Comprehensive Review of ABSLI Secure Plus Plan: Is it good or bad?

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Aditya Birla Sun Life Insurance Secure Plus Plan is a traditional endowment policy. It claims to provide a second income to your family to achieve your short-term goals with ease and flexibility.

Will ABSLI Secure Plus Plan’s claim to provide financial stability will be able to stand the test of time in the face of inflation?

Is it really a secure investment as it claims to be?

Let us do in-depth research on ABSLI Secure Plus Plan and discover how secure of an investment it really is.

What is the ABSLI Secure Plus plan?

ABSLI Secure Plus Plan is an individual, Non-Linked and Non-Participating Savings Plan.

ABSLI Secure Plus Plan claims to provide the benefits of a comprehensive life insurance cover along with a guaranteed regular income. This plan offers you both life protection and savings features.

Now let us see the features ABSLI Secure Plus Plan.

Features of ABSLI Secure Plus plan:

Flexibility to choose at your convenience – a combination of Premium Payment Term (PPT), Policy Term (PT), and Benefit Pay-out Period.
Flexibility to choose the frequency of Premium paying term & Income benefit pay-out of your choice.
Option to get guaranteed regular income for the chosen Benefit pay-out period.
Option to commute the future survival benefits as a lumpsum amount.
Loyalty additions to boost your income benefit pay-out.
Various rider options with a nominal extra cost to enhance the cover.

Tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act of 1961.

Eligibility criteria of ABSLI Secure Plus plan:

Coverage	All Individuals (Male \| Female \| Transgender)
Age of the Life Insured at Entry (age as on last birthday)	Minimum – 1 year
	Maximum- 60 years
Maturity Age of the Life Insured (age as on last birthday)	Minimum – 18 years
	Maximum- 77 years
Minimum Annualized Premium	50,000
Maximum Annualized Premium	No Limit (subject to Board Approved Underwriting Policy)
Minimum Sum Assured	3,50,000
Maximum Sum Assured	No Limit (subject to Board Approved Underwriting Policy)

Note: In case, the Life Insured is a minor, the Policy will automatically vest once the life insured attains the age of majority. The risk coverage for the minors will start from the date the policy is issued.

Premium Payment Term (PPT)	Policy Term (PT)	Benefit Pay-out Period
6 years	6/7/8/9/10/11 years	6/8/10/12 years
8 years	8/9/10/11/12/13 years	6/8/10/12 years
10 years	10/11/12/13/14/15 years	6/8/10/12 years
12 years	12/13/14/15/16/17 years	6/8/10/12 years

Benefits of ABSLI Secure Plus Plan:

Death benefit:

In case of death of the policyholder anytime during the Policy Term, provided the Policy is in-force; “Sum Assured on Death” is paid to the nominee/beneficiary.

“Sum Assured on Death” is defined as higher of:

150% of Total Premiums paid till the date of death
Sum Assured

Where,

Sum Assured is a multiple, depending upon the policyholder’s age at inception of the Policy, of the Annualized Premium.

In case of the death of the policyholder during the Benefit Pay-out Period, the Income Benefit and Loyalty Addition will continue to be paid to the nominee/beneficiary.

Staggered Death Benefit Option:

The nominee/beneficiary will have an option to receive the Death Benefit in annual/monthly instalments payable at the end of the year/month instead of a lump sum, over 5 years as per the percentage of the Death benefit.

Once the Instalment mode has been opted by the nominee/ beneficiary, it cannot be changed later.

However, if the nominee wishes to get the outstanding instalments of the death benefit in lumpsum, he can still get it.

Survival Benefit/ Income Pay-out benefit:

If the policyholder survives till the end of the Policy Term, the Income Benefit is payable for 6, 8, 10, or 12 years at the end of the period (monthly, quarterly, half-yearly, or annually) as per the Benefit Pay-out Frequency he has chosen.

Income Benefit, expressed as a percentage of Annualized Premium, will be paid to you which varies by your

Age at entry
Premium amount
Premium Payment Term
Benefit Pay-out Period.

Loyalty Addition:

ABSLI Secure Plus Plan will enhance your Income Benefit every year during the Benefit Pay-out Period, provided all premiums have been paid during the Premium Paying Term.

It is defined as a percentage of the Income Benefit ranging from 50% to 53.35% depending upon the annualized premium band.

Maturity benefit:

At the end of the Policy Term, there is flexibility to use the commutation option to get the lump sum instead of the income benefit.

The commutation option can also be exercised by the Nominee/legal heir after the death of the Policyholder.

Other benefits under the ABSLI Secure Plus plan:

Benefit pay-out frequency:

At policy inception, there is an option to choose the frequency of Income Benefit either an annual or semi-annual or quarterly or monthly frequency. It can be chosen during your Policy Term or your Benefit Pay-out Period

Riders benefit:

ABSLI Accidental Death Benefit Rider Plus (UIN: 109B023V02)
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)

You can read the “ABSLI Secure Plus Plan brochure” for more details.

Policy Loan:

Once the policy has acquired a Surrender Value, you can take a loan against the policy.

The minimum loan amount is Rs.5, 000 and the maximum is 80% of the then applicable Surrender Value.

The interest rate applicable is equal to the base rate of the State bank of India plus 100 basis points.

The grace period, Discontinuance of premium payment & Revival of ABSLI Secure Plus Plan:

Grace Period:

A grace period of 30 days for annual, semi-annual & quarterly frequency payments & 15 days for monthly frequency premium payments is allowed.

Discontinuance of premium payment:

If the premium is not paid within the grace period as mentioned above, then the following provision will apply.

Discontinuance of Payment of Premium before the Policy has acquired Surrender Value: 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 Policy shall become a Reduced Paid Up (RPU) Policy with reduced paid-up sum assured & reduced paid-up income benefit.

Revival of policy:

You can revive the policy within five years from the due date of the first unpaid premium.

By paying all outstanding premiums together with interest and/or late fees, the policy can be revived. Once the policy has been revived, all benefits will be restored to their full value.

Free look-up period, Surrendering & Termination of ABSLI Secure Plus Plan:

Free look-up period:

If the policyholder is not satisfied with the terms & conditions of the ABSLI Secure Plus plan, then it can be returned/cancelled.

The policyholder will get a refund of the premium after the charges get deducted.

The free look period is 15 days if the policy is purchased directly. It will be extended up to 30 days in case it was purchased in distance mode.

Cancelling/Surrendering the policy after the free look period:

The ABSLI Secure Plus policy shall acquire a surrender value after all due premiums for at least two full policy years are paid. The policy can be surrendered once it acquires the required surrender value.

The Surrender Value payable will be higher of

Guaranteed Surrender Value (GSV)

Special Surrender Value (SSV).

Guaranteed Surrender Value (GSV) = a percentage of Total Premiums Paid.

Special Surrender Value (SSV) is determined by the Company from time-to-time basis changing the economic scenario

Termination of policy:

ABSLI Secure Plus Plan can be terminated on the earliest occurrence of any of the following events

on payment of Free Look cancellation amount; or
on the date of payment of the Surrender Value; or
on the date of settlement of the Death Benefit; or
at the end of the Benefit Pay-out Period; or
on the date on which the revival period ends after your policy has lapsed if fewer than two full years of premiums have been paid; or

on the date on which the Policy is terminated due to the outstanding loan amount exceeding the surrender value in case of the Reduced Paid Up (RPU) policy.

Advantages of ABSLI Secure Plus Plan:

Flexibility in choosing Premium Payment Term (PPT), Policy Term (PT), and Benefit Pay-out Period.
Guaranteed income during the Benefit Pay-out Period.
Option to commute the future survival benefits according to your needs.
A loan facility is available.
Various riders to choose from.
Loyalty addition will boost the income benefit payout.

The death benefit can be received in instalments (staggered).

Disadvantages of ABSLI Secure Plus Plan:

The Premium Paying Term and Policy Term are once chosen at policy inception, and cannot be changed thereafter.
The income benefit received during the pay-out period is a fixed amount which is not sufficient to meet the inflated expenses over the long run.
The lock-in period is 2 years for surrendering or for applying for the loan.

The plan neither serves the purpose of insurance nor the investment.

Research Methodology:

Now, we have seen all the necessary details that we need to know about ABSLI Secure Plus Plan.

Now let us see whether this plan can act as a long-term sustainable investment or not by calculating the IRR of the ABSLI Secure Plus Plan.

Then let us compare ABSLI Secure Plus Plan with other alternate investments to see which gives us a better return in the long term.

IRR of ABSLI Secure Plus Plan:

Let us conduct a detailed analysis of the Internal Rate of Return (IRR) of the ABSLI Secure Plus Plan to provide us with better insight.

For example;

Male Age: 35 years

Annual premium: Rs. 1 lakh

Premium paying term: 12 years

Policy term: 13 years

Sum assured: Rs. 12, 50,000

Income pay-out period: 12 years

Survival benefit + Loyalty Addition = 143500 + 71750 = Rs. 2, 15,250

Age	Policy Year	Annualized premium / Maturity benefit	Death benefit
36	1	-1,00,000	12,50,000
37	2	-1,00,000	12,50,000
38	3	-1,00,000	12,50,000
39	4	-1,00,000	12,50,000
40	5	-1,00,000	12,50,000
41	6	-1,00,000	12,50,000
42	7	-1,00,000	12,50,000
43	8	-1,00,000	12,50,000
44	9	-1,00,000	12,50,000
45	10	-1,00,000	12,50,000
46	11	-1,00,000	12,50,000
47	12	-1,00,000	12,50,000
48	13	0	12,50,000
49	14	2,15,250
50	15	2,15,250
51	16	2,15,250
52	17	2,15,250
53	18	2,15,250
54	19	2,15,250
55	20	2,15,250
56	21	2,15,250
57	22	2,15,250
58	23	2,15,250
59	24	2,15,250
60	25	2,15,250

	IRR	6.07%

If the policyholder pays the premium for the entire policy term of 12 years & survives through the Policy Term and receives Income Benefits throughout the Benefit Pay-out Period.

Then the IRR works out to be roughly 6%.

This return on investment is not an inflation-beating return. The Real Rate of Return (RRR) after adjusting the inflation (6-7%) would result in a negative return on investment.

ABSLI Secure Plus Plan Vs Other Investments:

As an alternative to ABSLI Secure Plus Plan, you can invest the money in other alternate investments that can give you a better investment return.

For a risk-free investment, you can either choose PPF or RBI bonds for the long term.

RBI bonds in the long run give out an IRR of 7.15% higher than the ABSLI Secure Plus Plan.

There are a lot of options available for sustainable investments in the long run.

Let us explore other options and compare their IRR with ABSLI Secure Plus Plan in a detailed analysis.

ABSLI Secure Plus Plan Vs. ELSS + Pure Term Insurance:

Let us assume Raj considers buying a Pure Term Insurance Policy and investing in ELSS with a similar cash outflow of Rs.1 lakh for the same period of 12 years as an investment.

The annual premium for Pure Term Insurance is Rs.6000.

So, he allocates the remaining amount of Rs.94,000 to invest in ELSS.

The assumption for Comparison:

Annual cash outflow: Rs. 1 lakh (6000+94000)

Sum assured: Rs. 12, 50,000

Premium paying term: 12 years

The premium for pure term insurance: Rs.6000

Balance amount invested in ELSS: Rs. 94000

He invests the maturity value of the ELSS fund (after tax) in a Hybrid – Conservative mutual fund. He plans to utilize this investment for an annual withdrawal of Rs. 2,15,250 which is similar to the Income pay-out benefit of the ABSLI Secure Plus Plan. The Post tax rate of return assumed for the hybrid conservative fund is 7.6%

Age	Policy Year	Term Insurance premium + ELSS	Death benefit
36	1	-1,00,000	12,50,000
37	2	-1,00,000	12,50,000
38	3	-1,00,000	12,50,000
39	4	-1,00,000	12,50,000
40	5	-1,00,000	12,50,000
41	6	-1,00,000	12,50,000
42	7	-1,00,000	12,50,000
43	8	-1,00,000	12,50,000
44	9	-1,00,000	12,50,000
45	10	-1,00,000	12,50,000
46	11	-1,00,000	12,50,000
47	12	-1,00,000	12,50,000
48	13	0
49	14	2,15,250
50	15	2,15,250
51	16	2,15,250
52	17	2,15,250
53	18	2,15,250
54	19	2,15,250
55	20	2,15,250
56	21	2,15,250
57	22	2,15,250
58	23	2,15,250
59	24	2,15,250
60	25	2,15,250
		17,27,047
	IRR	8.7%

From the above illustration, it is clear that Raj will be left with a corpus of around Rs.17 lakhs in his hand even after withdrawing annually for 12 years. So, the Post tax IRR works out to be 8.7%. This is comparatively better than ABSLI secure plus plan whose IRR is 6.07%.

As much as it looks like a much more secure investment compared to ABSLI Secure Plus Plan, if you are a conservative investor who has a low-risk tolerance, you might still be hesitating to opt for mutual funds as your investment choice. Keep reading to discover options that might fit your bill.

ABSLI Secure plus plan Vs. PPF + Pure Term Insurance

As ELSS is a market-linked product. Conservative investors like you can opt for Term insurance + PPF instead.

The current rate of interest is 7.1% p.a.

If you are a Public Provident account holder, you also have the option to take a loan from the 3rd to 6th financial year, and from the 7th year onwards partial withdrawal once per financial year is allowed.

Final Verdict on ABSLI Secure Plus Plan:

After our detailed analysis, we can see that ELSS and PPF can give you a better return compared to ABSLI Secure Plus Plan.

So, the ABSLI Secure Plus Plan did not give us a good long-term return which neither makes it an adequate insurance cover nor makes it a good investment choice.

Depending on your risk appetite and financial goals, you can choose either the combination of ELSS + Pure Term Insurance or the combination of PPF + Pure Term Insurance as your investment choice

To explore more such options, you can discuss them with your Financial Advisor who can better assist you in making your investment choices.

ABSLI Secure Plus: Review (2024) – Is It Worth Buying?

Table of Contents:

What is the ABSLI Secure Plus plan?

Features of ABSLI Secure Plus plan:

Eligibility criteria of ABSLI Secure Plus plan: