ABSLI Monthly Income Plan
Is ABSLI Monthly Income Plan a reliable way to ensure a steady stream of income for your family?
Can the ABSLI Monthly Income Plan ensure a steady stream of income for your family?
Will the ABSLI Monthly Income Plan offer a solution by providing an additional financial source to meet these growing needs?
In this review, we will evaluate the features, advantages, disadvantages, and return analysis of the ABSLI Monthly Income Plan through IRR calculation. This detailed review aims to help you understand how the ABSLI Monthly Income Plan works.
What is the ABSLI Monthly Income Plan?
What are the features of the ABSLI Monthly Income Plan?
Who is eligible for the ABSLI Monthly Income Plan?
What are the benefits of the ABSLI Monthly Income Plan?
Grace period, Discontinuance and Revival of ABSLI Monthly Income Plan
Free Look period of ABSLI Monthly Income Plan
Surrendering ABSLI Monthly Income Plan
What are the advantages of the ABSLI Monthly Income Plan?
What are the disadvantages of the ABSLI Monthly Income Plan?
Research Methodology of ABSLI Monthly Income Plan
Benefit illustration – IRR analysis of ABSLI Monthly Income Plan
ABSLI Monthly Income Plan Vs Other Investment Returns
ABSLI Monthly Income Plan Vs Pure Term + ELSS
Final Verdict on ABSLI Monthly Income Plan
Aditya Birla Sun Life Insurance Monthly Income Plan is a participating non-linked life insurance plan. Aditya Birla Sun Life Insurance Monthly Income Plan fulfils your need to plan ahead of time for your family’s growing needs in the present while providing for their future.
| Entry Age | 18 years – 55 years (For a premium paying term of 10 years) |
| 18 years – 53 years (For a premium paying term of 12 years) | |
| Premium Paying Term (PPT) | 10, 12 years |
| Deferment Period (DF – starts after PPT) | 0, 5, 10 years |
| Income Benefit Period (IBP – starts after DP) | 10, 15, 20 years |
| Income benefit option | Level / Increasing |
| Policy term | Minimum – 20 years Maximum – 37 years Policy term = PPT + DP + IBF) |
| Minimum Sum Assured | ₹ 4 Lakhs |
| Premium Frequency | Annual, Semi-annual, Quarterly and Monthly |
After completion of the Deferment Period, you shall start receiving monthly income benefits in advance as a percentage of the sum assured over the Income Benefit Period as per the option chosen at inception.
You may choose one of the following Income Benefit Options at inception:
Level Income Benefit – Under this option, the income benefit paid will be 1% of the Sum Assured per month and will remain fixed throughout the Income Benefit Period (IBP).
Increasing Income Benefit – Under this option, the income benefit paid will start at 1% of the Sum Assured per month and then such amount of income benefit will increase at 5% per annum simply after every 12 months during the Income Benefit Period (IBP).
In the event of the death of Life Insured before the commencement of the Income Benefit Period
A. The Death Benefit will be the highest of:
Where the Sum Assured is the absolute amount assured to be paid immediately on death and the Total Income Benefit is an undiscounted total absolute amount of income benefit payable during the income benefit period.
The Income benefit due will commence for the fixed Income Benefit Period from the date of death.
B. Bonuses
It will continue to accrue on the full Sum Assured till the end of the Income Benefit Period and total bonuses including Terminal Bonus (if any) will be paid at the end of the Income Benefit Period
In the event of death of Life Insured on or after commencement of the Income Benefit Period
A. The Death Benefit will be the highest of:
Where Sum Assured is the absolute amount assured to be paid immediately on death and the outstanding Income Benefit is an undiscounted absolute amount of outstanding income which will continue to be paid for the remaining Income Benefit Period.
B. Bonuses
It will continue to accrue on full Sum Assured till the end of the Income Benefit Period and total bonuses including Terminal Bonus (if any) will be paid at the end of Income Benefit Period.
In the event of the death of a Life Insured due to an accident, an additional benefit equals to the Sum Assured chosen will be paid immediately in a lump sum to the nominee as an Accidental Death Benefit.
In the event the Life Insured survives to the end of the policy term, the maturity benefit will be: Attached bonuses accrued till maturity date; plus a terminal bonus (if any).
You will be given a grace period of 30 days and during this grace period, all coverage under your Aditya Birla Sun Life Insurance Monthly Income Plan policy will continue.
If you discontinue paying premiums after having paid for at least two full year’s premiums, your Aditya Birla Sun Life Insurance Monthly Income Plan policy will not lapse but will continue on a Reduced Paid-Up basis.
Revival You can revive your Aditya Birla Sun Life Insurance Monthly Income Plan policy for its full coverage within five years from the due date of the first unpaid premium.
You will have the right to return your Aditya Birla Sun Life Insurance Monthly Income Plan policy to us within 15 days (30 days in the case of electronic policies and the policies issued under Distance Marketing) from the date of receipt of the policy.
Your Aditya Birla Sun Life Insurance Monthly Income Plan policy will acquire a surrender value after all due premiums for at least two full policy years have been paid.
The Guaranteed Surrender Value is equal to a percentage of Total Premiums Paid and the surrender value of accrued bonuses less any income benefit already paid.
As the name suggests, the ABSLI Monthly Income Plan provides a monthly income. This income benefit is receivable after the completion of both the premium paying term and the deferment period, resulting in a significant waiting period before receiving the income benefit.
To determine if this wait is worthwhile, we can analyse a benefit illustration from the Aditya Birla Sun Life Insurance Monthly Income Plan policy brochure to understand the cash flow pattern and its value.
Consider a 35-year-old male who purchases the ABSLI Monthly Income Plan with a sum assured of ₹10 lakhs. The premium paying term is 10 years, followed by a 10-year deferment period, and an income benefit period of 10 years. This makes the total policy term 30 years.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 13,300 |
| Investment | ₹ 70,640 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -83,940 | 10,00,000 |
| 36 | 2 | -83,940 | 10,00,000 |
| 37 | 3 | -83,940 | 10,00,000 |
| 38 | 4 | -83,940 | 10,00,000 |
| 39 | 5 | -83,940 | 10,00,000 |
| 40 | 6 | -83,940 | 10,00,000 |
| 41 | 7 | -83,940 | 10,00,000 |
| 42 | 8 | -83,940 | 10,00,000 |
| 43 | 9 | -83,940 | 10,00,000 |
| 44 | 10 | -83,940 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 16 | 0 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 |
| 55 | 21 | 1,20,000 | 10,00,000 |
| 56 | 22 | 1,20,000 | 10,00,000 |
| 57 | 23 | 1,20,000 | 10,00,000 |
| 58 | 24 | 1,20,000 | 10,00,000 |
| 59 | 25 | 1,20,000 | 10,00,000 |
| 60 | 26 | 1,20,000 | 10,00,000 |
| 61 | 27 | 1,20,000 | 10,00,000 |
| 62 | 28 | 1,20,000 | 10,00,000 |
| 63 | 29 | 1,20,000 | 10,00,000 |
| 64 | 30 | 1,20,000 | 10,00,000 |
| 19,74,149 | |||
| IRR | 5.8% |
After the premium payment and deferment periods, a monthly income of 1% of the sum assured is received. The final maturity benefit depends on the bonus declaration. In this case, a monthly income of ₹10,000 and a final maturity benefit of ₹19.74 lakhs are receivable.
The IRR for this cash flow is calculated to be 5.8% as per the Aditya Birla Sun Life Insurance Monthly Income Plan maturity calculator.
Given the long waiting period, the accrued corpus does not generate the desired income, making the ABSLI Monthly Income Plan an unsuitable option for your portfolio.
Analysing cash flow and comparing returns with other investments is crucial for making informed decisions. For an effective comparison, it’s important to use consistent metrics, which means the previous illustration metric is also used in the comparison.
The ABSLI Monthly Income Plan combines life cover and monthly income. For comparison, we will separate these two components.
A pure term life insurance policy with a sum assured of ₹10 lakhs costs an annual premium of ₹13,300. The premium paying term is 10 years, and the policy term is 30 years. The remaining amount of ₹70,640 can be invested according to your risk profile.
The accumulated corpus from this investment can be used for monthly withdrawals, similar to the ABSLI Monthly Income Plan.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 30 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 13,300 |
| Investment | ₹ 70,640 |
Consider investing the savings in an ELSS fund. The accumulated corpus under the ELSS fund is ₹43.12 lakhs. After capital gains tax, the post-tax value is ₹39.61 lakhs.
At the end of 20 years, the proceeds from the ELSS are reinvested in an instrument with a 7% return, allowing for monthly withdrawals.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -83,940 | 10,00,000 |
| 36 | 2 | -83,940 | 10,00,000 |
| 37 | 3 | -83,940 | 10,00,000 |
| 38 | 4 | -83,940 | 10,00,000 |
| 39 | 5 | -83,940 | 10,00,000 |
| 40 | 6 | -83,940 | 10,00,000 |
| 41 | 7 | -83,940 | 10,00,000 |
| 42 | 8 | -83,940 | 10,00,000 |
| 43 | 9 | -83,940 | 10,00,000 |
| 44 | 10 | -83,940 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 16 | 0 | 10,00,000 |
| 51 | 17 | 0 | 10,00,000 |
| 52 | 18 | 0 | 10,00,000 |
| 53 | 19 | 0 | 10,00,000 |
| 54 | 20 | 0 | 10,00,000 |
| 55 | 21 | 1,20,000 | 10,00,000 |
| 56 | 22 | 1,20,000 | 10,00,000 |
| 57 | 23 | 1,20,000 | 10,00,000 |
| 58 | 24 | 1,20,000 | 10,00,000 |
| 59 | 25 | 1,20,000 | 10,00,000 |
| 60 | 26 | 1,20,000 | 10,00,000 |
| 61 | 27 | 1,20,000 | 10,00,000 |
| 62 | 28 | 1,20,000 | 10,00,000 |
| 63 | 29 | 1,20,000 | 10,00,000 |
| 64 | 30 | 1,20,000 | 10,00,000 |
| 60,72,845 | |||
| IRR | 9.15% | ||
By the end of 30 years, the investment value after monthly withdrawal is ₹60.72 lakhs. This amount can be fully withdrawn to match the maturity benefit of the ABSLI Monthly Income Plan.
The IRR for this cash flow is 9.1%. This alternative investment strategy outpaces inflation and offers flexibility to adjust withdrawals based on needs or inflation.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 43,12,159 |
| Purchase price | 7,06,400 |
| Long-Term Capital Gains | 36,05,759 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 35,05,759 |
| Tax paid on LTCG | 3,50,576 |
| Maturity value after tax | 39,61,583 |
Through this comparison, we can infer that there are more effective ways to achieve monthly withdrawals. The ABSLI Monthly Income Plan is not the best investment option.
The ABSLI Monthly Income Plan aims to provide regular monthly income until maturity to meet your financial needs. However, the income is only receivable after completing both the premium paying term and the deferment period, making it a long-term investment.
When evaluating returns, the plan’s long-term nature yields a relatively low return. Additionally, the income benefit cannot be deferred or accrued to receive as a lump sum.
The ABSLI Monthly Income Plan’s investment return and liquidity limitations hinder its performance, making it unsuitable for your investment portfolio and also has a high agent commission.
For regular income needs, consider accumulating the required corpus in products aligned with your risk tolerance. This approach offers better liquidity and investment returns, along with appropriate life coverage to protect your family.
A standard monthly withdrawal plan does not meet everyone’s needs. Consult a certified Financial Planner to customize your financial plan based on your risk profile and timeline for your goals.
Listen to this article Is the Ageas Federal ProGrow Plan truly a professional way to…
Listen to this article Is the Ageas Federal Platinum Wealth Builder Plan truly a wealth-building…
Listen to this article When stock markets tumble, what do direct retail investors do—hold, buy…
Listen to this article Table of Contents What Is a ULIP Insurance Plan? The Flaw…
Listen to this article Feeling uneasy seeing your equity funds in the red lately? You’re…
Listen to this article We often find idle money sitting in our savings accounts —…