ABSLI Vision Star Plan Review: Is It Worth Buying or Not?
Do you have financial goals (like a child’s education or marriage) to achieve?
You need to be financially ready to support your child’s aspirations.
ABSLI Vision Star Plan claims that it can support all your life’s Milestones.
Will this plan turn your child’s dream into reality?
Let us find out through in-depth analysis in the article below.
Table of Contents:
- Death Benefit
- Maturity Benefit
- Regular Bonuses
- Terminal Bonus
5.)A Grace Period, Discontinuance & Revival of the ABSLI Vision Star Plan
6.)Free Look-Up Period of the ABSLI Vision Star Plan
7.)Surrendering the ABSLI Vision Star Plan
8.)Advantages of the ABSLI Vision Star Plan
9.)Disadvantages of the ABSLI Vision Star Plan
11.)IRR Analysis of the ABSLI Vision Star Plan
12.)Are there Other Better Investment Alternatives than the ABSLI Vision Star Plan?
13.)ABSLI Vision Star Plan Vs. Pure Term Insurance + PPF / ELSS
14.)Final verdict on the ABSLI Vision Star Plan
What is ABSLI Vision Star Plan?
It is a Non-linked, Participating, Life Insurance Plan.
It provides you regularly assured pay-outs for financing your child’s education & securing your child’s future even in your absence with comprehensive financial protection.
Feature of the ABSLI Vision Star Plan
Waiver of Premium – In case of your untimely death, no burden on your family to pay the premiums to receive the benefits.
Depending on your choice of Sum Assured you get Comprehensive financial protection.
Accrued bonuses enhance your savings starting from the first policy year which continues to accrue till maturity.
Sum Assured Band:
|Band 1||1,00,000 – 1,99,999|
|Band 2||2,00,000 – 3,99,999|
|Band 3||4,00,000 – 7,99,999|
|Band 4||8,00,000 +|
Assured Pay-out options
Option A – 4 biannual pay-outs -there will be an Assured Pay-out every two years.
|X = Premium Paying term||x+5||x+7||x+9||x+11|
|Percentage of Sum Assured||20%||20%||30%||30%|
Option B – 5 annual pay-outs – there will be an Assured Pay-out every year.
|X = Premium Paying term||x+5||x+6||x+7||x+8||x+9|
|Percentage of Sum Assured||15%||15%||20%||20%||30%|
You can choose to defer the due Assured Pay-out until the time the next Assured Pay-out is due to be paid. On deferral, the percentage of Assured Pay-out will be enhanced.
Eligibility Criteria for the ABSLI Vision Star Plan
Let us look at the eligibility criteria of this plan at a glance below;
|Entry Age (age last birthday)||18 – 55 years|
|Max Maturity Age||75 years|
|Minimum Policy Term||For Option A – 16 years (maximum of 23 years)
For Option B – 14 years (maximum of 21 years)
|Premium Paying Term||5 -12 years|
|Minimum Sum Assured||Rs. 1,00,000|
|Premium Frequency||Annual, Semi-annual, Quarterly & Monthly|
Benefits Under the ABSLI Vision Star Plan
In the unfortunate event of the death of the life insured during the policy term, the nominee will receive
- Sum Assured on Death; plus
- No premiums are required to be paid in the future; plus
- Assured Pay-outs on the scheduled dates; plus
- Bonuses accrued till policy maturity date and terminal bonus, if any,
Sum Assured on Death is the maximum of Sum Assured chosen at inception irrespective of any guaranteed pay-outs paid or 10 times the Annualized premium payable.
The death benefit will be subject to a minimum of 105% of the Total Premiums paid.
If the life insured survives, the following is paid as a maturity benefit
- Accrued bonuses to date; plus
- Terminal bonus (if any)
ABSLI will declare simple reversionary bonuses regularly at the end of each financial year and that will be added to your policy on its policy anniversary. Bonuses once attached to the policy are payable along with the interim bonuses, as applicable on maturity or surrender.
ABSLI may also pay a terminal bonus on maturity or surrender if earlier, based on the actual experience and the prevailing economic conditions.
Grace Period, Discontinuance & Revival of the ABSLI Vision Star Plan
If you are unable to pay your premium by the due date, you will be given a grace period of 30 days by the ABSLI Corporation and during this grace period, all coverage under your policy will continue.
In case you have not paid premiums for two full years, then all benefits under your policy will cease immediately.
In case you have paid premiums for at least two full years, then your policy will continue as a Reduced Paid-Up policy.
You can revive your policy for its full coverage within five years from the due date of the first unpaid premium.
Free Look-Up Period of the ABSLI Vision Star Plan
You will have the right to return your policy within 15 days to the insurance company if you disagree with any of the terms and conditions of the ABSLI Vision Star Policy.
ABSLI will extend your Free Look-Up to 30 days from the date of receipt of the policy in case your policy was issued under Distance Marketing.
Surrendering the ABSLI Vision Star Plan
Your policy will acquire a surrender value after all due premiums for at least two full policy years are paid.
The Guaranteed Surrender Value is a percentage of Total Premiums paid plus the surrender value of accrued regular bonuses less any assured pay-out already paid or deferred.
The surrender value payable will be higher than the Guaranteed Surrender Value or Special Surrender Value.
Advantages of the ABSLI Vision Star Plan
- You get assured benefit (pay-out as a percentage of the Sum Assured) after 5 years from the end of your Premium Paying Term.
- For added protection, you can enhance your insurance coverage by adding riders for a nominal extra cost.
- Premium Rebate for Higher Sum Assured.
- You can take a loan against your policy once it has acquired a surrender value. 85% of your surrender value will be your maximum loan amount.
- Waiver of premium is an inbuilt option in this plan.
Disadvantages of the ABSLI Vision Star Plan
- The sum assured is too low to protect your family financially.
- There may be a mismatch between the pay-out period & your actual requirement.
- The plan hasn’t any specific maturity benefit. Just the accrued bonus is paid as a maturity benefit,
You can read the ABSLI Vision Star Policy Brochure for further details.
ABSLI Vision Star plan is a simple money-back policy. It has regular payouts after the premium paying term. The accrued regular bonus is paid along with the last payout.
You also have the option to defer the due Assured Pay-out until the time the next Assured Pay-out is due to be paid. On deferral, the percentage of Assured Pay-out will be enhanced.
IRR Analysis of the ABSLI Vision Star Plan
|Sum Assured||Rs. 2,50,000|
|Policy Term||21 years|
|Premium paying term||10 years|
|Annual premium||Rs. 22,392|
With the help of a Benefit Illustration pulled out from the policy brochure, let us understand the cash flow of the benefits.
A 40-year-old male opts for the ABSLI Vision Star Plan for a sum Assured of Rs. 2.50 lakhs with an annual premium of Rs. 22,392. The policy term is 21 years. He has chosen Option A for assured pay-outs (Money back – Every two years). We have worked out, what would be his maturity if he defers the payout till the end of the policy term.
Did he enjoy the benefit of compounding? Refer to the following table for the answer.
|At 4% p.a.||At 8% p.a.|
|Age||Year||Annualized premium / Maturity benefit||Deferred Pay-out||Death benefit||Annualized premium / Maturity benefit||Deferred Pay-out||Death benefit|
This illustration has been worked out with two different rates of assumed future investment returns (4% & 8%). These are assumed rates of return for the worst and best-case performing scenarios as what you might get back at the end would be different as the value of your policy is dependent on several factors including the future performance of the participating business.
At 4% assumed return, the IRR is 2.02%. If you defer your payouts, the IRR is 2.56%. The difference in the final return is meagre.
At 8% assumed return, the IRR is 5.66%. If you defer your payouts, the IRR is 5.65%. There is no additional return even if you defer your payouts.
The power of compounding works at its best, only if you allow your investment to grow. Here, in the illustration even if you allow your investment to grow, there are not many gains in your final maturity.
Also, the sum assured in the given illustration is just Rs. 2.5 lakhs which is not sufficient to meet any of your family’s financial needs. The minimum Sum Assured in Saral Jeevan Bima (Standard Term Plan as per guidelines of IRDAI) is Rs. 5 Lakhs.
Considering all the above things, it is evident that the cash pay-out is not beneficial in either way i.e., as scheduled or deferring. The Sum assured is also not adequate to support your Financial Goals.
Are there Other Better Investment Alternatives than the ABSLI Vision Star Plan?
Money-back policies have the special feature of regular pay-outs which is not common in other insurance products. For comparison purposes let us assume that the deferment option is chosen.
For life cover, let us consider Pure Term Life Insurance. The minimum sum assured in Pure Term Insurance under any Saral Jeevan Bima policy is Rs. 5 lakhs as the sum assured mentioned in the illustration is Rs. 2.50 Lakhs.
Out of Rs 22,392 pure term costs Rs. 5,600. The balance could be invested in any investment product for wealth creation purposes. To justify the comparison, we have chosen Rs. 5 Lakh as the sum assured. Considering an adequate term plan is necessary when you work out a financial plan for yourself.
ABSLI Vision Star Plan Vs. Pure Term Insurance + PPF / ELSS
|Pure Term Insurance|
|Sum Assured||Rs. 5 lakhs|
|Policy Term||21 years|
|Premium paying term||10 years|
|Annual premium||Rs. 5,600|
|Amount meant for investment||Rs. 16,792|
For PPF the minimum annual contribution period is 15 years. But in the illustration, the premium paying term is 10 years. So, in the final 5 years, a minimum of Rs. 500 is contributed towards PPF.
|Term Insurance + PPF||Term insurance + ELSS|
|Age||Year||Term Insurance premium + PPF||Death benefit||Term Insurance premium + ELSS (Pre-tax value)||Term Insurance premium + ELSS (Post-tax Value)||Death benefit|
The IRR for Term insurance along with PPF investment is 5.18%. You might have noticed that in the above illustration, the IRR under the 8% Scenario is slightly higher than the PPF IRR. The reason behind this is we have the chosen sum Assured as Rs. 5 lakh which is the minimum limit.
You might think there is no difference between investing in the ABSLI Vision Star plan & Pure Term Insurance along with PPF.
But, under the ABSLI Vision Star Plan, only the money backs are guaranteed, and the final maturity which includes a bonus is non-guaranteed.
On the other hand, PPF is a fixed instrument product, where the rate is fixed by the Ministry of Finance every quarter. This makes Term Insurance along with PPF have an upper hand over the ABSLI Vision Star Plan.
If you compare the ABSLI Vision Star Plan’s final value at its best-case scenario rate of interest @8% with the ELSS Mutual Fund, there is definitely a huge difference in the final maturity value. The approximate difference in value is ₹ 7,08,553
It is almost 3 times higher than the ABSLI Vision Star Plan’s rate of return. So, this combination of Pure Term insurance + ELSS mutual fund would be a good choice for an aggressive investor willing to take the risk.
But as ELSS Mutual Funds returns are not tax-free compared to the ABSLI Vision Star Plan, let us analyze the post-tax return rate of the ELSS mutual funds.
The ELSS Mutual Fund scheme’s post-tax return rate is illustrated in the table below.
|ELSS MUTUAL FUND: POST-TAX RETURN|
|Fund Value||₹ 10,25,053|
|LTCG Exemption||₹ 1,00,000|
|Taxable Gains||₹ 7,57,133|
|Tax Payable||₹ 75,713|
|Post Tax Return||9.53%|
|Post Tax Maturity Value||₹ 9,49,340|
We have considered the tax calculation under the ELSS option. The pre-tax maturity amount is Rs. 10.25 Lakhs & the pre-tax IRR is 10.05%.
Whereas the combination of the Term insurance along with the ELSS Investment yields you a return of 9.53% which is a post-tax return. The post-tax maturity value is Rs. 9.49 Lakhs. This rate is beneficial for an investor as this is over and above the inflation rate.
Final verdict on the ABSLI Vision Star Plan
ABSLI Vision Star Plan is a slightly ornamented money-back policy where you have the option to defer the pay-outs till the next pay-out / maturity. But there is no value addition if you opt for the deferment option.
The only advantage of this plan is that the premium waiver benefit option is part & parcel of the policy feature. This clause can be added to any insurance plan.
Earmarking the money-back policy’s return with your Children’s Education Goal is not beneficial as the potential return is not enough to combat the inflation rate. Education expense is skyrocketing as time passes.
So, make sure to have a customized Financial Plan to meet all your life’s financial goals.
Consult with a Professional Financial Advisor If you need guidance on customizing your financial plan for better results.