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Can the Reliance Nippon Life Fixed Money Back Plan provide financial security for your family in terms of savings and protection?
Can the Reliance Nippon Life Fixed Money Back Plan provide guaranteed returns and protect your loved ones at the same time?
Is the Reliance Nippon Life Fixed Moneyback Plan the right option for ensuring this financial security?
In this analysis, we’ll review the Reliance Nippon Life Fixed Moneyback Plan’s features, pros, cons, and potential returns to evaluate whether it truly aligns with your financial goals and needs.
Table of Contents:
What is the Reliance Nippon Life Fixed Moneyback Plan?
What are the features of the Reliance Nippon Life Fixed Moneyback Plan?
What are the plan options in the Reliance Nippon Life Fixed Moneyback Plan?
Who is eligible for the Reliance Nippon Life Fixed Moneyback Plan?
What are the benefits of the Reliance Nippon Life Fixed Moneyback Plan?
Grace period, Discontinuance and Revival of Reliance Nippon Life Fixed Moneyback Plan
Free Look Period for Reliance Nippon Life Fixed Moneyback Plan
Surrendering Reliance Nippon Life Fixed Moneyback Plan
What are the advantages of the Reliance Nippon Life Fixed Moneyback Plan?
What are the disadvantages of the Reliance Nippon Life Fixed Moneyback Plan?
Research Methodology of Reliance Nippon Life Fixed Moneyback Plan
Benefit Illustration – IRR Analysis of the Reliance Nippon Life Fixed Moneyback Plan
Reliance Nippon Life Fixed Moneyback Plan Vs. Other Investments
Reliance Nippon Life Fixed Moneyback Plan Vs. Pure-term + ELSS
Final Verdict on the Reliance Nippon Life Fixed Moneyback Plan
What is the Reliance Nippon Life Fixed Moneyback Plan?
Reliance Nippon Life Fixed Money Back Plan is a Non-Linked, Non-Participating, Individual Savings Life Insurance Plan. It offers you the flexibility to choose an appropriate life cover.
Reliance Nippon Life Fixed Money Back Plan also helps you systematically save for your growing financial needs and provides liquidity during the last five years to help you achieve your goals.
What are the features of the Reliance Nippon Life Fixed Moneyback Plan?
- Enjoy life cover throughout the entire Reliance Nippon Life Fixed Money Back Plan policy term to ensure financial protection for your loved ones.
- Option to continue receiving survival and maturity benefits even if you’re no longer around.
- Choose from 2 plan options with death benefit choices tailored to your life insurance coverage needs.
- Guaranteed fixed money-back benefits during the last four years leading up to maturity.
- Receive a lump sum maturity benefit at the end of the Reliance Nippon Life Fixed Money Back Plan policy term.
- Flexibility to select your premium payment term and policy term.
What are the plan options in the Reliance Nippon Life Fixed Moneyback Plan?
Plan Option A:
Fixed Moneyback Benefits and Maturity Benefits will be paid to the Reliance Nippon Life Fixed Money Back Plan policyholder as and when due, only on the survival of the Life Assured.
On the death of Life Assured during the Policy Term, the death benefit is payable as a lump sum and the policy terminates.
Plan Option B:
On the death of Life Assured during the Policy Term, the death benefit is payable as a lump sum. The policy continues, and future premiums are waived under the Reliance Nippon Life Fixed Money Back Plan policy.
The Fixed Moneyback Benefits and Maturity Benefit will be payable as and when due, irrespective of death or survival of the Life Assured. The policy terminates on payment of the Maturity Benefit.
Who is eligible for the Reliance Nippon Life Fixed Moneyback Plan?
| Plan option | Plan option A Plan Option B |
|
| Policy term | 15 or 20 years | |
| Premium payment term | 5/7/10 years | |
| Minimum | Maximum | |
| Age at Entry | Death benefit Option A 11X: 18 years Death benefit option B 7X: 45 years |
55 years |
| Age at Maturity | 33 years | 75 years |
| Sum Assured | ₹ 1,00,000 | No limit |
| Premium | ₹ 9,209 | No limit |
| Premium payment Mode | Yearly, Half-yearly, Quarterly and Monthly | |
What are the benefits of the Reliance Nippon Life Fixed Moneyback Plan?
1.) Fixed Money Back Benefits
Plan Option A – Payable on survival of the Life Assured at the end of the Reliance Nippon Life Fixed Money Back Plan policy years as specified below, provided the policy is in force.
Plan Option B – Payable irrespective of death or survival of the Life Assured at the end of the Reliance Nippon Life Fixed Money Back Plan policy years as specified below, provided the policy is in force.
Fixed Money Back Benefits as a percentage of Base Sum Assured
| Policy Term | 15 Years | 20 Years | Fixed Money Back Benefits (as % of Base Sum Assured) |
| Payable at the end of the policy year | 11 | 16 | 15% |
| 12 | 17 | 15% | |
| 13 | 18 | 15% | |
| 14 | 19 | 15% |
2.) Maturity Benefit
Plan Option A – Payable on survival of the Life Assured at the end of the Policy Term as specified below, provided the policy is in force.
Plan Option B – Payable irrespective of death or survival of the Life Assured at the end of the Policy Term as specified below, provided the policy is in force.
At the end of the Reliance Nippon Life Fixed Money Back Plan Policy Term, you will receive the Maturity Benefit which is the Sum Assured on Maturity defined as the sum of:
- 40% of Base Sum Assured; and
- Fixed Loyalty Addition equal to 3% of Base Sum Assured times the Policy Term
3.) Death Benefit
In case of unfortunate demise of the Life Assured during the Reliance Nippon Life Fixed Money Back Plan Policy Term, the claimant shall receive the following benefits, irrespective of any Fixed Money Back Benefit already paid, based on the Plan Option chosen at inception.
| Option A | Option B |
Higher of,
The policy will terminate on payment of the death benefit. |
Higher of,
The policy will continue and in addition, the future premiums are waived under the policy and the claimant will receive the future unpaid Fixed Money Back Benefits, if any, and Maturity Benefit as and when due. |
Sum Assured on Death is equal to higher of:
- Annualized premium multiplied by Death Benefit Multiple as per the Death Benefit Option chosen; and
- Base Sum Assured
Grace period, Discontinuance and Revival of Reliance Nippon Life Fixed Moneyback Plan
Grace period
There is a grace period of 30 days applicable from the due date of payment of premiums if the premium payment frequency is yearly, half-yearly or quarterly. In case the premiums are paid in monthly frequency, then the grace period applicable is 15 days.
Discontinuance
If all due premiums have not been paid for the first two consecutive policy years in full, the Reliance Nippon Life Fixed Money Back Plan policy shall lapse at the end of the grace period.
Once a policy has acquired a surrender value (all due premiums have been paid for the first two consecutive policy years), and if the policyholder chooses to discontinue the premium payment, the policy will continue as a paid-up (or reduced paid-up) policy with reduced benefits.
Paid-Up Sum Assured = Base Sum Assured multiplied by (Number of premiums paid divided by total number of premiums payable)
Revival
A policy in lapsed or paid-up condition may be revived by the Reliance Nippon Life Fixed Money Back Plan policyholder during the revival period of 5 years from the due date of the first unpaid due premium or date of maturity of the base policy whichever is earlier.
Free Look Period for Reliance Nippon Life Fixed Moneyback Plan
In the event you disagree with any of the policy terms or conditions, you shall have the option to return the policy to the company for cancellation within 15 days of its receipt (30 days of receipt where the Policy has been obtained through Distance Marketing mode).
Surrendering Reliance Nippon Life Fixed Moneyback Plan
The policy shall acquire a Surrender Value if all due premiums have been paid for the first two consecutive policy years in full. The Surrender Value payable is higher than the Guaranteed Surrender Value or Special Surrender Value of the Policy
What are the advantages of the Reliance Nippon Life Fixed Moneyback Plan?
- You can take a loan of up to 80% of the policy’s surrender value.
- Additional riders can be included to enhance coverage.
- Flexible premium payment options are available, allowing you to pay annually, semi-annually, quarterly, or monthly.
- A rebate on base premium rates is offered for higher sum assured amounts.
What are the disadvantages of the Reliance Nippon Life Fixed Moneyback Plan?
- The life cover offered is inadequate.
- Receiving the fixed money-back benefit annually might lead to unnecessary spending.
- The returns are relatively low.
- The fixed money-back benefit cannot be deferred or postponed, which may not suit your financial requirements.
- Early withdrawals disrupt the compounding growth of your investments.
Research Methodology of Reliance Nippon Life Fixed Moneyback Plan
The Reliance Nippon Life Fixed Moneyback Plan offers fixed cash payouts during the last four years of the policy term, along with a lump sum benefit at maturity. After reviewing the plan’s features and details, it’s important to assess its overall suitability.
To better understand the cash flow pattern and evaluate the returns, let’s examine a specific case and calculate the Internal Rate of Return (IRR).
Benefit Illustration – IRR Analysis of the Reliance Nippon Life Fixed Moneyback Plan
A 30-year-old male opts for the Reliance Nippon Life Fixed Moneyback Plan with a 20-year policy term, Death Benefit Option A, and a base sum assured of ₹10,00,000. He pays an annual premium of ₹95,426 for 10 years.
Starting at the end of the 16th policy year, he receives ₹1,50,000 annually for four years (15% of the base sum assured). At maturity, he gets ₹4 lakhs – 40% of the base sum assured and an additional ₹6 lakhs as a loyalty bonus.
| Male | 30 years |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 95,426 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -95,426 | 10,00,000 |
| 31 | 2 | -95,426 | 10,00,000 |
| 32 | 3 | -95,426 | 10,00,000 |
| 33 | 4 | -95,426 | 10,00,000 |
| 34 | 5 | -95,426 | 10,00,000 |
| 35 | 6 | -95,426 | 10,00,000 |
| 36 | 7 | -95,426 | 10,00,000 |
| 37 | 8 | -95,426 | 10,00,000 |
| 38 | 9 | -95,426 | 10,00,000 |
| 39 | 10 | -95,426 | 10,00,000 |
| 40 | 11 | 0 | 10,00,000 |
| 41 | 12 | 0 | 10,00,000 |
| 42 | 13 | 0 | 10,00,000 |
| 43 | 14 | 0 | 10,00,000 |
| 44 | 15 | 0 | 10,00,000 |
| 45 | 16 | 0 | 10,00,000 |
| 46 | 17 | 1,50,000 | 10,00,000 |
| 47 | 18 | 1,50,000 | 10,00,000 |
| 48 | 19 | 1,50,000 | 10,00,000 |
| 49 | 20 | 1,50,000 | 10,00,000 |
| 50 | 10,00,000 | ||
| IRR | 3.59% |
The IRR for this cash flow is 3.59% as per the Reliance Nippon Life Fixed Money Back Plan maturity calculator. Although the plan provides guaranteed and regular payouts, the returns are underwhelming for investors.
Moreover, the periodic payouts may not be enough to cover substantial expenses and could encourage unnecessary spending. The life cover is also insufficient to secure the family’s future financial needs.
Given the low returns, inflexible cash payouts, and inadequate life cover, the Reliance Nippon Life Moneyback Plan is not an effective investment option.
Reliance Nippon Life Fixed Moneyback Plan Vs. Other Investments
The Reliance Nippon Life Fixed Moneyback Plan combines life cover and investment, leading to poor returns. A more effective approach is to separate these into two distinct products.
Let’s explore better alternatives that can provide the same cash payouts and life cover as the Reliance Nippon Life Fixed Moneyback Plan.
Reliance Nippon Life Fixed Moneyback Plan Vs. Pure-term + ELSS
Using the same metrics as in the previous scenario, a pure-term life insurance policy with a sum assured of ₹10 lakhs requires an annual premium of ₹6,600 for a 20-year term, with a 10-year premium payment period. This leaves ₹88,826 annually, which can be invested based on your risk profile.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 6,600 |
| Investment | ₹ 88,826 |
Low-risk investors might opt for debt instruments like the Public Provident Fund (PPF), while higher-risk investors could choose equity-based options such as Equity-Linked Savings Schemes (ELSS). For this analysis, we assume an ELSS investment.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -95,426 | 10,00,000 |
| 31 | 2 | -95,426 | 10,00,000 |
| 32 | 3 | -95,426 | 10,00,000 |
| 33 | 4 | -95,426 | 10,00,000 |
| 34 | 5 | -95,426 | 10,00,000 |
| 35 | 6 | -95,426 | 10,00,000 |
| 36 | 7 | -95,426 | 10,00,000 |
| 37 | 8 | -95,426 | 10,00,000 |
| 38 | 9 | -95,426 | 10,00,000 |
| 39 | 10 | -95,426 | 10,00,000 |
| 40 | 11 | 0 | 10,00,000 |
| 41 | 12 | 0 | 10,00,000 |
| 42 | 13 | 0 | 10,00,000 |
| 43 | 14 | 0 | 10,00,000 |
| 44 | 15 | 0 | 10,00,000 |
| 45 | 16 | 0 | 10,00,000 |
| 46 | 17 | 1,50,000 | 10,00,000 |
| 47 | 18 | 1,50,000 | 10,00,000 |
| 48 | 19 | 1,50,000 | 10,00,000 |
| 49 | 20 | 1,50,000 | 10,00,000 |
| 50 | 25,41,881 | ||
| IRR | 8.10% | ||
After 16 years, the ELSS investment is shifted to an instrument yielding 7% p.a., and annual withdrawals begin, mirroring the money-back payouts from the Reliance Nippon Life Fixed Moneyback Plan. Finally, the remaining amount is fully withdrawn to match the maturity benefit of the plan.
| ELSS Tax Calculation | |
| Maturity value after 16 years | 34,45,975 |
| Purchase price | 8,88,260 |
| Long-Term Capital Gains | 25,57,715 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 24,32,715 |
| Tax paid on LTCG | 3,04,089 |
| Maturity value after tax | 31,41,885 |
The pre-tax value of the ELSS fund is ₹34.45 lakhs, and after accounting for capital gains tax, the post-tax value is ₹31.41 lakhs. From this, ₹1.5 lakhs is withdrawn annually, and at the end of the term, the remaining ₹25.41 lakhs is fully withdrawn. The IRR for this cash flow is 8.10%.
This alternative provides similar cash flow patterns as the Reliance Nippon Life Fixed Moneyback Plan. However, if you choose not to make annual withdrawals, your returns could improve even more.
When planning for life goals, separating investments from life insurance proves to be a more effective strategy than relying on cash payouts from moneyback plans.
Final Verdict on the Reliance Nippon Life Fixed Moneyback Plan
The Reliance Nippon Life Fixed Moneyback Plan offers liquidity during the last five years of the policy term, along with life cover throughout the policy term.
While the cash payouts at the end of the term are guaranteed, they may not align with your actual financial needs, potentially leading to discretionary spending.
An analysis of the returns shows that the Reliance Nippon Life Fixed Moneyback Plan is a suboptimal product, with returns falling below the inflation rate. The lack of flexibility in how you receive these payouts, combined with low returns, makes it less appealing for investors.
Moreover, the sum assured is insufficient to meet a family’s basic financial needs and it has a high agent commission. Pure-term life insurance policies provide higher coverage at much more affordable premiums.
Moneyback plans, on the other hand, offer insufficient life coverage and tend to offer payouts that don’t match real financial needs, reducing their effectiveness.
It’s advisable to keep your investments separate rather than combining them with a money-back or traditional life insurance plan.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
To secure your future, build an investment portfolio tailored to your risk profile, life goals, and time horizon. For personalized guidance, consult a Certified Financial Planner, who can help design a plan that fits your unique financial objectives.
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