Listen to this article
Can the PNB MetLife Genius Plan secure your child’s future with financial growth and protection?
Can the PNB MetLife Genius Plan combine savings, insurance, and flexibility in one powerful package?
Can the PNB MetLife Genius Plan offer both security and growth potential?
Let’s assess the features, advantages, disadvantages, and potential returns of the PNB MetLife Genius Plan through an Internal Rate of Return (IRR) analysis. This review will offer a comprehensive understanding of how the plan operates.
Table of Contents:
What is the PNB MetLife Genius Plan?
What are the features of the PNB MetLife Genius Plan?
Who is eligible for the PNB MetLife Genius Plan?
What are the benefits of the PNB MetLife Genius Plan?
3. Waiver of premium on accidental total permanent disability (WOP ON ATPD)
Grace period, Reduced Paid-up and Revival of PNB MetLife Genius Plan
Free Look Period for the PNB MetLife Genius Plan
Surrendering the PNB MetLife Genius Plan
What are the advantages of the PNM MetLife Genius Plan?
What are the disadvantages of the PNB MetLife Genius Plan?
Research Methodology of PNB MetLife Genius Plan
Benefit Illustration – IRR Analysis of PNB MetLife Genius Plan
PNB MetLife Genius Plan Vs. Other Investments
PNB MetLife Genius Plan Vs. Pure-term + ELSS
Final verdict on PNB MetLife Genius Plan
What is the PNB MetLife Genius Plan?
PNB MetLife Genius Plan is an Individual, Non-linked, Non-participating, Savings, Life Insurance Plan. PNB MetLife Genius Plan ever-increasing cost of living and education coupled with the uncertainties of life can derail the best of plans. To overcome this, the PNB MetLife Genius Plan guarantees its returns.
What are the features of the PNB MetLife Genius Plan?
- Guaranteed benefits to secure your child’s future.
- Flexibility to save for your child’s goals like primary, secondary/higher education, Marriage or all these goals in a single plan.
- Assured goal achievement with in-built Waiver of premium on Death which ensures continuity of benefits even in your absence.
- Additional protection against Accidental Total Permanent Disability if WOP on ATPD benefit is chosen.
- Increasing Income benefits with Wealth Booster additions growing @5% every 5 years.
- Dhan Lakshmi Benefit: Higher Income benefit for girl child under Child Secure Option.
Who is eligible for the PNB MetLife Genius Plan?
| Future Secure Option | Child Secure Option | |
| Minimum Age at Entry | Policyholder / Life Assured – 18 years | Policyholder – 18 years Life Assured – 0 years |
| Maximum Age at Entry | Policyholder / Life Assured – 55/60 years | Policyholder – 55/60 years Life Assured – 25 years |
| Maximum Age at Maturity | Life Assured – 80 years | Policyholder – 80 years Life Assured – 50 years |
| Premium Paying Term and Policy Term | Premium paying Term | Policy Term |
| 5 years | 10 to 25 years | |
| 7 years | 12 to 25 years | |
| 10 years | 15 to 25 years | |
| Income Payout period | Based on the Premium paying term | |
| Minimum Annualised premium | 5 pay – ₹ 24,000 7/10 pay – ₹ 12,000 |
|
| Maximum Annualised premium | As per Board approval | |
| Minimum Sum Assured | 5 pay – ₹ 2,40,000 7/10 pay – ₹ 1,20,000 |
|
| Maximum Sum Assured | As per Board approval | |
| Premium payment mode | Annual / Half Yearly / Quarterly/ Monthly | |
What are the benefits of the PNB MetLife Genius Plan?
1.) Income Benefit
On survival of the Life-Assured, Income benefit payable in each Policy Year is the sum of –
- Guaranteed Income: Annualised Premium x Guaranteed Income Factors
- The sum of accrued Guaranteed Additions (GA) divided by the Income Payout Period
- Wealth Booster
2.) Death benefit
Option 1: Future Secure Option
On the death of the Life Assured during the Premium Paying Term,
All Instalment Premiums falling due after the date of death, if any, shall be waived off
Income Benefit as defined above will be payable at the respective future due date(s) and any excess of the Sum Assured on Death over the present value of future income benefits (calculated using an interest rate of 7% compounded annually), will be payable immediately on death as lumpsum
On the death of the Life Assured after completion of the Premium Paying Term,
Income Benefit as defined above will be payable at the respective future due date(s)
Any excess of the Sum Assured on Death over the present value of future income benefits (calculated using an interest rate of 7% compounded annually), will be payable immediately on death as lumpsum
Option 2: Child Secure Option
In this option, the child shall be the Life Assured and the parent or legal guardian of the child shall be the PNB MetLife Genius Plan Policyholder.
On the death of Policyholder – During Premium Paying Term:
All Instalment Premiums falling due after the date of death, if any, shall be waived off and Income benefit as defined above will be payable at the respective future due date(s).
On the death of Policyholder – After completion of Premium Paying Term:
Income benefit as defined above will be payable at the respective future due date(s).
On the death of Life Assured:
Higher of the following amounts shall be payable immediately as lumpsum and the PNB MetLife Genius Plan policy shall terminate,
Sum assured on Death (10 times the annualised premium or 105% of the total premium paid), or
Present value of future income benefits (calculated using an interest rate of 7% compounded annually)
3.) Waiver of premium on accidental total permanent disability (WOP ON ATPD)
This is an optional benefit. In the event of an Accidental Total Permanent Disability of the Policyholder, while the PNB MetLife Genius Plan Policy is in In-force Status, all the future Instalment Premiums falling due after the disability shall be waived off. All future benefits shall continue to be payable as and when due.
Grace period, Reduced Paid-up and Revival of PNB MetLife Genius Plan
Grace Period
The grace period for payment of the premium is 15 days, where the PNB MetLife Genius Plan policyholder pays the premium on a monthly basis and 30 days in all other cases.
Lapsed Policy
If all due premiums for the first two consecutive years are not paid, the PNB MetLife Genius Plan policy shall lapse at the end of the grace period and the risk cover and rider benefits, if any, will cease immediately
Reduced Paid-up
If a policy has acquired a surrender value and future due instalment premiums are not paid, the policy will continue as a paid-up policy with reduced benefits. However, the policyholder shall have the option to surrender the PNB MetLife Genius Plan policy.
Revival
You can revive your lapsed / Paid-up policy and the riders for its full coverage within five consecutive years from the due date of the first unpaid premium but before policy maturity.
Free Look Period for the PNB MetLife Genius Plan
If you have any objections to the terms and conditions of your PNB MetLife Genius Plan Policy, you may cancel the Policy within 30 days beginning from the date of receipt of the Policy document whether received electronically or otherwise.
Surrendering the PNB MetLife Genius Plan
If all due instalment Premiums have been paid for at least two consecutive Policy Years, the PNB MetLife Genius Plan Policy shall acquire a Guaranteed Surrender Value. The Policy will automatically terminate after payment of the Surrender Value.
The Surrender Value payable shall be higher of Guaranteed Surrender Value and Special Surrender Value.
What are the advantages of the PNM MetLife Genius Plan?
- The Guaranteed Income Factors will increase by 1.5% under the Dhan Lakshmi benefit when the Life Assured is a female.
- Policyholders have the flexibility to select the specific date on which they receive their income benefits.
- There is an option to defer the income benefits and allow them to accumulate over time.
- The PNB MetLife Genius Plan policy offers flexibility in choosing the mode of income payout.
- You can take a loan against your policy once it has acquired a Surrender Value, with a maximum loan amount of 80% of the surrender value.
- Riders can be added to enhance the base policy coverage.
What are the disadvantages of the PNB MetLife Genius Plan?
- In the Child Secure option, the life assured is the child, but life insurance coverage for children is generally not advisable.
- While the PNB MetLife Genius Plan provides guaranteed payouts, the returns are relatively low.
Research Methodology of PNB MetLife Genius Plan
With the PNB MetLife Genius Plan, you can customize income payouts to align with various financial goals. The income benefit can be received either as a lump sum or distributed over time, with all payments guaranteed.
However, it’s essential to evaluate the actual returns before making an investment decision. Let’s calculate the Internal Rate of Return (IRR) based on the figures provided in the policy brochure.
Benefit Illustration – IRR Analysis of PNB MetLife Genius Plan
Consider a 40-year-old male who opts for the PNB MetLife Genius Plan with a sum assured of ₹15.44 lakhs. The policy term is 20 years, and the premium payment term is 7 years, requiring an annual premium of ₹1.54 lakhs.
| Male | 40 years |
| Sum Assured | ₹ 15,44,670 |
| Policy Term | 20 years |
| Premium Paying Term | 7 years |
| Annualised Premium | ₹ 1,55,467 |
He selects the Future Secure Option and opts for a one-time lump sum payment at the end of the term. In this scenario, the final maturity benefit amounts to ₹26.26 lakhs, resulting in an IRR of 5.33% as per the PNB MetLife Genius Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,54,467 | 15,44,670 |
| 41 | 2 | -1,54,467 | 15,44,670 |
| 42 | 3 | -1,54,467 | 15,44,670 |
| 43 | 4 | -1,54,467 | 15,44,670 |
| 44 | 5 | -1,54,467 | 15,44,670 |
| 45 | 6 | -1,54,467 | 15,44,670 |
| 46 | 7 | -1,54,467 | 15,44,670 |
| 47 | 8 | 0 | 15,44,670 |
| 48 | 9 | 0 | 15,44,670 |
| 49 | 10 | 0 | 15,44,670 |
| 50 | 11 | 0 | 15,44,670 |
| 51 | 12 | 0 | 15,44,670 |
| 52 | 13 | 0 | 15,44,670 |
| 53 | 14 | 0 | 15,44,670 |
| 54 | 15 | 0 | 15,44,670 |
| 55 | 16 | 0 | 15,44,670 |
| 56 | 17 | 0 | 15,44,670 |
| 57 | 18 | 0 | 15,44,670 |
| 58 | 19 | 0 | 15,44,670 |
| 59 | 20 | 0 | 15,44,670 |
| 60 | 26,26,137 | ||
| IRR | 5.33% |
Over the 20-year policy term, inflation—typically ranging from 6% to 7%—would have increased the cost of the goal. Unfortunately, the returns from the PNB MetLife Genius Plan do not outpace this inflation rate in the long run.
In summary, while the plan offers the advantage of guaranteed benefits, its moderate returns under the PNB MetLife Genius Plan may limit its overall effectiveness in meeting long-term financial goals.
PNB MetLife Genius Plan Vs. Other Investments
The PNB MetLife Genius Plan is designed as a combined insurance and savings product, offering customizable benefits to suit your unique needs. However, the guaranteed payouts may not be compelling due to the plan’s relatively low returns.
In this section, let’s explore an alternative strategy that involves splitting the same premium across two different products.
PNB MetLife Genius Plan Vs. Pure-term + ELSS
We’ll use the same parameters as in the previous example. A pure-term life insurance policy with a sum assured of ₹14.50 lakhs costs an annual premium of ₹31,100. The policy term is 20 years, with a premium payment term of 5 years.
Unlike the earlier case where the premium was spread over 7 years, this approach frees up ₹1.23 lakhs from the ₹1.54 lakh premium for investment during the first 5 years. In the following 2 years, the entire ₹1.54 lakh can be invested.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 15,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 31,100 |
| Investment | ₹ 1,24,367 |
Selecting the right investment avenue based on your risk appetite is crucial. High-risk investors might prefer equity investments, while those with lower risk tolerance could opt for debt instruments. In this example, we’ve chosen an Equity Linked Savings Scheme (ELSS), an equity-based investment.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,54,467 | 15,44,670 |
| 41 | 2 | -1,54,467 | 15,44,670 |
| 42 | 3 | -1,54,467 | 15,44,670 |
| 43 | 4 | -1,54,467 | 15,44,670 |
| 44 | 5 | -1,54,467 | 15,44,670 |
| 45 | 6 | -1,54,467 | 15,44,670 |
| 46 | 7 | -1,54,467 | 15,44,670 |
| 47 | 8 | 0 | 15,44,670 |
| 48 | 9 | 0 | 15,44,670 |
| 49 | 10 | 0 | 15,44,670 |
| 50 | 11 | 0 | 15,44,670 |
| 51 | 12 | 0 | 15,44,670 |
| 52 | 13 | 0 | 15,44,670 |
| 53 | 14 | 0 | 15,44,670 |
| 54 | 15 | 0 | 15,44,670 |
| 55 | 16 | 0 | 15,44,670 |
| 56 | 17 | 0 | 15,44,670 |
| 57 | 18 | 0 | 15,44,670 |
| 58 | 19 | 0 | 15,44,670 |
| 59 | 20 | 0 | 15,44,670 |
| 60 | 57,35,692 | ||
| IRR | 10.19% | ||
To match the income payout of the PNB MetLife Genius Plan, the ELSS units are redeemed after 20 years. At maturity, the ELSS investment yields a pre-tax value of ₹64.04 lakhs. After considering capital gains tax, the post-tax value is ₹57.35 lakhs.
The combined IRR for the ELSS investment and pure-term life insurance policy comes to 10.19% (post-tax return).
| ELSS Tax Calculation | |
| Maturity value after 20 years | 64,04,967 |
| Purchase price | 9,25,769 |
| Long-Term Capital Gains | 54,79,198 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 53,54,198 |
| Tax paid on LTCG | 6,69,275 |
| Maturity value after tax | 57,35,692 |
This higher rate of return significantly aids in accumulating a substantial corpus, helping you achieve your financial goals. While the PNB MetLife Genius Plan offers guaranteed and customizable income payouts, its returns may fall short of what is needed to meet your objectives effectively.
Final verdict on PNB MetLife Genius Plan
The PNB MetLife Genius Plan is targeted at children, with its primary focus on supporting goals like primary and secondary education, higher education, marriage, or a combination of these milestones.
As parents, we strive to provide the best for our children, often leading us to invest in pre-packaged children’s plans without thoroughly analysing their benefits.
Like many children’s plans, the PNB MetLife Genius Plan emphasizes customizing income payouts to address lump sum or regular income needs. However, the guaranteed payouts may not be sufficient to achieve these goals.
Additionally, under the Child Secure Option, the life assured is the child, which raises concerns. In personal finance, life insurance for a non-earning member is generally unnecessary and also it has a high agent commission, making this aspect of the PNB MetLife Genius Plan questionable.
The life coverage and returns in the PNB MetLife Genius Plan are less convincing because they combine both insurance and investment. A more effective strategy would be to opt for a pure-term policy with adequate coverage for the earning parent.
For your child’s future goals, it’s better to select investment products that align with your risk tolerance and time horizon.
Are Facebook, Twitter, and Quora the last word when it comes to financial advice?
Instead of investing in off-the-shelf children’s education plans, consider consulting a Certified Financial Planner. Their expertise can help tailor a financial plan that truly meets your family’s unique needs.
Leave a Reply