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Can the ABSLI Nishchit Laabh Plan secure your financial future with guaranteed returns?
Is ABSLI Nishchit Laabh Plan that combines the benefits of insurance and investment with assured returns?
Can the ABSLI Nishchit Laabh Plan be considered for investing your savings?
In this article, we will explore whether investing in the ABSLI Nishchit Laabh can help you stay on track and achieve your goals.
We will delve into its features, advantages, disadvantages, and returns, using an Internal Rate of Return (IRR) analysis to provide a comprehensive understanding of this financial planning tool.
Table of Contents:
What is the ABSLI Nishchit Laabh Plan?
What are the features of the ABSLI Nishchit Laabh Plan?
Who is eligible for the ABSLI Nischit Laabh Plan?
What are the benefits of the ABSLI Nishchit Laabh Plan?
Grace Period, Discontinuance and Revival of ABSLI Nishchit Laabh Plan
Free Look Period of ABSLI Nishchit Laabh Plan
Surrendering ABSLI Nishchit Laabh Plan
What are the advantages of the ABSLI Nishchit Laabh Plan?
What are the disadvantages of the ABSLI Nishchit Laabh Plan?
Research Methodology of ABSLI Nischit Laabh Plan
Benefit illustration – IRR Analysis of ABSLI Nischit Laabh Plan
ABSLI Nishchit Laabh Plan Vs Other Investments
ABSLI Nishchit Laabh Plan Vs Pure Term + PPF / ELSS
Final Verdict on ABSLI Nischit Laabh Plan
What is the ABSLI Nishchit Laabh Plan?
ABSLI Nishchit Laabh Plan is a non-linked non-participating individual life insurance savings plan. ABSLI Nishchit Laabh Plan provides life insurance coverage with guaranteed lumpsum benefits, regular income, and money-back benefits depending on your saving needs.
What are the features of the ABSLI Nishchit Laabh Plan?
- Flexibility to build your ABSLI Nishchit Laabh Plan with a choice of plan option, premium payment term and policy term.
- Choice of 3 Plan Options – Endowment, Income with Lumpsum and Moneyback Option.
- Get Long-term guaranteed income for 20 or 30 years under the Income with Lumpsum option.
- Loyalty Additions to boost maturity corpus and survival benefits as per the chosen plan option.
- Guaranteed Lumpsum Benefit at Maturity of the ABSLI Nishchit Laabh Plan policy.
Who is eligible for the ABSLI Nischit Laabh Plan?
| Minimum | Maximum | |
| Age at Entry | 30 days | 60 / 55 years |
| Maturity Age | 18 years | 85 / 88 / 80 years |
| Premium Paying Term (PPT) | 8, 10 and 12 years | |
| Policy Term | Endowment – 20, 25 Income with Lumpsum – (PPT+20), (PPT+30) Moneyback – 20, 25 |
|
| Premium paying Mode | Annual, Semi-Annual, Quarterly, Monthly | |
| Annualised Premium | ₹ 15,000 | ₹ 1,50,000 |
| Sum Assured | ₹ 1,50,000 | ₹ 10,60,000 |
What are the benefits of the ABSLI Nishchit Laabh Plan?
i.) Death Benefit
In the unfortunate event of the Death of the Life Insured anytime during the ABSLI Nishchit Laabh Plan Policy Term, the Death Benefit shall be payable as a lump sum to the nominee. Death Benefit is defined as higher of:
- Sum Assured on Death
- Surrender Benefit
Where ‘Sum Assured on Death’ is higher than – Sum Assured or 105% of Total Premiums Paid till date of death
ii.) Survival benefit
On Survival of life insured, provided all due premiums have been paid, Survival Benefit is paid as below.
Endowment Option: No benefit is applicable
Income with Lumpsum Option: On survival of the Life Insured till the end of every ABSLI Nishchit Laabh Plan policy year following the completion of the Premium Payment Term, Income Benefit, expressed as a percentage of Annualized Premium, will be paid to you.
Loyalty Addition shall be paid on the date of maturity.
Moneyback Option: On survival of the Life Insured till the end of every 5th ABSLI Nishchit Laabh Plan policy year, Moneyback Benefit and Loyalty Addition will be paid to you.
iii.) Maturity benefit
Endowment & Income with Lumpsum Option: On survival of life insured till the end of the ABSLI Nishchit Laabh Plan policy term, Guaranteed Lumpsum Benefit (GLB) plus Loyalty additions are payable. Guaranteed Lumpsum Benefit and Loyalty additions are expressed as a % of Total Premiums Payable.
Moneyback Option: No maturity benefit is payable.
Grace Period, Discontinuance and Revival of ABSLI Nishchit Laabh Plan
Grace Period
A grace period of 30 days from the premium due date (15 days in case of Monthly mode) for payment of each premium will be allowed.
Discontinuance
Your ABSLI Nishchit Laabh Plan policy will acquire a Surrender Value after all due premiums for at least two full policy years are paid.
Discontinuance of Payment of Premium before the Policy has acquired surrender value: the ABSLI Nishchit Laabh Plan Policy shall Lapse w.e.f. the due date of unpaid premium, and all benefits under the policy, including the insurance cover, shall cease and no benefits shall be payable.
Discontinuance of Payment of Premium after the Policy has acquired surrender value: the ABSLI Nishchit Laabh Plan Policy shall become a Reduced Paid Up (RPU) Policy.
The RPU Sum Assured, RPU Guaranteed Lumpsum Benefit, RPU Income Benefit and RPU Moneyback Benefit shall be equal to the Sum Assured, Guaranteed Lumpsum Benefit, Income Benefit and Moneyback respectively, multiplied by the RPU Factor.
Revival
You can revive your ABSLI Nishchit Laabh Plan policy within a revival period of five years from the due date of the first unpaid premium.
Free Look Period of ABSLI Nishchit Laabh Plan
In case you are not satisfied with the terms & conditions of your ABSLI Nishchit Laabh Plan Policy, you will have the right to return your Policy 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.
Surrendering ABSLI Nishchit Laabh Plan
Your ABSLI Nishchit Laabh Plan policy will acquire a Surrender Value after all due premiums for at least two full policy years are paid. You can surrender the policy any time during the Policy Term after the policy has acquired a Surrender Value.
The Surrender Value payable will be higher than the Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV).
What are the advantages of the ABSLI Nishchit Laabh Plan?
- To enhance your risk coverage during the ABSLI Nishchit Laabh Plan policy term, you can add riders for a nominal extra cost.
- You can take a loan against your ABSLI Nishchit Laabh Plan policy, with the maximum loan amount being 80% of the surrender value.
What are the disadvantages of the ABSLI Nishchit Laabh Plan?
- The sum assured is insufficient to cover the family’s basic future needs.
- The returns are relatively low.
Research Methodology of ABSLI Nischit Laabh Plan
The ABSLI Nishchit Laabh Plan involves paying premiums for a limited period, after which you can enjoy the benefits either in a staggered manner or as a lump sum. Both survival and maturity benefits are guaranteed under this ABSLI Nishchit Laabh Plan .
To estimate the returns of the ABSLI Nishchit Laabh Plan, we will use the figures provided in the policy brochure.
Benefit illustration – IRR Analysis of ABSLI Nischit Laabh Plan
Let’s consider a scenario where a 35-year-old male invests Rs. 50,000 annually in the plan. He chooses the Endowment Option with a Premium Payment Term of 10 years and a Policy Term of 20 years, with a sum assured of ₹5.25 Lakhs.
| Male | 35 years |
| Sum Assured | ₹ 5,25,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 50,000 |
As this is an endowment option, he will receive the maturity benefit, including loyalty addition, at the end of the policy term.
The maturity amount is ₹10 Lakhs, and the Internal Rate of Return (IRR) is 4.52% as per the ABSLI Nishchit Laabh Plan maturity calculator. This rate of return is relatively low for a long-term investment with a 20-year policy term.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -50,000 | 5,25,000 |
| 36 | 2 | -50,000 | 5,25,000 |
| 37 | 3 | -50,000 | 5,25,000 |
| 38 | 4 | -50,000 | 5,25,000 |
| 39 | 5 | -50,000 | 5,25,000 |
| 40 | 6 | -50,000 | 5,25,000 |
| 41 | 7 | -50,000 | 5,25,000 |
| 42 | 8 | -50,000 | 5,25,000 |
| 43 | 9 | -50,000 | 5,25,000 |
| 44 | 10 | -50,000 | 5,25,000 |
| 45 | 11 | 0 | 5,25,000 |
| 46 | 12 | 0 | 5,25,000 |
| 47 | 13 | 0 | 5,25,000 |
| 48 | 14 | 0 | 5,25,000 |
| 49 | 15 | 0 | 5,25,000 |
| 50 | 16 | 0 | 5,25,000 |
| 51 | 17 | 0 | 5,25,000 |
| 52 | 18 | 0 | 5,25,000 |
| 53 | 19 | 0 | 5,25,000 |
| 54 | 20 | 0 | 5,25,000 |
| 55 | 10,00,000 | ||
| IRR | 4.52% |
While the guaranteed benefits of the ABSLI Nishchit Laabh Plan appear attractive, the returns are lower compared to debt instruments. Additionally, the ability to assess the funds is limited under this plan. These factors can impact the overall suitability of the ABSLI Nishchit Laabh Plan .
ABSLI Nishchit Laabh Plan Vs Other Investments
The returns of the ABSLI Nishchit Laabh Plan are lower than the inflation rate. The combination of insurance and investment in this plan negatively impacts the returns, affecting your overall financial journey.
To stay on track, you need a robust investment strategy rather than a traditional policy. Let’s explore alternative investment options in the following scenario.
ABSLI Nishchit Laabh Plan Vs Pure Term + PPF / ELSS
By separating insurance and investment, you can accumulate a higher corpus. For life coverage, a pure term life insurance policy with a sum assured of ₹5.5 Lakhs costs a premium of ₹3,900 annually.
The policy term is 20 years with a premium payment term of 10 years. This allows you to save ₹46,100 out of the ₹50,000 annual budget, which can be invested for corpus accumulation.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 3,900 |
| Investment | ₹ 46,100 |
We’ll consider two investment instruments – one for equity and one for debt – to illustrate how different asset classes perform. You can choose investments based on your risk appetite.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 36 | 2 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 37 | 3 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 38 | 4 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 39 | 5 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 40 | 6 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 41 | 7 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 42 | 8 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 43 | 9 | -50,000 | 5,25,000 | -50,000 | 5,25,000 |
| 44 | 10 | -47,500 | 5,25,000 | -50,000 | 5,25,000 |
| 45 | 11 | -500 | 5,25,000 | 0 | 5,25,000 |
| 46 | 12 | -500 | 5,25,000 | 0 | 5,25,000 |
| 47 | 13 | -500 | 5,25,000 | 0 | 5,25,000 |
| 48 | 14 | -500 | 5,25,000 | 0 | 5,25,000 |
| 49 | 15 | -500 | 5,25,000 | 0 | 5,25,000 |
| 50 | 16 | 0 | 5,25,000 | 0 | 5,25,000 |
| 51 | 17 | 0 | 5,25,000 | 0 | 5,25,000 |
| 52 | 18 | 0 | 5,25,000 | 0 | 5,25,000 |
| 53 | 19 | 0 | 5,25,000 | 0 | 5,25,000 |
| 54 | 20 | 0 | 5,25,000 | 0 | 5,25,000 |
| 55 | 13,59,954 | 25,88,822 | |||
| IRR | 6.56% | 10.88% | |||
Debt Instrument – PPF: The PPF account requires a minimum contribution of ₹500 per year for 15 years. Given the policy term is only 10 years, adjustments are made for the contributions in the remaining years.
The final maturity value in the PPF account is ₹13.59 Lakhs, with an IRR of 6.56% when combined with the pure-term policy.
Equity Instrument – ELSS: The pre-tax final maturity value of the ELSS fund is ₹28.14 Lakhs. After accounting for capital gains tax, the post-tax maturity value is ₹25.88 Lakhs, with an IRR of 10.88% (post-tax return) when combined with the pure-term policy.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 28,14,135 |
| Purchase price | 4,61,000 |
| Long-Term Capital Gains | 23,53,135 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 22,53,135 |
| Tax paid on LTCG | 2,25,314 |
| Maturity value after tax | 25,88,822 |
The accumulated corpus from these investments can help you achieve your life goals. These investments offer better returns, making them superior to the ABSLI Nishchit Laabh Plan.
Final Verdict on ABSLI Nischit Laabh Plan
The ABSLI Nishchit Laabh Plan offers guaranteed lump-sum benefits, with options for regular income and moneyback plans that can be tailored to your savings needs. Based on your preference, you can design your cash payouts.
These guaranteed benefits and flexible payout options are the primary advantages of the ABSLI Nishchit Laabh Plan.
However, the returns analysis shows that the yield is comparatively low, and the life cover provided is insufficient to meet a family’s basic needs in case of unforeseen events. Both the cash payout and the death benefit are inadequate for a family to achieve its financial goals.
Given the current inflation rate of 6-7%, the ABSLI Nishchit Laabh Plan falls short of providing the necessary support and it also has a high agent commission
A pure-term life insurance policy offers adequate life cover, acting as a safety net for your family. These policies are available at an affordable premium, allowing you to allocate more of your savings to solid investments.
By aligning your risk tolerance, time horizon, and life goals with appropriate investment options, you can build a diversified investment portfolio across various asset classes to achieve your financial goals.
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