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Can the Reliance Nippon Life Fixed Savings Plan secure your future with a guaranteed savings plan?
Can the Reliance Nippon Life Fixed Savings Plan offer both life cover and guaranteed returns?
Can the Reliance Nippon Life Fixed Savings Plan safeguard your savings while enjoying life cover?
In this review, we will explore the features, benefits, pros, cons, and potential returns of the Reliance Nippon Life Fixed Savings Plan. By the end, you’ll have a clearer understanding of more efficient strategies for investing your savings.
Table of Contents:
What is the Reliance Nippon Life Fixed Savings Plan?
What are the features of the Reliance Nippon Life Fixed Savings Plan?
Who is eligible for the Reliance Nippon Life Fixed Savings Plan?
What are the benefits of the Reliance Nippon Life Fixed Savings Plan?
Grace period, Discontinuance and Revival of Reliance Nippon Life Fixed Savings Plan
Free Look Period for Reliance Nippon Life Fixed Savings Plan
Surrendering Reliance Nippon Life Fixed Savings Plan
What are the advantages of the Reliance Nippon Life Fixed Savings Plan?
What are the disadvantages of the Reliance Nippon Life Fixed Savings Plan?
Research Methodology of Reliance Nippon Life Fixed Savings Plan
Benefit Illustration – IRR Analysis of the Reliance Nippon Life Fixed Savings Plan
Reliance Nippon Life Fixed Savings Plan Vs. Other Investments
Reliance Nippon Life Fixed Savings Plan Vs. Pure-term + ELSS
Final Verdict on Reliance Nippon Life Fixed Savings Plan
What is the Reliance Nippon Life Fixed Savings Plan?
Reliance Nippon Life Fixed Savings is a Non-Linked, Non-Participating, Individual, Savings Life Insurance Plan. Reliance Nippon Life Fixed Savings plan offers guaranteed benefits, including fixed regular additions that accrue every year and an additional lump sum at maturity, along with a life cover to protect your family.
What are the features of the Reliance Nippon Life Fixed Savings Plan?
- Enjoy life cover for the entire duration of the Reliance Nippon Life Fixed Savings policy term.
- Fixed Regular Additions are credited at the start of each policy year and paid out on the first day of the final policy year.
- Receive the Guaranteed Sum Assured upon maturity.
- Benefit from tax savings on both the premiums paid and the payouts received.
Who is eligible for the Reliance Nippon Life Fixed Savings Plan?
| Minimum | Maximum | |
| Policy term | 12,15 and 20 years | |
| Age at entry | 8 years | 60 years |
| Age at maturity | 20 years | 80 years |
| Annualised Premium | ₹ 25,000 | No Limit |
| Premium paying term | 5, 7 and 10years | |
| Premium payment option | Limited pay | |
| Premium payment mode | Yearly, Half-yearly, Quarterly and Monthly | |
What are the benefits of the Reliance Nippon Life Fixed Savings Plan?
1.) Survival Benefit
On survival of the Life Assured till the start of the last Policy year, the accrued Fixed Regular Additions are payable on the first day of the last Policy year. Fixed Regular Additions as a percentage of Annualized Premium as mentioned below will accrue at the start of each Policy year.
| Policy Year | Fixed Regular Additions (Percentage of Annualized Premium) |
| 1 | 8% |
| 2 | 9% |
| 3 onwards | 10% |
2.) Maturity Benefit
On survival of the Life Assured till the end of the Reliance Nippon Life Fixed Savings Policy Term, the Guaranteed Sum Assured on Maturity is payable which is equal to
- Annualized Premium x Premium Payment Term (PPT)
- Fixed Maturity Addition = Maturity Factor x Annualized Premium
3.) Death Benefit
In case of unfortunate demise of the Life Assured during the Reliance Nippon Life Fixed Savings Policy Term, provided the Policy is in force as of the date of death, the nominee/beneficiary shall receive the maximum of the following benefits:
- Sum Assured on death
- 105% of Total Premiums Paid as of the date of death
PLUS
Accrued Fixed Regular Additions till the time of death, if not paid earlier.
The sum Assured on death is higher than:
- Annualized Premium x death benefit multiple as per the death benefit option chosen (11 times or 7 times)
- Guaranteed Sum Assured on Maturity
Grace period, Discontinuance and Revival of Reliance Nippon Life Fixed Savings Plan
Grace period
A grace period of 30 days (15 days for monthly mode) will be given to pay your premium.
Discontinuance
The Reliance Nippon Life Fixed Savings Policy shall acquire a surrender value if premiums for the first two Policy years have been paid in full.
If you discontinue the payment of premiums before your policy has acquired a surrender value, the policy shall lapse at the end of the grace period.
Once a policy has acquired a surrender value and if the Reliance Nippon Life Fixed Savings policyholder chooses to discontinue the premium payment, the policy will continue as a paid-up (or reduced paid-up) policy with reduced benefits.
Revival
A policy in lapsed or paid-up condition may be revived by the Reliance Nippon Life Fixed Savings policyholder during the revival period of two 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 Savings 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 Savings Plan
The Reliance Nippon Life Fixed Savings Policy shall acquire a surrender value if premiums for the first two Policy years have been paid in full.
If your policy has acquired a surrender value and you choose to discontinue your policy, you will be entitled to the surrender value, which is higher of
- Guaranteed Surrender Value (GSV) and
- Special Surrender Value (SSV)
What are the advantages of the Reliance Nippon Life Fixed Savings Plan?
- Riders can be added to increase the coverage.
- Premium payments are flexible, with options to pay annually, semi-annually, quarterly, or monthly.
- All the benefits are guaranteed
What are the disadvantages of the Reliance Nippon Life Fixed Savings Plan?
- The life coverage offered is inadequate.
- The returns are relatively low.
- Loan facility is not available under the plan.
- The plan lacks flexibility in both the premium payment term and the policy term.”
Research Methodology of Reliance Nippon Life Fixed Savings Plan
The Reliance Nippon Life Fixed Savings Plan provides survival benefits one year before the maturity payout, with a gap of one year between these two benefits. Let’s calculate the returns based on the figures provided in the policy brochure and compare them with other investment options.
Benefit Illustration – IRR Analysis of the Reliance Nippon Life Fixed Savings Plan
Take the case of a 30-year-old male who chooses the Reliance Nippon Life Fixed Savings Plan. The policy has a 20-year term, with a 7-year premium payment period. The annual premium is ₹50,000, and the sum assured is ₹5.5 lakhs (11 times the annual premium).
| Male | 30 years |
| Sum Assured | ₹ 5,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 7 years |
| Annualised Premium | ₹ 50,000 |
At the start of the final policy year, he receives ₹98,500 as Accrued Fixed Regular Additions. At maturity, he receives a Guaranteed Sum Assured of ₹6,17,025. The IRR (Internal Rate of Return) for this cash flow is 4.31% as per the Reliance Nippon Life Fixed Savings Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -50,000 | 5,50,000 |
| 31 | 2 | -50,000 | 5,50,000 |
| 32 | 3 | -50,000 | 5,50,000 |
| 33 | 4 | -50,000 | 5,50,000 |
| 34 | 5 | -50,000 | 5,50,000 |
| 35 | 6 | -50,000 | 5,50,000 |
| 36 | 7 | -50,000 | 5,50,000 |
| 37 | 8 | 0 | 5,50,000 |
| 38 | 9 | 0 | 5,50,000 |
| 39 | 10 | 0 | 5,50,000 |
| 40 | 11 | 0 | 5,50,000 |
| 41 | 12 | 0 | 5,50,000 |
| 42 | 13 | 0 | 5,50,000 |
| 43 | 14 | 0 | 5,50,000 |
| 44 | 15 | 0 | 5,50,000 |
| 45 | 16 | 0 | 5,50,000 |
| 46 | 17 | 0 | 5,50,000 |
| 47 | 18 | 0 | 5,50,000 |
| 48 | 19 | 0 | 5,50,000 |
| 49 | 20 | 98,500 | 5,50,000 |
| 50 | 6,17,025 | ||
| IRR | 4.31% |
Though the premium payment is limited to 7 years, the Reliance Nippon Life Fixed Savings Plan is a long-term commitment of 20 years, and benefits are only payable if the full term is completed.
However, for such a long-term plan, the returns are lower than those from many debt instruments. Over time, inflation erodes the purchasing power of the accumulated benefits.
Moreover, the sum assured is insufficient to meet basic family needs. The low returns, lack of flexibility in accessing benefits, and inadequate coverage make the Reliance Nippon Life Fixed Savings Plan a less suitable option for investing your savings.
Reliance Nippon Life Fixed Savings Plan Vs. Other Investments
Long-term investments with lower returns may not help you accumulate the required corpus to achieve your financial goals. Therefore, let’s explore alternative investment strategies using the same premium amount and calculate the returns.
Unlike the Reliance Nippon Life Fixed Savings Plan, which combines insurance and investment, we’ll separate these components.
Reliance Nippon Life Fixed Savings Plan Vs. Pure-term + ELSS
Consider the following scenario for comparison: A pure-term life insurance policy with a sum assured of ₹5.5 lakhs can be secured for an annual premium of ₹5,900, with a 20-year term and a 10-year premium payment period.
This leaves ₹44,100 each year for investment, depending on your risk profile. For the first 5 years, the remaining amount after paying the insurance premium is invested, and for the next 2 years, the entire ₹50,000 is allocated to investments.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 5 years |
| Annualised Premium | ₹ 5,900 |
| Investment | ₹ 44,100 |
Low-risk investors could opt for debt instruments like the Public Provident Fund (PPF), while higher-risk investors might choose equity-based options such as Equity-Linked Savings Schemes (ELSS). In this comparison, we’ll focus on ELSS.
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -50,000 | 5,50,000 |
| 31 | 2 | -50,000 | 5,50,000 |
| 32 | 3 | -50,000 | 5,50,000 |
| 33 | 4 | -50,000 | 5,50,000 |
| 34 | 5 | -50,000 | 5,50,000 |
| 35 | 6 | -50,000 | 5,50,000 |
| 36 | 7 | -50,000 | 5,50,000 |
| 37 | 8 | 0 | 5,50,000 |
| 38 | 9 | 0 | 5,50,000 |
| 39 | 10 | 0 | 5,50,000 |
| 40 | 11 | 0 | 5,50,000 |
| 41 | 12 | 0 | 5,50,000 |
| 42 | 13 | 0 | 5,50,000 |
| 43 | 14 | 0 | 5,50,000 |
| 44 | 15 | 0 | 5,50,000 |
| 45 | 16 | 0 | 5,50,000 |
| 46 | 17 | 0 | 5,50,000 |
| 47 | 18 | 0 | 5,50,000 |
| 48 | 19 | 0 | 5,50,000 |
| 49 | 20 | 98,500 | 5,50,000 |
| 50 | 19,02,745 | ||
| IRR | 10.70% |
At the start of the 20th year, ₹98,500 is withdrawn to match the Accrued Fixed Regular Additions from the Reliance Nippon Fixed Savings Plan.
At the end of the term, the ELSS investment’s pre-tax maturity value is ₹21.25 lakhs. After accounting for capital gains tax, the post-tax maturity value comes to ₹19.02 lakhs, yielding a post-tax IRR of 10.70%.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 21,25,208 |
| Purchase price | 2,20,500 |
| Long-Term Capital Gains | 19,04,708 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 17,79,708 |
| Tax paid on LTCG | 2,22,464 |
| Maturity value after tax | 19,02,745 |
This alternative strategy not only delivers better returns but also provides flexibility in accessing your funds when needed. In contrast, the Reliance Nippon Life Fixed Savings Plan lacks flexibility and offers sub-par returns.
Final Verdict on Reliance Nippon Life Fixed Savings Plan
The Reliance Nippon Life Fixed Savings Plan allows you to save systematically over time, aiming to create a corpus for your life goals.
However, the accumulated savings may fall short of achieving those goals, as the plan’s returns are lower than the inflation rate. Over time, the cost of your goals will have increased, making the final maturity value insufficient and also it has a high agent commission.
Additionally, the sum assured often provides inadequate protection for your family. With limited life coverage and relatively low returns, the Reliance Nippon Life Fixed Savings Plan is not ideal for those looking to build long-term wealth.
To effectively grow your savings, it’s essential to choose investment options based on your risk tolerance, life goals, and time horizon, ensuring they align with your financial objectives.
Combining insurance with investment is not the best approach. Pure-term life insurance policies are a more effective way to safeguard your family from uncertainties.
Do Facebook, Twitter, and Quora have the last word when it comes to financial advice?
Avoid relying on traditional life insurance policies for both life coverage and investments. If you need help choosing the right products, consider consulting a Certified Financial Planner who can offer expert guidance tailored to your needs.
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