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Can the PNB MetLife Guaranteed Goal Plan ensure a guaranteed solution for your financial future?
Can the PNB MetLife Guaranteed Goal Plan secure your dreams with guaranteed returns?
Can the PNB MetLife Guaranteed Goal Plan provide guaranteed security for your financial goals?
Let’s dive into a detailed analysis of the plan’s features, advantages, and drawbacks. We’ll also use an Internal Rate of Return (IRR) analysis to help you compare the returns this plan offers.
Table of Contents:
What is the PNB MetLife Guaranteed Goal Plan?
What are the features of the PNB MetLife Guaranteed Goal Plan?
Who is eligible for the PNB MetLife Guaranteed Goal Plan?
What are the plan options in the PNB MetLife Guaranteed Goal Plan?
What are the benefits of the PNB MetLife Guaranteed Plan?
Grace period, Reduced Paid-up and Revival of PNB MetLife Guaranteed Goal Plan
Free Look Period for the PNB MetLife Guaranteed Goal Plan
Surrendering the PNB MetLife Guaranteed Goal Plan
What are the advantages of the PNM MetLife Guaranteed Goal Plan?
What are the disadvantages of the PNB MetLife Guaranteed Goal Plan?
Research Methodology of PNB MetLife Guaranteed Goal Plan
Benefit Illustration – IRR analysis of PNB Met Life Guaranteed Goal Plan
PNB MetLife Guaranteed Goal Plan Vs. Other Investments
PNB MetLife Guaranteed Goal Plan Vs. Pure-Term + ELSS
Final Verdict on PNB MetLife Guaranteed Goal Plan
What is the PNB MetLife Guaranteed Goal Plan?
PNB MetLife Guaranteed Goal Plan is an Individual, Non-linked, Non-Participating, Savings, Life insurance plan. PNB MetLife Guaranteed Goal Plan secures your goals against unforeseen life events and offers you complete control and flexibility to customize your savings schedule. It helps you save systematically and get guaranteed returns.
What are the features of the PNB MetLife Guaranteed Goal Plan?
- Safeguard your family’s future with life cover for the entire PNB MetLife Guaranteed Goal Plan policy term
- Secure your future with Guaranteed benefit
- Get the flexibility to receive the benefit as Lumpsum or Guaranteed Income
- Boost your corpus with Guaranteed additions and Wealth additions
- Get a higher Sum Assured on Maturity for a higher premium
- Secure goals against unfortunate death or diagnosis of critical illness, with Family Care benefit and Health Care benefits.
Who is eligible for the PNB MetLife Guaranteed Goal Plan?
What are the plan options in the PNB MetLife Guaranteed Goal Plan?
Lumpsum Option: Guaranteed Maturity Benefit will be payable at Maturity date.
Income + Lumpsum Option: Guaranteed Survival Benefit will be payable every year post completion of Premium Payment Term along with a Guaranteed Maturity Benefit on Maturity date. Benefits will differ based on the option chosen.
What are the benefits of the PNB MetLife Guaranteed Plan?
1.) Survival Benefit
On survival of the Life Assured until the end of the Premium Payment Term, the following benefit will be payable.
Option 1: Lumpsum Option: No survival benefit will be payable under this option.
Option 2: Income + Lumpsum Option: If this option is chosen, Survival Benefit will be payable on each Policy Anniversary following the completion of the Premium Payment Term, provided the Life Assured is alive on the due date of each such instalment.
Survival Benefits payable in each year will be the sum of:
- Guaranteed Income
- The sum of Accrued Guaranteed Additions divided by Income Payout Period (years)
- Wealth Additions
2.) Maturity benefit
Option 1 – Lumpsum Option: On survival of the Life Assured till the Maturity Date, the Guaranteed Maturity Benefit shall be paid which is equal to the sum of:
For Limited Pay policies:
- Sum Assured at Maturity; plus
- Accrued Guaranteed Additions; plus
- Accrued Wealth Additions
For Single Premium policies:
- Sum Assured at Maturity; plus
- Accrued Wealth Additions
Option 2 – Income + Lumpsum Option:
On survival of the Life Assured till the Maturity Date, the Guaranteed Maturity Benefit shall be paid which is equal to the Sum Assured on Maturity.
Where Sum Assured on Maturity means the amount of benefit guaranteed to be paid on maturity and is defined as a percentage of the Annualised Premium. Sum Assured on Maturity varies by age, Premium Payment Term, Policy Term, amount of Annualised Premium and option chosen.
3.) Death Benefit
On death of the Life/Lives Assured during the PNB MetLife Guaranteed Goal Plan policy term, the nominee shall receive Death Benefit which is Sum Assured on Death and the Policy shall immediately and automatically terminate.
For Limited Pay policies, the Sum Assured on Death is higher than 10 times of Annualised Premium or 105% of the Total premiums paid up to the date of death of Life Assured.
For Single Premium with Single Life policies, the Sum Assured on Death is 1.25 times Single Premium.
For Single Premium policies where Joint Life Cover is in force, the following Sum Assured on Death will be payable:
a) In case of death of the first Life Assured during the Policy Term: 1.25 times of Single Premium will be payable to the last surviving Life Assured
b) In case of death of the last surviving Life Assured during the Policy Term: 10 times of Single Premium will be payable to the Nominee and the policy terminates.
Grace period, Reduced Paid-up and Revival of PNB MetLife Guaranteed Goal Plan
Grace Period
The grace period for payment of the premium is 15 days, where the PNB MetLife Guaranteed Goal 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 Guaranteed Goal 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 PNB MetLife Guaranteed Goal Plan policyholder shall have the option to surrender the 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 Guaranteed Goal Plan
If you have any objections to the terms and conditions of your PNB MetLife Guaranteed Goal 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 Guaranteed Goal Plan
If all due Instalment Premiums have been paid for at least two consecutive Policy Years, the PNB MetLife Guaranteed Goal 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 PNB MetLife Guaranteed Goal Plan?
- If the Life Assured passes away during the PNB MetLife Guaranteed Goal Plan Policy Term, the Family Care Benefit ensures that all future instalment premiums (if any) will be waived.
- If the Life Assured is diagnosed with any of the specified Critical Illnesses, the Health Care Benefit provides for the waiver of all future instalment premiums (if any).
- 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 Guaranteed Goal Plan policy offers flexibility in choosing the mode of income payout.
- You can take a loan against your PNB MetLife Guaranteed Goal Plan 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 Guaranteed Goal Plan?
- The sum assured may be insufficient to fully meet the future needs of your family.
- The rate of return is relatively modest.
Research Methodology of PNB MetLife Guaranteed Goal Plan
The PNB MetLife Guaranteed Goal Plan offers benefits that can be received as a lump sum, in instalments, or a combination of both, with all payments guaranteed.
However, it’s crucial to assess the actual returns before deciding to invest. Let’s calculate the Internal Rate of Return (IRR) based on the figures provided in the policy brochure.
Benefit Illustration – IRR analysis of PNB Met Life Guaranteed Goal Plan
Consider a 35-year-old male who selects the PNB MetLife Guaranteed Goal Plan with a sum assured of ₹10 lakhs. The policy term is 15 years, and the premium payment term is 7 years, with an annual premium of ₹1 lakh. He opts for Option 1: Lump Sum payout.
| Male | 35 years |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 7 years |
| Annualised Premium | ₹ 1,00,000 |
Under Option 1, after paying the premiums, he receives a lump sum benefit at the end of the policy term. In this case, the final maturity benefit amounts to ₹12.73 lakhs, yielding an IRR of 5.07% as per the PNB MetLife Guaranteed Goal Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 12,73,540 | 10,00,000 | |
| IRR | 5.07% |
This maturity benefit is likely insufficient to meet financial goals, as the rate of return is lower than the inflation rate. As a long-term investment, the PNB MetLife Guaranteed Goal Plan fails to outpace inflation. Additionally, the sum assured may not be adequate.
The lack of sufficient life coverage and the relatively poor investment return of the PNB MetLife Guaranteed Goal Plan do not favour investors.
PNB MetLife Guaranteed Goal Plan Vs. Other Investments
In our returns analysis, it becomes evident that the PNB MetLife Guaranteed Goal Plan is a low-yielding product. Combining insurance with investment is not an ideal strategy, often leading to suboptimal outcomes on both fronts.
A better approach is to opt for a pure-term life insurance policy with an adequate sum assured and invest separately for your life goals. Let’s explore this strategy using the same parameters as in the previous example.
PNB MetLife Guaranteed Goal Plan Vs. Pure-Term + ELSS
A pure-term life insurance policy with a sum assured of ₹10 lakhs would require an annual premium of ₹10,100. The policy term is 15 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 ₹89,900 from the ₹1 lakh premium for investment during the first 5 years. In the following 2 years, the entire ₹1 lakh can be invested.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 10,100 |
| Investment | ₹ 89,900 |
When choosing investments for life goals, it’s crucial to base your decisions on your personal risk tolerance. High-risk investors might lean towards equity investments, while those with lower risk tolerance could opt for debt instruments.
In this example, we’ve selected an Equity Linked Savings Scheme (ELSS), an equity-based investment.
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,00,000 | 10,00,000 |
| 36 | 2 | -1,00,000 | 10,00,000 |
| 37 | 3 | -1,00,000 | 10,00,000 |
| 38 | 4 | -1,00,000 | 10,00,000 |
| 39 | 5 | -1,00,000 | 10,00,000 |
| 40 | 6 | -1,00,000 | 10,00,000 |
| 41 | 7 | -1,00,000 | 10,00,000 |
| 42 | 8 | 0 | 10,00,000 |
| 43 | 9 | 0 | 10,00,000 |
| 44 | 10 | 0 | 10,00,000 |
| 45 | 11 | 0 | 10,00,000 |
| 46 | 12 | 0 | 10,00,000 |
| 47 | 13 | 0 | 10,00,000 |
| 48 | 14 | 0 | 10,00,000 |
| 49 | 15 | 0 | 10,00,000 |
| 50 | 23,49,557 | 10,00,000 | |
| IRR | 10.44% |
At maturity, the ELSS investment generates a pre-tax value of ₹25.74 lakhs. After accounting for capital gains tax, the post-tax value is ₹23.49 lakhs. The combined IRR for the ELSS investment and the pure-term life insurance policy comes to 10.44% (post-tax return).
| ELSS Tax Calculation | |
| Maturity value after 20 years | 25,74,566 |
| Purchase price | 6,49,500 |
| Long-Term Capital Gains | 19,25,066 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 18,00,066 |
| Tax paid on LTCG | 2,25,008 |
| Maturity value after tax | 23,49,557 |
This rate of return significantly outpaces inflation, allowing for the accumulation of a substantial corpus. Additionally, this approach offers liquidity, enabling you to redeem units as needed.
Given the poor returns, inadequate sum assured, and the misalignment of needs with the PNB MetLife Guaranteed Goal Plan, the PNB MetLife Guaranteed Goal Plan is less appealing from an investor’s perspective.
Final Verdict on PNB MetLife Guaranteed Goal Plan
The PNB MetLife Guaranteed Goal Plan offers life coverage and investment opportunities tailored to meet your goals at various stages of life. You have the flexibility to customize the survival and maturity benefits to suit your needs.
While the plan promises guaranteed benefits, the rate of return is not compelling enough to justify the investment. The guaranteed benefits may give the impression that you can achieve your life goals as planned, but this can be misleading.
Inflation poses a significant challenge in long-term investments. To overcome this, your returns need to outpace inflation, allowing you to accumulate the necessary corpus. Unfortunately, this crucial aspect is lacking in the PNB MetLife Guaranteed Goal Plan.
The plan’s poor returns and low coverage are largely due to the bundling of insurance with investment and it also has a high agent commission. A more effective strategy is to opt for a pure-term life insurance policy and invest separately for your life goals.
Pure-term policies offer high coverage at affordable premiums, while a diversified investment portfolio can help you achieve all your financial objectives.
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