Listen to this article
Are you pondering over ways to secure a bright future for your loved ones?
Life has a knack for throwing surprises our way, and being prepared is key. But fear not! Can you tackle life’s uncertainties head-on with confidence and clarity? Wondering if Pramerica Life Rakshak Smart is the right fit to fuel your dreams and shield you from unforeseen circumstances?
Well, stick around as we delve into this review to uncover if Pramerica Rakshak is the reliable solution you’ve been searching for!
To understand, let’s examine the Advantages (Pros) and Disadvantages (cons) of the Pramerica Rakshak Smart Plan. This analysis will aid in making informed financial decisions.
Deeper into the specifics will reveal more about the Pramerica Rakshak Smart Plan.
Table of Contents
1.What is the Pramerica Rakshak Smart Plan?
2.What are the Features of the Pramerica Rakshak Smart Plan?
3.Pramerica Rakshak Smart Plan Eligibility Criteria
4.Pramerica Rakshak Smart Plan Benefits in detail
- Death benefit
- Maturity Benefit
- Annual Guaranteed Additions
5.Pramerica Rakshak Smart Plan Grace period, Premium discontinuance, and Revival
6.Pramerica Rakshak Smart Plan Free Look period
7.Surrendering Pramerica Rakshak Smart Plan
8.What are the Advantages of the Pramerica Rakshak Smart Plan
9.What are the Disadvantages of the Pramerica Rakshak Smart Plan
10.Pramerica Rakshak Smart Plan Research methodology
- Pramerica Rakshak Smart Plan Benefit Illustration – IRR Analysis
11.Pramerica Rakshak Smart Plan Vs Other Products
- Pramerica Rakshak Smart Plan Vs. Pure term + ELSS
12.Final Verdict on Pramerica Rakshak Smart Plan
1.What is the Pramerica Rakshak Smart
Pramerica Life Rakshak Smart is a Non-Linked Non-Participating Individual Life Insurance Savings Plan. This Life Insurance plan not only provides you with a life cover but also offers assured benefits. The plan is designed to meet the annual education needs of your kid.
2.What are the Features of the Pramerica Rakshak Smart Plan
- Get life insurance coverage during the policy term to secure your loved ones.
- You could choose from two plan options as per your life insurance needs.
- Option to choose your policy term and Premium paying term.
- You may choose to receive your guaranteed income in annual or monthly installments during the payout period.
- The plan offers guaranteed benefits.
3.Pramerica Rakshak Smart Plan Eligibility Criteria
| Life option | Enhanced Life option | |
| Age at entry | 91 days | 18 to 50 years |
| Maturity age | 18 to 80 years | 28 to 70 years |
| Policy term and Premium paying term | Policy term | Premium paying term |
| 10 | 5 | |
| 12 | 7 | |
| 15 | 10 | |
| 20 | 12 | |
| Base Sum assured | Minimum: 1.5 lakhs Maximum: No limit |
|
| Annual premium | 19,445 | 20,567 |
| Premium payment mode | Annual, Semi-annual, and Monthly | |
4.Pramerica Rakshak Smart Plan Benefits in detail
Death benefit
Life Option:
If the Life Insured dies within the Policy Term, and the policy is still in effect on the date of death, the beneficiary shall receive the sum Assured on Death and, Accrued Annual Guaranteed Additions till the date of death.
The Sum Assured on the Death for Life Option is the highest of:
- 11 times Annualised Premium# (or)
- Base Sum Assured (or)
- 105% of the total premiums paid till the date of death (or)
- X% of Total Premiums Paid* till the date of death
Enhanced Life Option:
If the Life Insured dies within the Policy Term, and the policy is still in effect on the date of death, the beneficiary shall receive the following benefits.
- Immediate Benefit: A lump sum amount equal to Base Sum Assured and Accrued Annual Guaranteed Additions till the date of death
- Monthly Payout: 2% of the Base Sum Assured, starting from the month of death for the rest of the policy term subject to a minimum of 36 monthly payouts even if these fall outside the Policy Term
- Benefit at Maturity Date: A lump sum amount equivalent to the Base Sum Assured multiplied by the Guaranteed Maturity Multiple (GMM) factor.
The Sum Assured on Death shall be the highest of the following:
- 11 times the Annualized Premium
- 105% of the total premiums paid till the date of death
- The Sum of the 3 benefits is defined above.
Maturity Benefit
On Survival of the Life Insured till the end of the policy term and provided all due premiums have been paid, you shall receive the Maturity Benefit as a sum of
- Guaranteed Income Benefit, in arrears as per the frequency chosen (annual or monthly), during the payout period of 5 years from the maturity date and
- Savings Booster payable at the end of the Payout Period
Annual Guaranteed Additions
Annual Guaranteed Additions (AGA) must be credited to the Policy at the end of each completed Policy Year during the last ten years of the Policy Term. The rates of addition are provided below for each Policy Term choice. The AGAs per thousand of Base Sum Assured are as follows:
5.Pramerica Rakshak Smart Plan Grace period, Premium discontinuance, and Revival
Grace Period
If you are unable to pay your premium by the due date, you will be allowed a 30-day grace period across all options.
Premium Discontinuance
The 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 Policy has acquired a Surrender Value, your Policy will lapse at the end of the grace period, the Death Benefit will cease immediately and When the Policy expires, no benefits will be paid.
If the 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 insurance for its full coverage within five years after the due date of the first unpaid premium but before policy maturity, by paying all arrears
6.Pramerica Rakshak Smart Plan Free Look period
If you disagree with any of these terms and conditions, you have the option to return the Policy within a period of 15 days (30 days in case the Policy is sold through Distance Marketing) beginning with the date of receipt of the Policy Document.
7.Surrendering Pramerica Rakshak Smart Plan
If your 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 which will be higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV) of the Policy.
8.What are the Advantages of the Pramerica Rakshak Smart Plan
- The Beneficiary shall have an option to receive maturity benefit i.e. Guaranteed income combined with a savings boost in the form of a lump sum payment.
- The Loan can be availed and the maximum loan amount is 75% of the Surrender Value.
- Tax benefits are applicable on premiums paid and on benefits received, as per prevailing income tax laws.
9.What are the Disadvantages of the Pramerica Rakshak Smart Plan
- The plan option, base sum assured, policy term, or premium payment term cannot be altered after the commencement of the policy.
- The sum assured is too low to cover the future needs of the family.
- During the pay-out period, life cover is not available.
10.Pramerica Rakshak Smart Plan Research Methodology
The investment should always be analysed in terms of returns. Pramerica Rakshak Smart plan offers guaranteed payouts. But we need to look at the returns percentage for decision-making. A quote was taken from the portal for the Internal Rate of Return (IRR) calculation.
Pramerica Rakshak Smart Plan Benefit Illustration – IRR Analysis
A 35-year-old male opts for Pramerica Life Rakshak Smart (Life option) with a policy term of 15 years and a premium payment term of 10 years. He pays an annual premium of ₹ 2,09,490 and his base sum assured is ₹ 15,00,000.
| Male | 35 years |
| Sum Assured | ₹ 15 Lakhs |
| Policy term | 15 years |
| premium paying term | 10 years |
| Annualised premium | ₹ 2,09,490 |
After paying a premium for 10 years, he starts receiving the payouts from the 16th year. He receives ₹ 6 Lakhs annually for the next 5 years. Along with the last pay-out, he receives the annual accrued guaranteed addition.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -2,09,490 | 15,00,000 |
| 36 | 2 | -2,09,490 | 15,00,000 |
| 37 | 3 | -2,09,490 | 15,00,000 |
| 38 | 4 | -2,09,490 | 15,00,000 |
| 39 | 5 | -2,09,490 | 15,00,000 |
| 40 | 6 | -2,09,490 | 15,00,000 |
| 41 | 7 | -2,09,490 | 15,00,000 |
| 42 | 8 | -2,09,490 | 15,00,000 |
| 43 | 9 | -2,09,490 | 15,00,000 |
| 44 | 10 | -2,09,490 | 15,00,000 |
| 45 | 11 | 0 | 15,00,000 |
| 46 | 12 | 0 | 15,00,000 |
| 47 | 13 | 0 | 15,00,000 |
| 48 | 14 | 0 | 15,00,000 |
| 49 | 15 | 0 | 15,00,000 |
| 50 | 16 | 6,00,000 | 15,00,000 |
| 51 | 17 | 6,00,000 | 15,00,000 |
| 18 | 6,00,000 | 15,00,000 | |
| 19 | 6,00,000 | 15,00,000 | |
| 20 | 18,24,000 | 15,00,000 | |
| IRR | 5.44% |
The IRR for this cash flow is 5.44%. The plan offers guaranteed pay-outs, but the returns percentage is less than the inflation rate. Especially, the education inflation is around 10 -12%. Investing in Pramerica Rakshak Smart will not be beneficial to meet the education cost.
11.Pramerica Rakshak Smart Plan Vs other products
Comparing the returns of Pramerica Rakshak Smart with other investment returns helps you in decision-making. Regular payouts from Pramerica Rakshak Smart may not be sufficient to meet your goals. So, let us look for other investments where you get better returns. For easy comparison, the above illustration’s metrics are taken.
Pramerica Rakshak Smart Plan Vs. Pure term + ELSS
Similar to Pramerica Rakshak Smart, we need to look for life cover and regular pay-outs. For life cover, a pure life insurance policy for a sum assured of ₹ 15 Lakhs would cost ₹ 9,300. The policy term is 15 years and the premium paying term is 10 years. For the same metric, the premium under Pramerica Rakshak Smart is ₹ 2,09,490. By opting for a pure term life insurance policy, you save ₹ 2,00,190 per annum. This amount can be invested to meet your future needs.
| Pure Term Life Insurance | |
| Sum Assured | ₹ 15 Lakhs |
| Policy term | 15 years |
| premium paying term | 10 years |
| Annualised premium | ₹ 9,300 |
| Investment | ₹ 2,00,190 |
In the initial 10 years, after paying the life insurance premium, the balance is invested in the ELSS fund. At the end of 15 years, the ELSS units are redeemed. In the last 5 years, the investment is transferred to a 6% instrument, to meet the regular needs i.e., annual pay-outs.
| Age | Year | Term insurance + ELSS | |
| Term Insurance premium + ELSS | Death benefit | ||
| 35 | 1 | -2,09,490 | 15,00,000 |
| 36 | 2 | -2,09,490 | 15,00,000 |
| 37 | 3 | -2,09,490 | 15,00,000 |
| 38 | 4 | -2,09,490 | 15,00,000 |
| 39 | 5 | -2,09,490 | 15,00,000 |
| 40 | 6 | -2,09,490 | 15,00,000 |
| 41 | 7 | -2,09,490 | 15,00,000 |
| 42 | 8 | -2,09,490 | 15,00,000 |
| 43 | 9 | -2,09,490 | 15,00,000 |
| 44 | 10 | -2,09,490 | 15,00,000 |
| 45 | 11 | 0 | 15,00,000 |
| 46 | 12 | 0 | 15,00,000 |
| 47 | 13 | 0 | 15,00,000 |
| 48 | 14 | 0 | 15,00,000 |
| 49 | 15 | 0 | 15,00,000 |
| 50 | 16 | 6,00,000 | 15,00,000 |
| 51 | 17 | 6,00,000 | 15,00,000 |
| 18 | 6,00,000 | 15,00,000 | |
| 19 | 6,00,000 | 15,00,000 | |
| 20 | 53,61,945 | 15,00,000 | |
| IRR | 9.79% | ||
The final maturity value of the ELSS fund at the end of 15 years is ₹ 69.34 Lakhs. This amount is subject to capital gains tax. The post-tax maturity value is ₹ 64.50 lakhs. This amount is transferred to a 6% instrument. From here, an annual withdrawal of ₹ 6 Lakhs is made to match the guaranteed pay-outs of Pramerica Rakshak Smart. In the final year, total investment is withdrawn to match the accrued guaranteed additions under Pramerica Rakshak Smart. The IRR for this cash flow is 9.79%.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 69,34,200 |
| Purchase price | 20,01,900 |
| Long-Term Capital Gains | 49,32,300 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 48,32,300 |
| Tax paid on LTCG | 4,83,230 |
| Maturity value after tax | 64,50,970 |
The return percentage under alternate investment is higher than the inflation rate. This allows you to build a sizeable corpus for education-related goals. The returns of Pramerica Rakshak Smart will not help achieve the required corpus.
12. Final verdict on Premerica Rakshak Smart Plan
In conclusion, while Pramerica Rakshak Smart Plan offers a straightforward money-back approach and regular income for meeting your financial needs, it falls short in providing adequate life cover and may not align with your long-term goals. Additionally, there is a significant agent commission associated with acquiring the plan.
The guaranteed payouts may not always match your requirements, and the returns analysis suggests a potential deficit. Investing in ready-made child plans may not be the most effective strategy for building the required corpus.
It’s advisable to explore separate investment avenues for your children’s education goals, considering your risk appetite. Consulting a financial advisor can simplify the decision-making process and ensure you make informed choices for a secure financial future.
Relying on social media platforms such as Facebook, Quora, Twitter, etc., for crucial investment decisions is not recommended.
It’s advisable to seek guidance from a Certified Financial Planner for personalized financial planning. A thorough financial plan will address all your future financial requirements
Leave a Reply