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Can the ABSLI Nishchit Pension Plan the peace of mind that comes with knowing their pension is guaranteed and their lifestyle is protected?
Can the ABSLI Nishchit Pension Plan stop your worries about post-retirement expenses?
Will investing in the ABSLI Nishchit Pension Plan guarantee the retirement income you need?
To assess its reliability, let’s review the features, advantages, disadvantages, and returns through an IRR analysis. This review will provide a comprehensive overview of the ABSLI Nishchit Pension Plan.
Table of Contents:
What is the ABSLI Nishchit Pension Plan?
What are the features of the ABSLI Nishchit Pension Plan?
Who is eligible for the ABSLI Nishchit Pension Plan?
What are the benefits of the ABSLI Nishchit Pension Plan?
Grace Period, Discontinuance and Revival of ABSLI Nishchit Pension Plan
Free Look Period of ABSLI Nishchit Pension Plan
Surrendering ABSLI Nishchit Pension Plan
What are the advantages of the ABSLI Nishchit Pension Plan?
What are the disadvantages of the ABSLI Nishchit Pension Plan?
Research Methodology of ABSLI Nishchit Pension Plan
Benefit Illustration – IRR Analysis of ABSLI Nishchit Pension Plan
ABSLI Nishchit Pension Plan Vs. Other Investments
ABSLI Nishchit Pension Plan Vs. Pure Term + ELSS
Final Verdict on ABSLI Nishchit Pension Plan
What is the ABSLI Nishchit Pension Plan?
ABSLI Nishchit Pension Plan is a non-linked non-participating individual pension plan. ABSLI Nishchit Pension Plan helps you accumulate a guaranteed corpus for your retirement along with a life insurance cover.
This lump sum corpus allows you to secure an uninterrupted income throughout your golden years.
What are the features of the ABSLI Nishchit Pension Plan?
- Guaranteed corpus accumulates on your retirement helping you secure a regular income for your golden years.
- Build your own plan by choosing between varied Premium Payment Terms and ABSLI Nishchit Pension Plan policy terms.
- It offers financial protection for your loved ones, equal to total premiums paid accumulated at a fixed percentage during the ABSLI Nishchit Pension Plan Policy Term
- Guaranteed Additions accrue periodically during the ABSLI Nishchit Pension Plan Policy Term to build your retirement corpus.
- Loyalty Addition is added at the end of the ABSLI Nishchit Pension Plan Policy Term to further boost your retirement corpus.
- Flexibility to defer your Vesting Benefit by up to 10 years.
Who is eligible for the ABSLI Nishchit Pension Plan?
| Minimum | Maximum | |
| Age at Entry | 30 years | 65 years |
| Vesting Age | 45 years | 75 years |
| Premium Payment Term (PPT) & Policy Term (PT) | PPT | PT |
| 5 years | Minimum – PPT + 5 years Maximum – 35 years |
|
| 6 years | ||
| 8 years | ||
| 10 years | ||
| 12 years | ||
| Regular pay | 10 years | |
| Annual premium | ₹ 20,000 | No limit |
What are the benefits of the ABSLI Nishchit Pension Plan?
i.) Death Benefit
In the event of death of the Life Insured during the ABSLI Nishchit Pension Plan Policy Term, the Death Benefit shall be the higher of:
- Sum Assured on Death
- Surrender Value acquired by the policy till the date of death
Where The Sum Assured on Death is defined as the higher of:
- Total Premiums Paid to date accumulated at a guaranteed rate of 6% p.a. compounded annually.
- 105% of the Total Premiums Paid to date.
Utilisation of Death benefit
Utilize the entire proceeds of the Death Benefit or part thereof for purchasing an immediate annuity or deferred annuity at the then prevailing annuity rate either from ABSLI or any other insurer
ii.) Guaranteed Additions
Guaranteed Additions are defined as a fixed percentage of Total Premiums Payable which get accrued and shall be paid on the date of vesting.
For a Limited Pay policy, Guaranteed Additions accrue at the end of each ABSLI Nishchit Pension Plan policy year starting from the end of the policy year following the Premium Payment Term till the date of vesting i.e., till the end of the ABSLI Nishchit Pension Plan Policy Term.
For a Regular Pay policy, Guaranteed Additions accrue at the end of each ABSLI Nishchit Pension Plan policy year starting from the end of the first policy year onwards till the date of vesting i.e., till the end of the Policy Term.
iii.) Loyalty Addition
Loyalty Addition as a fixed percentage of Total Premiums Payable will be added to your Vesting Benefit and payable on the date of vesting.
iv.) Vesting Benefit
On survival of the Life Insured till the end of the ABSLI Nishchit Pension Plan Policy Term, your Vesting Benefit will be defined as the sum of the following:
- Guaranteed Vesting Benefit; plus
- Accrued Guaranteed Additions till the end of the Policy Term; plus
- Loyalty Addition, if any
Utilisation of Vesting Benefit
Utilize the entire proceeds to purchase an immediate annuity or deferred annuity at the then prevailing annuity rate from ABSLI or any other insurer.
Commute up to 60% and utilize the balance amount to purchase an immediate annuity or deferred annuity at the then prevailing annuity rate from ABSLI or any other insurer.
Purchase immediate annuity or deferred annuity from another insurer at the then prevailing annuity rate to the extent of 50%, of the entire proceeds of the policy net of commutation.
Grace Period, Discontinuance and Revival of ABSLI Nishchit Pension Plan
Grace Period
A Grace Period of 30 days from the premium due date 15 days in the case of Monthly mode for payment of each premium will be allowed.
Discontinuance
Your ABSLI Nishchit Pension Plan policy will acquire a Surrender Value provided all the due Instalment Premiums for the first two Policy Years have been paid
Discontinuance of Payment of Premium before the policy has acquired Surrender Value: The ABSLI Nishchit Pension Plan Policy shall Lapse w.e.f. the due date of unpaid premium, and all benefits under the policy, including the risk cover, shall cease and no benefits shall be payable
Discontinuance of Payment of Premium after the policy has acquired Surrender Value: the ABSLI Nishchit Pension Plan policy shall be converted into a Reduced Paid-Up (RPU) Policy post.
The RPU Guaranteed Vesting Benefit shall be equal to the Guaranteed Vesting Benefit respectively multiplied by the RPU Factor.
Revival
You will have the option to revive the lapsed/Reduced Paid-up policy for its full coverage within five years from the due date of the first unpaid premium.
Free Look Period of ABSLI Nishchit Pension Plan
You will have the right to return Your ABSLI Nishchit Pension Plan policy within 15 days (30 days in case of electronic policies and the policies issued under Distance Marketing of Insurance products) from the date of receipt of the policy, in case You are not satisfied with the terms & conditions of your policy.
Surrendering ABSLI Nishchit Pension Plan
Your ABSLI Nishchit Pension Plan policy will acquire a Surrender Value provided all the due instalment premiums for the first 2 Policy Years have been paid. You can Surrender the Policy any time before the end of the ABSLI Nishchit Pension Plan Policy Term.
The surrender value payable will be higher than the Guaranteed Surrender Value (GSV) and the Special Surrender Value (SSV).
What are the advantages of the ABSLI Nishchit Pension Plan?
- You have the option to defer Vesting benefits by a Deferral Period of 1 year to 10 years from the date of vesting.
- Guaranteed additions and Loyalty additions boost up your corpus.
What are the disadvantages of the ABSLI Nishchit Pension Plan?
- There is no Loan facility.
- There is no maturity benefit, only the benefit is vested at the end of the ABSLI Nishchit Pension Plan policy term.
Research Methodology of ABSLI Nishchit Pension Plan
The purpose of the ABSLI Nishchit Pension Plan is to help you save for retirement, with the accumulated savings providing a regular income during the post-retirement period.
Unlike many insurance-cum-savings products that offer periodic payments, lump sums, or a combination of both, the ABSLI Nishchit Pension Plan has a different structure. Let’s understand this with a benefit illustration.
Benefit Illustration – IRR Analysis of ABSLI Nishchit Pension Plan
A 35-year-old male pays an annual premium of ₹1 lakh into the ABSLI Nishchit Pension Plan. The premium payment term is 10 years, while the policy term spans 25 years, with a vesting age of 60 years. The death benefit is ₹15 lakhs.
| Male | 35 years |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,00,000 |
He pays the premiums for the first 10 years, and the benefits, along with accrued guaranteed additions and loyalty additions, vest at the age of 60.
This is termed a vesting benefit rather than a maturity benefit, meaning you cannot encash the benefit at the end of the policy term. In this scenario, the vesting benefit is ₹39.37 lakhs.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 15,00,000 |
| 36 | 2 | -1,00,000 | 15,00,000 |
| 37 | 3 | -1,00,000 | 15,00,000 |
| 38 | 4 | -1,00,000 | 15,00,000 |
| 39 | 5 | -1,00,000 | 15,00,000 |
| 40 | 6 | -1,00,000 | 15,00,000 |
| 41 | 7 | -1,00,000 | 15,00,000 |
| 42 | 8 | -1,00,000 | 15,00,000 |
| 43 | 9 | -1,00,000 | 15,00,000 |
| 44 | 10 | -1,00,000 | 15,00,000 |
| 45 | 11 | 0 | 15,00,000 |
| 46 | 12 | 0 | 15,00,000 |
| 47 | 13 | 0 | 15,00,000 |
| 48 | 14 | 0 | 15,00,000 |
| 49 | 15 | 0 | 15,00,000 |
| 50 | 16 | 0 | 15,00,000 |
| 51 | 17 | 0 | 15,00,000 |
| 52 | 18 | 0 | 15,00,000 |
| 53 | 19 | 0 | 15,00,000 |
| 54 | 20 | 0 | 15,00,000 |
| 55 | 21 | 0 | 15,00,000 |
| 56 | 22 | 0 | 15,00,000 |
| 57 | 23 | 0 | 15,00,000 |
| 58 | 24 | 0 | 15,00,000 |
| 59 | 25 | 0 | 15,00,000 |
| 60 | 39,37,000 | ||
| IRR | 6.82% |
The IRR for this cash flow is 6.82% as per the ABSLI Nishchit Pension Plan maturity calculator, which matches the inflation rate and might persuade you to invest in the ABSLI Nishchit Pension Plan.
However, the numbers we have arrived at are notional since the benefit is not directly available for you to use. You cannot utilise it for personal goals or invest at your discretion. Instead, you are required to purchase an annuity plan (commuting up to 60%).
The accumulated corpus is then invested in an annuity plan at the prevailing rate, which is not part of the ABSLI Nishchit Pension Plan. This restricted situation often leads policyholders to reject the ABSLI Nishchit Pension Plan.
ABSLI Nishchit Pension Plan Vs. Other Investments
All retirement plans consist of an accumulation phase and a distribution phase. The ABSLI Nishchit Pension Plan focuses solely on the accumulation phase, leaving the distribution phase-out of its scope.
To address this limitation, let’s explore alternative investment opportunities. By comparing these options, we can identify effective ways to accumulate a retirement corpus and appropriate investments for regular income.
ABSLI Nishchit Pension Plan Vs. Pure Term + ELSS
Assume the same metrics as the previous illustration. For life cover, a pure-term life insurance policy with a sum assured of ₹15 lakhs costs ₹15,900 per annum. The policy term is 25 years, and the premium-paying term is 10 years.
After paying the insurance premium, you will have ₹84,100 left from the ₹1 lakh annual premium, which can be invested according to your risk appetite.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 15,900 |
| Investment | ₹ 84,100 |
In this scenario, the savings are invested in an ELSS fund for retirement corpus accumulation. At the end of 25 years, the maturity proceeds amount to ₹90.47 lakhs. After accounting for capital gains tax, the post-tax maturity value is ₹81.61 lakhs, yielding an IRR of 10.56% (post-tax return).
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 15,00,000 |
| 36 | 2 | -1,00,000 | 15,00,000 |
| 37 | 3 | -1,00,000 | 15,00,000 |
| 38 | 4 | -1,00,000 | 15,00,000 |
| 39 | 5 | -1,00,000 | 15,00,000 |
| 40 | 6 | -1,00,000 | 15,00,000 |
| 41 | 7 | -1,00,000 | 15,00,000 |
| 42 | 8 | -1,00,000 | 15,00,000 |
| 43 | 9 | -1,00,000 | 15,00,000 |
| 44 | 10 | -1,00,000 | 15,00,000 |
| 45 | 11 | 0 | 15,00,000 |
| 46 | 12 | 0 | 15,00,000 |
| 47 | 13 | 0 | 15,00,000 |
| 48 | 14 | 0 | 15,00,000 |
| 49 | 15 | 0 | 15,00,000 |
| 50 | 16 | 0 | 15,00,000 |
| 51 | 17 | 0 | 15,00,000 |
| 52 | 18 | 0 | 15,00,000 |
| 53 | 19 | 0 | 15,00,000 |
| 54 | 20 | 0 | 15,00,000 |
| 55 | 21 | 0 | 15,00,000 |
| 56 | 22 | 0 | 15,00,000 |
| 57 | 23 | 0 | 15,00,000 |
| 58 | 24 | 0 | 15,00,000 |
| 59 | 25 | 0 | 15,00,000 |
| 60 | 81,61,190 | ||
| IRR | 10.56% |
| ELSS Tax Calculation | |
| Maturity value after 25 years | 90,47,533 |
| Purchase price | 84,100 |
| Long-Term Capital Gains | 89,63,433 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 88,63,433 |
| Tax paid on LTCG | 8,86,343 |
| Maturity value after tax | 81,61,190 |
This accumulated retirement corpus is double that of the ABSLI Nishchit Pension Plan. Additionally, you have the flexibility to utilize these funds as you see fit. This substantial corpus can be invested in a diversified asset class, providing regular income.
A diversified investment portfolio, along with appropriate rebalancing, ensures inflation-adjusted income during your golden years.
The ABSLI Nishchit Pension Plan fails to offer these benefits, leaving policyholders with fewer options and less flexibility.
Final Verdict on ABSLI Nishchit Pension Plan
The ABSLI Nishchit Pension Plan combines a savings plan with an annuity plan, where the accumulated savings are used later for regular income.
Unlike traditional endowment plans that offer insurance cover and maturity benefits at the end of the policy term, the benefits of the ABSLI Nishchit Pension Plan vest at the end of the term.
You don’t fully enjoy the benefits of the ABSLI Nishchit Pension Plan; instead, you receive a regular income, which isn’t covered under the plan. The plan’s suitability is unclear because it doesn’t provide details on how the annuity plan works.
Even if you receive a regular income from the accumulated corpus, the annuity might not keep up with ever-increasing expenses and it also has a high agent commission, making the ABSLI Nishchit Pension Plan less appealing.
To accumulate a retirement corpus, start by setting clear retirement goals and determining how much you need to save. Invest regularly in a diversified portfolio that includes equities, fixed-income instruments, and other assets based on your risk tolerance.
Consistently review and adjust your investment strategy to stay on track with your retirement goals.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
For personalized guidance in determining your retirement corpus and starting your retirement investments, consult a Certified Financial Planner. They can help you craft a personalized retirement plan.
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