Nonetheless, the figure shows that the PPF plan provides about 20.32 lakhs for the same investment as the ABSLI Guaranteed Milestone plan. Its returns are approximately 9.08 lakhs higher than the ABSLI Guaranteed Milestone Plan.
The PPF, in combination with a term insurance plan, is a better option for a conservative investor looking for guaranteed returns than the ABSLI Guaranteed Milestone Plan.
Not to mention the tax-free status of PPF investments, interest, and maturity amounts.
You should read 15 facts you may not know about PPF to learn more about the scheme.
However, if you have a long-term financial goal and are willing to take calculated investment risk, there is an even better alternative.
ABSLI Guaranteed Milestone Plan Returns Vs ELSS Mutual Fund + Term Insurance Plan
ELSS mutual funds are investment plans that invest in the stock market.
Because this is a market-linked investment, there is some risk involved. However, ELSS mutual funds provide a better return on investment as risk and return are linked.
We’ve chosen the ELSS fund for comparison because it gives tax exemption on investments up to 1.5 lakh under section 80C. They also have a 3-year lock-in period.
Consider investing the same amount in an ELSS fund as shown in the previous illustration. A portion of the initial capital—Rs.4500—is deducted to offer life cover with a term plan.
The returns from ELSS mutual fund schemes are presented below, assuming a cautious 12 percent CAGR.
Despite the huge investment risk, the ELSS Mutual Fund has generated a far better return even after assuming a conservative return rate.
Whereas, as you can see, the return on ABSLI Guaranteed Milestone is even lesser than 5.3% after a long period of 20-year!!
The return of 36.96 lakhs from the ELSS Fund is more than 3 times that of the ABSLI Guaranteed Milestone plan.
ELSS funds are also eligible for tax benefits under Section 80C of the Income Tax Act, 1961, with a maximum tax deduction of Rs. 1.5 lakh.
If an investor’s risk tolerance is high, an ELSS fund should be considered instead of the ABSLI Guaranteed Milestone plan.
Is the ABSLI Guaranteed Milestone Plan better than PPF and ELSS Mutual Fund?
- vestors looking for high returns, guaranteed returns or benefits of this plan may be a downside. As low-risk investments typically yield moderate returns.
- If you are risk-averse, you should invest in a PPF, which will provide you with assured returns of roughly 7%! Even fixed-income yields are better than ABSLI Guaranteed Milestone Plan.
- If you are a young person with a higher risk appetite, I recommend investing in an ELSS Mutual Fund rather than locking up your savings in a plan like this.
- This plan may also disappoint those who seek higher insurance coverage.
- Although, keeping your insurance and investment part separate can help you gain the benefits of both insurance and investment.
If you have already purchased this plan, you can still course-correct your investments in the appropriate direction.
Start by surrendering your policy.
How to Surrender/Cancel your ABSLI Guaranteed Milestone Plan?
You can return your policy to the corporation within a free look-up period of 15 days from the date of receipt of the policy.
If the policy is purchased online or through telemarketing, the free-look period is 30 days.
You will have to provide the written notice of cancellation stating the reason thereof along with your original policy documents.
The Corporation will then terminate the policy and refund the premium deposited upon receipt of the same.
They may deduct the proportionate risk premium (for Base Policy and any Riders, if applicable) for the term of coverage, as well as charges for medical examinations, special reports, and stamp duty.
What if you didn’t surrender the policy during the free look-up period?
You can still surrender your policy anytime during the policy term.
However, you will only receive the surrender value benefit if at least two full years’ premiums have been paid
The Guaranteed Surrender Value will be a percentage of the total premiums paid plus the percentage of Guaranteed Additions that have accrued.
The Guaranteed Surrender Value is determined by the policy’s surrender year.
A Special Surrender Value will also be available for your policy. The highest Guaranteed Surrender Value or Special Surrender Value will be paid as the surrender value.
As a result, before surrendering or canceling your policy, we recommend consulting with your financial counselor. They can help you make the most informed financial decision possible.
Final Takeaway: Should you buy ABSLI Guaranteed Milestone Plan?
Another disadvantage of this plan is that some of the funds are dedicated to term insurance while the majority of the funds are assigned to savings plans.
As a result, you do not reap the full benefits of both insurance and investing.
Keep your money secure by avoiding low-return “savings insurance” schemes.
Also, feel free to leave your thoughts or questions about this plan in the comments section below.
We hope that this review has assisted you in determining if ABSLI Guaranteed Milestone Plan is a good or bad investment for your financial needs.
By clicking the link below, you can also schedule a FREE Complimentary Consultation Call for guidance on the appropriate investment and insurance coverage for your needs: