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Can the Reliance Nippon Life Smart Total Advantage Return (RNL STAR) offer the flexibility to grow your savings over the long term?
Can the Reliance Nippon Life Smart Total Advantage Return (RNL STAR) secure your family’s future while building your financial assets?
Can the Reliance Nippon Life Smart Total Advantage Return (RNL STAR) truly offer the financial security and stability your family needs?
This review delves into the features, benefits, drawbacks, and potential returns of the Reliance Nippon Life Smart Total Advantage Return (RNL STAR). Let’s dive into this in-depth analysis.
Reliance Nippon Life Smart Total Advantage Return (referred to as RNL STAR throughout this article).
Table of Contents:
What are the features of the RNL STAR?
Who is eligible for the RNL STAR?
What are the benefits of the RNL STAR?
Grace period, Discontinuance and Revival of RNL STAR
What are the advantages of the RNL STAR?
What are the disadvantages of the RNL STAR?
Research Methodology of RNL STAR
Benefit Illustration – IRR Analysis of RNL STAR
RNL STAR Vs. Other Investments
RNL STAR Vs. Pure-term + PPF / ELSS
What is the RNL STAR?
RNL STAR is a Non-Linked, Participating, Individual, Life Savings Insurance Plan. It provides you with life insurance coverage and also helps you with an alternate source of income to take care of your financial goals. You can customize this plan RNL STAR by utilizing the various flexibilities available in the product to meet your financial objectives.
What are the features of the RNL STAR?
- Two plan variants are available – Life Variant and Life Plus Variant
- Life insurance cover for a fixed term or Whole of Life i.e., up to 100 years of age.
- Increasing Income in the form of Cash Bonus, if any, starting from the first policy year till the end of the RNL STAR policy term
- Guaranteed Loyalty Addition (GLA) as a one-time payout/lump sum after completion of the premium payment term
- Choose to pay for a limited period of 8,10,12 or 15 years.
- Flexibility to accumulate and later access survival benefits i.e., cash bonus and Guaranteed Loyalty Addition
Who is eligible for the RNL STAR?
| Parameter | Life Variant | Life Plus Variant |
| Minimum Age at Entry | 91 days | 18 years |
| Maximum Age at Entry | 55 years | |
| Minimum Age at Maturity | 20 years | 38 years |
| Maximum Age at Maturity | Fixed Term: 95 years Whole of Life: 100 years |
80 years |
The various Policy Term, Premium Paying Term & the corresponding minimum Annualized Premiums available under the policy across two different variants are given below:
| Premium paying term | Life Variant & Life Plus Variant | Life Variant | |
| Fixed Policy Term (Years) | Whole of Life | ||
| 20, 25, 30 & 35 | 40 | 100 minus age at entry | |
| 8 | ₹ 75,000 | ₹ 75,000 | NA |
| 10 | ₹ 50,000 | ₹ 1,00,000 | |
| 12 | |||
| 15 | |||
What are the benefits of the RNL STAR?
1.) Death Benefit
Life Variant
In case of unfortunate death of the Life Assured during the Reliance Nippon Life Smart Total Advantage Return (RNL STAR) Policy Term, the nominee shall receive a lump sum payout equal to Higher of:
- Sum Assured on Death plus, Terminal Bonus, if any
- 105% of Total Premiums Paid as of the date of death of the life assured.
Plus, Attached Paid Up Addition (PUA), if any Plus, the balance in the Survival Benefit Account (SBA) if any.
Sum assured on death is equal to a higher of
- 11 times the Annualised Premium
- Base Sum assured
Life Variant Plus
The nominee receives a lump sum benefit as specified in the Life variant. However, the Policy will continue and in addition to the above lump sum benefit payable on death, the Claimant will continue to receive the Survival Benefits and Maturity Benefits, as and when due, without the requirement to pay future premiums.
2.) Survival Benefit
(for both variants)
Cash Bonus, if any, will be paid to you at the end of each RNL STAR policy year starting from 1st Policy Year, till the end of the policy term. Additionally, a Guaranteed Loyalty Addition (GLA) will be paid to you as a one-time benefit after the completion of the premium payment term.
The Reliance Nippon Life Smart Total Advantage Return (RNL STAR) policyholder can choose any of the following options to receive Survival Benefits under the policy
- Immediate payout of Survival Benefits when due or,
- Accumulation of Survival Benefits (SBA) or,
- Convert Survival Benefits into Paid Up Addition (PUA)
3.) Maturity Benefit
(for both variants)
On survival of the Life Assured to the end of the RNL STAR Policy Term, the following Benefits will be payable:
- Sum Assured on Maturity; plus
- Terminal Bonus, if any; plus
- Paid Up Addition (Attached), if any; plus
- Balance in Survival Benefit Account (SBA), if any
Where Sum Assured on Maturity is equal to Base Sum Assured.
Grace period, Discontinuance and Revival of RNL STAR
Grace period
A grace period of 30 days (15 days for monthly mode) will be given to pay your premium.
Discontinuance
If all due premiums have not been paid for the first two consecutive policy years in full, the Reliance Nippon Life Smart Total Advantage Return (RNL STAR) 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.
Revival
A policy in lapsed or paid-up condition may be revived by the RNL STAR 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 STAR
In the event you disagree with any of the policy terms or conditions, you shall have the option to return the RNL STAR policy to the company for cancellation within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering RNL STAR
The Reliance Nippon Life Smart Total Advantage Return (RNL STAR) policy shall acquire a Surrender Value if all due premiums have been paid for the first two consecutive policy years in full. The total Surrender Value to be paid will be the sum of the:
Higher Guaranteed Surrender Value (GSV) and Special Surrender Value (SSV),
Balance in SBA, if any,
Surrender Value of Attached PUA, if any
What are the advantages of the RNL STAR?
- You can avail a loan of up to 80% of the RNL STAR policy’s surrender value.
- Riders can be added to increase the coverage.
- Premium payments are flexible, with options to pay annually, semi-annually, quarterly, or monthly.
What are the disadvantages of the RNL STAR?
- The life coverage offered is inadequate.
- Withdrawing the survival benefit annually may lead to unnecessary spending.
- Since this is a participating policy, the benefits are not guaranteed.
Research Methodology of RNL STAR
RNL STAR aims to offer both an investment opportunity and life coverage. However, before committing to any product, it’s crucial to evaluate the potential returns.
Using a quote from the portal, we’ll calculate the estimated returns for RNL STAR and compare them with other investment options.
Benefit Illustration – IRR Analysis of RNL STAR
Consider a 40-year-old male who chooses the RNL STAR Life option variant with a 20-year policy term and a 15-year premium-paying term, contributing an annual premium of ₹1.5 lakhs. He opts to accumulate the survival benefit, which will be paid alongside the maturity benefit.
| Male | 40 years |
| Sum Assured | ₹ 18,68,367 |
| Policy Term | 20 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 1,50,000 |
The illustration assumes investment rates of 4% and 8%, though these returns are not guaranteed and do not reflect the full range of possible outcomes. The actual maturity benefit will vary based on the policy’s performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 41 | 2 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 42 | 3 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 43 | 4 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 44 | 5 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 45 | 6 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 46 | 7 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 47 | 8 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 48 | 9 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 49 | 10 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 50 | 11 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 51 | 12 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 52 | 13 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 53 | 14 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 54 | 15 | -1,50,000 | 18,68,367 | -1,50,000 | 18,68,367 |
| 55 | 16 | 0 | 18,68,367 | 0 | 18,68,367 |
| 56 | 17 | 0 | 18,68,367 | 0 | 18,68,367 |
| 57 | 18 | 0 | 18,68,367 | 0 | 18,68,367 |
| 58 | 19 | 0 | 18,68,367 | 0 | 18,68,367 |
| 59 | 20 | 0 | 18,68,367 | 0 | 18,68,367 |
| 60 | 31,54,849 | 47,83,329 | |||
| IRR | 2.59% | 5.74% | |||
At a 4% return, the estimated fund value is ₹31.54 lakhs, resulting in an IRR of 2.59% as per the RNL STAR Plan maturity calculator, which is lower than the typical savings account interest rate.
At an 8% return, the projected fund value is ₹47.83 lakhs as per the RNL STAR Plan maturity calculator, giving an IRR of 5.74%, still lower than the interest rates on bank fixed deposits.
While RNL STAR is a long-term investment spanning 20 years, the rate of return may not keep up with inflation, making it difficult to meet the rising cost of future goals. Additionally, the life cover provided is insufficient.
Given its low life coverage and modest returns, RNL STAR falls short as a suitable option for long-term investors.
RNL STAR Vs. Other Investments
The return analysis clearly shows that Reliance Nippon Life Smart Total Advantage Return (RNL STAR)is a relatively low-yield product. The same premium could be more effectively utilized to achieve better returns.
While RNL STAR combines life coverage and investment, separating these two components could yield more favourable results. Let’s explore this by using the same premium as in the previous example.
RNL STAR Vs. Pure-term + PPF / ELSS
A pure-term life insurance policy with a sum assured of ₹20 lakhs comes with an annual premium of ₹23,900 for a 20-year policy term and a 10-year premium payment period.
This leaves you with ₹1,26,100 annually, which can be invested based on your risk appetite. For the first 10 years, after paying the insurance premium, the remaining amount is invested, and for the next 5 years, the full premium is allocated toward investments.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 18,68,367 |
| Policy Term | 20 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 23,900 |
| Investment | ₹ 1,26,100 |
Low-risk investors could opt for debt instruments like the Public Provident Fund (PPF), while high-risk investors might prefer equity instruments such as Equity-Linked Savings Schemes (ELSS) funds. In this comparison, we’ll consider both.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 41 | 2 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 42 | 3 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 43 | 4 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 44 | 5 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 45 | 6 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 46 | 7 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 47 | 8 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 48 | 9 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 49 | 10 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 50 | 11 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 51 | 12 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 52 | 13 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 53 | 14 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 54 | 15 | -1,50,000 | 20,00,000 | -1,50,000 | 20,00,000 |
| 55 | 16 | 0 | 20,00,000 | 0 | 20,00,000 |
| 56 | 17 | 0 | 20,00,000 | 0 | 20,00,000 |
| 57 | 18 | 0 | 20,00,000 | 0 | 20,00,000 |
| 58 | 19 | 0 | 20,00,000 | 0 | 20,00,000 |
| 59 | 20 | 0 | 20,00,000 | 0 | 20,00,000 |
| 60 | 50,27,033 | 20,00,000 | 86,48,255 | 20,00,000 | |
| IRR | 6.11% | 10.18% | |||
By the end of the term, the PPF account is projected to grow to ₹50.27 lakhs with an IRR of 6.11%. On the other hand, the pre-tax maturity value of the ELSS fund is ₹95.78 lakhs. After accounting for capital gains tax, the post-tax maturity value is ₹86.48 lakhs, resulting in a post-tax IRR of 11.74%.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 95,78,577 |
| Purchase price | 20,11,000 |
| Long-Term Capital Gains | 75,67,577 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 74,42,577 |
| Tax paid on LTCG | 9,30,322 |
| Maturity value after tax | 86,48,255 |
In both cases, the rate of return significantly outperforms that of RNL STAR, making it a more effective strategy for wealth accumulation and accelerating your investment journey.
Final Verdict on RNL STAR
Reliance Nippon Life Smart Total Advantage Return (RNL STAR) is a traditional endowment plan that offers life coverage while encouraging regular savings for future goals.
It allows customization of payouts based on your needs. However, key benefits like the death benefit, survival, and maturity benefits are non-guaranteed, as they rely on bonuses.
The sum assured is insufficient to provide adequate protection for a family, and the combination of limited life coverage and relatively low returns makes RNL STAR unsuitable for those looking to build wealth.
As an investor, it’s essential to evaluate your risk tolerance before starting your investment journey. Based on your risk profile, life goals, and time horizon, you should choose investment plans that align with your objectives.
But first, securing an adequate life insurance policy is crucial to protect your family from uncertainties and also it has a high agent commission.
When it comes to financial advice, are Quora, Facebook, and Twitter the final word?
In general, combining insurance with investment is not the ideal strategy for building a strong portfolio. For a personalized financial plan, it’s advisable to consult a Certified Financial Planner, who can guide you in selecting the right products based on your individual needs.
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