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Can the Pramerica Flexi Income Plan provide steady income and the potential for capital appreciation?
Is Pramerica Flexi Income Plan the plan that offers financial security and freedom to live on its terms?
Does the Pramerica Flexi Income Plan offer the security and support needed to reach these milestones?
In this review, we will explore the features, benefits, drawbacks, and return analysis of the Pramerica Flexi Income Plan. This thorough review will include detailed calculations and analysis.
Table of Contents:
What is the Pramerica Flexi Income Plan?
What are the features of the Pramerica Flexi Income Plan?
Who is Eligible for the Pramerica Flexi Income Plan?
What are the benefits of the Pramerica Flexi Income Plan?
Plan Option 2: Early Income with Policy Continuation Benefit
Grace Period, Discontinuance and Revival of Pramerica Flexi Income Plan
Free Look Period of Pramerica Flexi Income Plan
Surrendering Pramerica Flexi Income Plan
What are the advantages of the Pramerica Flexi Income Plan?
What are the disadvantages of the Pramerica Flexi Income Plan?
Research Methodology of Pramerica Flexi Income Plan
Benefit Illustration – IRR Analysis of Pramerica Flexi Income Plan
Pramerica Flexi Income Plan Vs Other Investments
Final Verdict on Pramerica Flexi Income Plan
What is the Pramerica Flexi Income Plan?
Pramerica Life Flexi Income Plan is a Non-Linked Non-Participating Individual Life Insurance Savings Plan. Pramerica Life Flexi Income Plan offers guaranteed regular income during the Policy Term & lump sum benefit at maturity provided the policy is in force and all due premiums are paid in full.
What are the features of the Pramerica Flexi Income Plan?
- Get life insurance coverage during the entire Pramerica Life Flexi Income Plan Policy Term.
- Provides two plan options: Early Income option and Early Income with Policy Continuation Benefit (PCB).
- The Pramerica Life Flexi Income Plan offers guaranteed regular income during the Policy Term & lumpsum benefit at maturity.
- Wide choice of Premium Payment Term (PPT) to choose from – 6, 8, 10, 12 years.
- Flexibility to choose your Income Start Year at inception and income payout frequency.
Who is Eligible for the Pramerica Flexi Income Plan?
| Minimum | Maximum | |
| Age at Entry | 91 days | 40 / 45 / 55 years |
| Age at Maturity | 25 to 80 years | |
| Premium Paying Term | 6, 8, 10 and 12 years | |
| Policy term | 25, 30, 35 and 40 years | |
| Income Start Year | 1, 2, 3, 4 and 5 | |
| Sum Assured on Death | 7 or 11 times of Annualised premium | |
| 2,10,000 | No Limit | |
What are the benefits of the Pramerica Flexi Income Plan?
Plan Option 1: Early Income
i.) Survival Benefit
Guaranteed Income Benefit (Income Payout), expressed as a percentage of Annualized Premium, shall be payable in arrears on survival of the Life Insured from the Income Start Year until the end of the Pramerica Life Flexi Income Plan Policy Term as per the chosen income payout frequency.
ii.) Maturity Benefit
On survival of the Life Insured till the end of the Pramerica Life Flexi Income Plan Policy Term, the policyholder shall receive the Sum Assured on Maturity as lumpsum which is equal to
- Guaranteed Maturity Benefit, plus
- Accrued Loyalty Boosters
Where Guaranteed Maturity Benefit means the benefit amount as a percentage of Total Annualized Premiums.
Loyalty Boosters are defined as 100% of Guaranteed Maturity Benefits, which shall accrue uniformly at the end of every year, starting from 3rd Pramerica Life Flexi Income Plan policy year till the end of the Premium Payment Term.
iii.) Death Benefit
In the unfortunate event of death of the Life Insured during the Pramerica Life Flexi Income Plan Policy Term, the nominee shall receive higher of:
- Sum Assured on Death (or)
- 105% of the Total Premiums Paid till the date of death (or)
- Surrender Value as of date of death
Plan Option 2: Early Income with Policy Continuation Benefit
i.) Survival Benefit
Guaranteed Income Benefit (Income Payout), expressed as a percentage of Annualized Premium, shall be payable in arrears on survival of the Life Insured from the Income Start Year until the end of the Pramerica Life Flexi Income Plan Policy Term as per the chosen income payout frequency.
ii.) Maturity Benefit
On survival of the Life Insured till the end of the Pramerica Life Flexi Income Plan Policy Term, the policyholder shall receive the Sum Assured on Maturity as lumpsum which is equal to
- Guaranteed Maturity Benefit, plus
- Accrued Loyalty Boosters
Where Guaranteed Maturity Benefit means the benefit amount as a percentage of Total Annualized Premiums.
Loyalty Boosters are defined as 100% of Guaranteed Maturity Benefits, which shall accrue uniformly at the end of every year, starting from 3rd Pramerica Life Flexi Income Plan policy year till the end of the Premium Payment Term.
iii.) Death benefit
In the unfortunate event of death of the Life Insured during the Pramerica Life Flexi Income Plan Policy Term, the nominee shall receive higher of:
- Sum Assured on Death (or)
- 105% of the Total Premiums Paid## till the date of death
Additionally, the nominee shall continue to receive Guaranteed Income Benefits (Income Payout) as and when due, without any need of paying future premiums.
At the end of the Pramerica Life Flexi Income Plan Policy Term, the nominee shall receive the Sum Assured on Maturity which is equal to Guaranteed Maturity Benefit Plus Accrued Loyalty Boosters.
| Early Income | Early Income with PCB | |
| Survival benefit | Guaranteed Income Benefit – expressed as a percentage of Annualized Premium, from the Income Start Year until the end of the Policy Term | |
| Maturity benefit | Assured on Maturity as lumpsum which is equal toGuaranteed Maturity Benefit, plus | |
Accrued Loyalty BoostersDeath benefitHigher of:
- Sum Assured on Death (or)
- 105% of the Total Premiums Paid till the date of death (or)
- Surrender Value as on date of death
Higher of:
- Sum Assured on Death (or)
- 105% of the Total Premiums Paid## till the date of death
Additionally, the nominee shall continue to receive Guaranteed Income Benefits & Final Maturity benefit
Grace Period, Discontinuance and Revival of Pramerica Flexi Income Plan
Grace Period
If you are unable to pay your premium by the due date, you will be given a grace period of 15 days for the monthly mode and 30 days for all other premium payment modes.
Premium Discontinuance
The Pramerica Life Flexi Income Plan Policy shall acquire a Surrender Value after payment of the Premium for at least the first two consecutive policy years in full.
If you discontinue the payment of premiums before your Pramerica Life Flexi Income Plan Policy has acquired a Surrender Value, your Policy will lapse at the end of the grace period, the Death Benefit will cease immediately and no benefits will be paid when the Policy is in lapsed status.
If the Pramerica Life Flexi Income Plan Policy has acquired a Surrender Value and no future premiums are paid, you may choose to continue your Policy on a Reduced Paid-up basis.
Revival
You can revive your lapsed/Paid-up policy for its full coverage within five years from the due date of the first unpaid premium but before policy maturity.
Free Look Period of Pramerica Flexi Income Plan
You will have a period of 15 days (30 days in case the Policy is sold through Distance Marketing i.e. any means of communication other than in person) from the date of receipt of the Policy Document to review the terms and conditions of the Policy and where you disagree to any of these terms and conditions, you have an option to return the Policy stating the reasons for objection.
Surrendering Pramerica Flexi Income Plan
If your Pramerica Life Flexi Income Plan Policy acquired a Surrender Value, on payment of at least the first two full years’ premium and you choose to discontinue your policy.
You will be entitled to receive a Surrender Value that will be higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV) of the Policy.
What are the advantages of the Pramerica Flexi Income Plan?
- Using the premium offset feature, you shall be able to adjust the premium payable in the Pramerica Life Flexi Income Plan policy to the extent of survival benefits payable by the company, if any.
- You have an option to accumulate the Guaranteed Income Benefit (Income Payout), instead of taking the same as a periodic payment during the policy term.
- You have the option to pay premiums Annually, Semi-annually or Monthly.
What are the disadvantages of the Pramerica Flexi Income Plan?
- The annual income benefit may lead to discretionary spending.
- Due to regular payouts, the final maturity amount will be relatively small, making it insufficient for covering significant expenses.
- Starting regular payouts as early as the end of the first year will diminish the compounding effect on the investment.
Research Methodology of Pramerica Flexi Income Plan
The survival benefit under the Pramerica Flexi Income Plan is a key attraction for investing in it. While it offers guaranteed regular payouts, it’s essential to evaluate the plan’s returns.
Let’s calculate the Internal Rate of Return (IRR) based on the figures provided in the Pramerica Life Flexi Income Plan policy brochure to help you make informed decisions.
Benefit Illustration – IRR Analysis of Pramerica Flexi Income Plan
Consider a 35-year-old male who purchases the Pramerica Life Flexi Income Plan (Early Income plan option) and pays ₹1,00,000 per year for 12 years, with an Income Duration of 40 years, starting from the first year. The sum assured is ₹11 Lakhs.
| Male | 35 years |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 40 years |
| Premium Paying Term | 12 years |
| Annualised Premium | ₹ 1,00,000 |
He receives a guaranteed income benefit of ₹22,500 p.a. from the end of the first year until the end of the Pramerica Life Flexi Income Plan policy term. At maturity, he receives the Guaranteed Maturity Benefit along with a Loyalty Booster.
The IRR for this cash flow is 5.53% as per the Pramerica Life Flexi Income Plan maturity calculator
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,00,000 | 11,00,000 |
| 36 | 2 | -77,500 | 11,00,000 |
| 37 | 3 | -77,500 | 11,00,000 |
| 38 | 4 | -77,500 | 11,00,000 |
| 39 | 5 | -77,500 | 11,00,000 |
| 40 | 6 | -77,500 | 11,00,000 |
| 41 | 7 | -77,500 | 11,00,000 |
| 42 | 8 | -77,500 | 11,00,000 |
| 43 | 9 | -77,500 | 11,00,000 |
| 44 | 10 | -77,500 | 11,00,000 |
| 45 | 11 | -77,500 | 11,00,000 |
| 46 | 12 | -77,500 | 11,00,000 |
| 47 | 13 | 22,500 | 11,00,000 |
| 48 | 14 | 22,500 | 11,00,000 |
| 49 | 15 | 22,500 | 11,00,000 |
| 50 | 16 | 22,500 | 11,00,000 |
| 51 | 17 | 22,500 | 11,00,000 |
| 52 | 18 | 22,500 | 11,00,000 |
| 53 | 19 | 22,500 | 11,00,000 |
| 54 | 20 | 22,500 | 11,00,000 |
| 55 | 21 | 22,500 | 11,00,000 |
| 56 | 22 | 22,500 | 11,00,000 |
| 57 | 23 | 22,500 | 11,00,000 |
| 58 | 24 | 22,500 | 11,00,000 |
| 59 | 25 | 22,500 | 11,00,000 |
| 60 | 26 | 22,500 | 11,00,000 |
| 61 | 27 | 22,500 | 11,00,000 |
| 62 | 28 | 22,500 | 11,00,000 |
| 63 | 29 | 22,500 | 11,00,000 |
| 64 | 30 | 22,500 | 11,00,000 |
| 65 | 31 | 22,500 | 11,00,000 |
| 66 | 32 | 22,500 | 11,00,000 |
| 67 | 33 | 22,500 | 11,00,000 |
| 68 | 34 | 22,500 | 11,00,000 |
| 69 | 35 | 22,500 | 11,00,000 |
| 70 | 36 | 22,500 | 11,00,000 |
| 71 | 37 | 22,500 | 11,00,000 |
| 72 | 38 | 22,500 | 11,00,000 |
| 73 | 39 | 22,500 | 11,00,000 |
| 74 | 40 | 22,500 | 11,00,000 |
| 75 | 47,45,460 | 11,00,000 | |
| IRR | 5.53% |
Guaranteed survival benefits and maturity benefits are not advantageous if the returns are lower than those of any debt instrument. The primary reason for the low returns is that the annual payout starts early, diminishing the compounding effect on the investment.
Overall, the Pramerica Flexi Income Plan may not help you achieve your life goals, especially when a substantial corpus is required.
Pramerica Flexi Income Plan Vs Other Investments
All the benefits of the Pramerica Flexi Income Plan are guaranteed; however, the returns do not outpace the inflation rate in the long run.
With sub-par returns and low insurance coverage, this Pramerica Life Flexi Income Plan is unsuitable for both an investment portfolio and an insurance portfolio. Instead, you can utilize your savings more effectively to achieve your milestones.
Pramerica Flexi Income Plan Vs Pure Term + ELSS
For life cover, opting for a pure-term life insurance policy is ideal. Pure-term life insurance policies are available at affordable premiums, allowing you to invest the saved premium towards your life goals.
Risk-averse investors can stick to debt instruments like PPF accounts, while those willing to take risks can choose equity instruments like ELSS funds.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 11,00,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 12,100 |
| Investment | ₹ 65,400 (1,00,000 – 22,500 -12,100) |
A pure-term life insurance policy with a sum assured of ₹12 Lakhs costs ₹12,100 annually. The Pramerica Life Flexi Income Plan policy term is 25 years with a premium-paying term of 10 years.
In contrast, the previous example with the Pramerica Flexi Income Plan has a policy term of 40 years (covering up to age 75) and a premium-paying term of 12 years. In personal finance, we recommend coverage for up to 60 years of age.
For the first 10 years, after paying the premium, the remaining balance can be invested. In the following 2 years, the full amount can be invested.
| Year | Term Insurance premium + ELSS | Death benefit |
| 1 | -1,00,000 | 11,00,000 |
| 2 | -77,500 | 11,00,000 |
| 3 | -77,500 | 11,00,000 |
| 4 | -77,500 | 11,00,000 |
| 5 | -77,500 | 11,00,000 |
| 6 | -77,500 | 11,00,000 |
| 7 | -77,500 | 11,00,000 |
| 8 | -77,500 | 11,00,000 |
| 9 | -77,500 | 11,00,000 |
| 10 | -77,500 | 11,00,000 |
| 11 | -77,500 | 11,00,000 |
| 12 | -77,500 | 11,00,000 |
| 13 | 22,500 | 11,00,000 |
| 14 | 22,500 | 11,00,000 |
| 15 | 22,500 | 11,00,000 |
| 16 | 22,500 | 11,00,000 |
| 17 | 22,500 | 11,00,000 |
| 18 | 22,500 | 11,00,000 |
| 19 | 22,500 | 11,00,000 |
| 20 | 22,500 | 11,00,000 |
| 21 | 22,500 | 11,00,000 |
| 22 | 22,500 | 11,00,000 |
| 23 | 22,500 | 11,00,000 |
| 24 | 22,500 | 11,00,000 |
| 25 | 22,500 | 11,00,000 |
| 26 | 22,500 | 11,00,000 |
| 27 | 22,500 | 11,00,000 |
| 28 | 22,500 | 11,00,000 |
| 29 | 22,500 | 11,00,000 |
| 30 | 22,500 | 11,00,000 |
| 31 | 22,500 | 11,00,000 |
| 32 | 22,500 | 11,00,000 |
| 33 | 22,500 | 11,00,000 |
| 34 | 22,500 | 11,00,000 |
| 35 | 22,500 | 11,00,000 |
| 36 | 22,500 | 11,00,000 |
| 37 | 22,500 | 11,00,000 |
| 38 | 22,500 | 11,00,000 |
| 39 | 22,500 | 11,00,000 |
| 40 | 22,500 | 11,00,000 |
| 1,01,14,946 | 11,00,000 | |
| IRR | 7.56% |
In the Pramerica Flexi Income Plan, you receive a survival benefit of ₹22,500, which can offset your cash outflow, meaning you pay only ₹77,500 out of pocket annually. After paying the life insurance premium, you can invest ₹65,400 in an ELSS fund.
The accumulated corpus at the end of 12 years in the ELSS fund is ₹19.31 Lakhs. After accounting for capital gains tax, the final maturity amount of ₹18.13 Lakhs is shifted to an instrument yielding 7%.
From this investment, you can withdraw an annual survival benefit and a final maturity benefit similar to the Pramerica Flexi Income Plan.
| ELSS Tax Calculation | |
| Maturity value after 12 years | 19,31,235 |
| Purchase price | 6,54,000 |
| Long-Term Capital Gains | 12,77,235 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 11,77,235 |
| Tax paid on LTCG | 1,17,723 |
| Maturity value after tax | 18,13,511 |
The final value of the investment is approximately ₹1 Crore (which is double the maturity value of the Pramerica Flexi Income Plan) with an IRR of 7.56%. This return is significantly better than that of the Pramerica Flexi Income Plan, and it also provides liquidity with the investment.
Be prudent with your choice of investment. Based on your risk profile, time horizon, and financial goals, build a diversified investment portfolio.
Avoid traditional life insurance plans like the Pramerica Flexi Income Plan, where insurance and investment are combined, as this can hinder your financial journey.
Final Verdict on Pramerica Flexi Income Plan
The Pramerica Flexi Income Plan offers assured income payouts that are not impacted by market volatility. However, guaranteed survival benefits and maturity benefits alone are not sufficient to achieve your goals.
A long-term investment of 40 years yielding a low return will not meet the inflated costs of your objectives.
The primary reason for the low yield is that the survival benefit begins before the premium-paying term ends.
Additionally, the plan does not provide adequate life cover to meet your family’s future needs in case of unforeseen circumstances and also has a high agent commissionThese factors undermine the reliability of the Pramerica Flexi Income Plan.
Separating insurance and investment is more effective. For insurance, a pure-term life insurance policy is ideal for protecting your loved ones. For investments, building a robust portfolio will keep your financial plan on track and help you achieve your goals.
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