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Can the Reliance Nippon Life Increasing Income Insurance Plan guarantee income growth for financial stability?
Can the Reliance Nippon Life Increasing Income Insurance Plan safeguard your family’s future while ensuring your income grows year after year?
Can the Reliance Nippon Life Increasing Income Insurance Plan offer both life cover and increasing income for long-term security?
In this detailed review, we will explore the features, advantages, drawbacks, and returns of the Reliance Nippon Life Increasing Income Insurance Plan. Let’s dive into an in-depth analysis of the plan.
Table of Contents:
What is the RNL Increasing Income Insurance Plan?
What are the features of the RNL Increasing Income Insurance Plan?
Who is eligible for the RNL Increasing Income Insurance Plan?
What are the benefits of the RNL Increasing Income Insurance Plan?
1. Guaranteed Monthly Income (GMI) Benefit
Grace period, Discontinuance and Revival of RNL Increasing Income Insurance Plan
Free Look Period for RNL Increasing Income Insurance Plan
Surrendering RNL Increasing Income Insurance Plan
What are the advantages of the RNL Increasing Income Insurance Plan?
What are the disadvantages of the RNL Increasing Income Insurance Plan?
Research Methodology of RNL Increasing Income Insurance Plan
Benefit Illustration – IRR Analysis of the RNL Increasing Income Insurance Plan
RNL Increasing Income Insurance Plan Vs. Other Investments
RNL Increasing Income Insurance Plan Vs. Pure-term + ELSS
Final Verdict on the RNL Increasing Income Insurance Plan
What is the RNL Increasing Income Insurance Plan?
Reliance Nippon Life Increasing Income Insurance Plan is a Non-Linked, Non-Participating, Individual, Savings Life Insurance Plan. Reliance Nippon Life Increasing Income Insurance Plan safeguards your family from any eventuality and additionally, you can receive a monthly income that increases every year and a lump sum at the end of the term.
What are the features of the RNL Increasing Income Insurance Plan?
- Enjoy life insurance coverage for the entire Reliance Nippon Life Increasing Income Insurance Plan policy term.
- Choose from policy terms of 12, 16, 20, or 24 years, with premium payments required for only half of the selected term.
- You can opt for one of two income options: “Income with Maturity Benefit” or “Income Only Benefit.”
- Receive a Guaranteed Monthly Income starting at the end of the premium payment period, continuing until maturity.
- The Guaranteed Monthly Income begins at 1% of the Base Sum Assured and increases by 0.25% each policy year.
- Under the “Income with Maturity Benefit” option, you’ll receive twice the Base Sum Assured upon survival at maturity.
- Enjoy tax benefits on both premiums paid and benefits received, under applicable income tax laws.
Who is eligible for the RNL Increasing Income Insurance Plan?
| Minimum | Maximum | |
| Age at Entry | 14 years | 60 years |
| Age at Maturity | 26 years | 80 years |
| Sum Assured | Age at entry up to 44 years: ₹ 60,000 Age at entry 45 years and above: ₹ 1,00,000 |
No limit |
| Annual premium | ₹ 15,000 | No limit |
| Policy term | 12/16/20/24 years | |
| Premium payment term | Half of the selected policy term | |
| Premium payment Mode | Yearly, Half-yearly, Quarterly and Monthly | |
What are the benefits of the RNL Increasing Income Insurance Plan?
1.) Guaranteed Monthly Income (GMI) Benefit
You will receive a Guaranteed Monthly Income (in arrears) after the end of the Premium Payment Term on survival of the Life Assured at the end of every month (in arrears) till the end of the Reliance Nippon Life Increasing Income Insurance Plan Policy Term.
Income with Maturity Benefit Option: Guaranteed Monthly Income is 1% of the Base Sum Assured for the first year and will increase by 0.25% in subsequent Policy years, at a simple rate.
Only Income Option: Guaranteed Monthly Income is 2% of the Base Sum Assured for the first year and will increase by 0.50% in subsequent Policy years, at a simple rate.
2.) Maturity Benefit
Maturity Benefit is applicable only for Income with Maturity Benefit option.
On survival of the Life Assured to the end of the Policy Term provided the Policy is in force, the Reliance Nippon Life Increasing Income Insurance Plan policyholder shall receive the Guaranteed Sum Assured on Maturity.
The guaranteed Sum Assured on Maturity is defined as twice the Base Sum Assured
3.) Death Benefit
In case of unfortunate demise of the Life Assured during the Reliance Nippon Life Increasing Income Insurance Plan Policy Term, provided the Policy is in force, the claimant(s) shall receive the following benefits based on the Death Benefit Option chosen at inception.
| Death benefit option 11x | Death benefit option 7x |
Higher of
Where Sum Assured on Death is higher of
|
Higher of
Where Sum Assured on Death is higher of
|
Grace period, Discontinuance and Revival of RNL Increasing Income Insurance 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 Increasing Income Insurance 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 Increasing Income Insurance 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 RNL Increasing Income Insurance 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 RNL Increasing Income Insurance Plan
The Reliance Nippon Life Increasing Income Insurance Plan 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 RNL Increasing Income Insurance Plan?
- You can avail of a loan of up to 80% of the policy’s surrender value.
- Enhance your coverage with additional rider options.
- Choose from flexible premium payment options, including annual, semi-annual, quarterly, or monthly payments.
- Your income increases each year.
What are the disadvantages of the RNL Increasing Income Insurance Plan?
- The life cover provided is insufficient.
- Receiving income benefits annually could lead to unplanned spending.
- The overall returns are comparatively low.
- The income benefit cannot be deferred, which may not align with your financial needs.
- Annual withdrawals interrupt the compounding growth of your investments.
Research Methodology of RNL Increasing Income Insurance Plan
The Reliance Nippon Life Increasing Income Insurance Plan provides annual cash payouts that increase over time. At the end of the Reliance Nippon Life Increasing Income Insurance Plan policy term, a maturity benefit is available based on the chosen plan option.
However, guaranteed cash flow alone should not be the primary reason for investing in this plan. The decision should be based on returns—let’s review an example and calculate the Internal Rate of Return (IRR).
Benefit Illustration – IRR Analysis of the RNL Increasing Income Insurance Plan
A 30-year-old male selects the Reliance Nippon Life Increasing Income Insurance Plan with a base sum assured of ₹10 Lakhs (death benefit – ₹23.21 Lakhs). The policy term is 20 years, and the premium payment term is 10 years, requiring an annual premium of ₹2,11,064.
| Male | 30 years |
| Base Sum Assured | ₹ 8,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 2,11,064 |
After the premium payment term, he starts receiving income benefits, with the first payout being ₹96,000, increasing annually.
Additionally, a maturity benefit of ₹16 Lakhs (twice the base sum assured) is paid at the end of the policy term. The IRR for this cash flow is calculated to be 4.11% as per the Reliance Nippon Life Increasing Income Insurance Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -2,11,064 | 23,21,704 |
| 31 | 2 | -2,11,064 | 23,21,704 |
| 32 | 3 | -2,11,064 | 23,21,704 |
| 33 | 4 | -2,11,064 | 23,21,704 |
| 34 | 5 | -2,11,064 | 23,21,704 |
| 35 | 6 | -2,11,064 | 23,21,704 |
| 36 | 7 | -2,11,064 | 23,21,704 |
| 37 | 8 | -2,11,064 | 23,21,704 |
| 38 | 9 | -2,11,064 | 23,21,704 |
| 39 | 10 | -2,11,064 | 23,21,704 |
| 40 | 11 | 0 | 23,21,704 |
| 41 | 12 | 96,000 | 23,21,704 |
| 42 | 13 | 1,20,000 | 23,21,704 |
| 43 | 14 | 1,44,000 | 23,21,704 |
| 44 | 15 | 1,68,000 | 23,21,704 |
| 45 | 16 | 1,92,000 | 23,21,704 |
| 46 | 17 | 2,16,000 | 23,21,704 |
| 47 | 18 | 2,40,000 | 23,21,704 |
| 48 | 19 | 2,64,000 | 23,21,704 |
| 49 | 20 | 2,88,000 | 23,21,704 |
| 50 | 19,12,000 | ||
| IRR | 4.11% |
While the plan offers guaranteed, regular payouts, the returns are lower than the inflation rate. Moreover, the annual payouts may not be sufficient to cover significant expenses, and since deferral is not an option, it could lead to unnecessary spending. The life cover also falls short of addressing the family’s long-term financial needs.
Although the Reliance Nippon Life Increasing Income Insurance Plan offers guaranteed benefits and life cover over the long term, the low returns and inadequate life coverage make it an unsuitable investment for achieving long-term financial goals.
RNL Increasing Income Insurance Plan Vs. Other Investments
The RNL Increasing Income Insurance Plan offers key benefits, such as increasing income after the premium-paying term and life coverage throughout the policy term.
However, let’s explore alternative investments that can provide similar benefits with the potential for higher returns by separating insurance and investment.
RNL Increasing Income Insurance Plan Vs. Pure-term + ELSS
Using the same parameters as in the previous example, we consider a pure-term life insurance policy with a sum assured of ₹25 Lakhs, requiring an annual premium of ₹15,400 over a 10-year premium payment term and a policy term of 20 years.
This leaves ₹1,95,664 annually available for investment, which can be allocated based on your risk profile.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 25,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 15,400 |
| Investment | ₹ 1,95,664 |
For low-risk investors, options like the Public Provident Fund (PPF) can be considered, while higher-risk investors might explore equity-based investments such as Equity-Linked Savings Schemes (ELSS). In this case, we assume the funds are invested in an ELSS fund.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -2,11,064 | 23,21,704 |
| 31 | 2 | -2,11,064 | 23,21,704 |
| 32 | 3 | -2,11,064 | 23,21,704 |
| 33 | 4 | -2,11,064 | 23,21,704 |
| 34 | 5 | -2,11,064 | 23,21,704 |
| 35 | 6 | -2,11,064 | 23,21,704 |
| 36 | 7 | -2,11,064 | 23,21,704 |
| 37 | 8 | -2,11,064 | 23,21,704 |
| 38 | 9 | -2,11,064 | 23,21,704 |
| 39 | 10 | -2,11,064 | 23,21,704 |
| 40 | 11 | 0 | 23,21,704 |
| 41 | 12 | 96,000 | 23,21,704 |
| 42 | 13 | 1,20,000 | 23,21,704 |
| 43 | 14 | 1,44,000 | 23,21,704 |
| 44 | 15 | 1,68,000 | 23,21,704 |
| 45 | 16 | 1,92,000 | 23,21,704 |
| 46 | 17 | 2,16,000 | 23,21,704 |
| 47 | 18 | 2,40,000 | 23,21,704 |
| 48 | 19 | 2,64,000 | 23,21,704 |
| 49 | 20 | 2,88,000 | 23,21,704 |
| 50 | 50,84,250 | ||
| IRR | 8.38% | ||
To generate regular cash withdrawals, the accumulated ELSS funds can be transferred to an instrument yielding 7% p.a. The final investment value is withdrawn to match the maturity benefit of the Reliance Nippon Life Increasing Income Insurance plan.
| ELSS Tax Calculation | |
| Maturity value after 11 years | 43,07,178 |
| Purchase price | 19,56,640 |
| Long-Term Capital Gains | 23,50,538 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 22,25,538 |
| Tax paid on LTCG | 2,78,192 |
| Maturity value after tax | 40,28,985 |
The ELSS fund’s final pre-tax value stands at ₹43.07 Lakhs, and the post-tax value is ₹40.28 Lakhs. This amount is then invested in a 7% p.a. return instrument.
Following a withdrawal pattern similar to the RNL Increasing Income Insurance Plan, the final value of the investments reaches ₹50.84 Lakhs. The combined IRR for this strategy, involving the pure-term life insurance and ELSS investment, comes to 8.38% post-tax.
This return outpaces inflation, and avoiding periodic withdrawals could result in even greater returns. When planning for life goals, separating insurance from investments generally leads to better financial outcomes compared to relying on traditional life insurance policies.
Final Verdict on the RNL Increasing Income Insurance Plan
The RNL Increasing Income Insurance Plan provides guaranteed rising income and family protection. While the guaranteed income feature may seem attractive for those seeking a regular income stream, its returns fall short of even basic debt instruments.
The increasing income benefits are unlikely to cover significant expenses and may lead to unnecessary spending and it also has a high agent commission.
Additionally, the sum assured is insufficient to meet future financial needs. By combining insurance and investment, the RNL Increasing Income Insurance Plan fails to deliver on both fronts.
As a long-term investment, the plan does not meet the expectations of most investors. For those seeking regular income, it’s wiser to invest separately rather than rely on cash payouts from life insurance.
At the same time, protecting your family against unforeseen risks is essential, and pure-term life insurance offers the best solution for life coverage.
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