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Is the Shriram Life Assured Income Plan the key to securing your family’s financial future?
Is the Shriram Life Assured Income Plan the combination of guaranteed income with life protection?
Is the Shriram Life Assured Income Plan the right choice to help you meet these financial goals?
In this review, we will examine the plan’s features, benefits, and drawbacks. Additionally, we’ll include an Internal Rate of Return (IRR) analysis to assist you in making well-informed decisions.
Table of Contents:
What is the Shriram Life Assured Income Plan?
What are the features of the Shriram Life Assured Income Plan?
Who is eligible for the Shriram Life Assured Income Plan?
What are the benefits of the Shriram Life Assured Income Plan?
Grace period, Lapsed and Paid-up Policy and Revival of Shriram Life Assured Income Plan
Free Look Period for Shriram Life Assured Income Plan
Surrendering Shriram Life Assured Income Plan
What are the advantages of the Shriram Life Assured Income Plan?
What are the disadvantages of the Shriram Life Assured Income Plan?
Research Methodology of Shriram Life Assured Income Plan
Benefit Illustration – IRR Analysis of Shriram Life Assured Income Plan
Shriram Life Assured Income Plan Vs. Other Investments
Shriram Life Assured Income Plan Vs. Pure-term + PPF/ELSS
Final Verdict on Shriram Life Assured Income Plan
What is the Shriram Life Assured Income Plan?
Shriram Life Assured Income Plan is a Non-Linked Non-Participating Life Insurance Individual Savings Plan. Shriram Life Assured Income Plan not only helps you secure your family financially but also provides you assured returns on maturity.
With the regular income option under this plan, you will receive your maturity amount in periodical payments of an assured amount.
What are the features of the Shriram Life Assured Income Plan?
- The plan offers flexible term options of 8, 10, 12, and 15 years.
- Premium payments can be made monthly, quarterly, half-yearly, or annually, depending on your convenience.
- Assured Income benefits are provided after the completion of the policy term.
- The plan rewards higher terms and premium amounts with increased assured income—the greater the commitment, the greater the payout.
- It also allows for additional protection through optional riders.
Who is eligible for the Shriram Life Assured Income Plan?
|
Parameters |
Minimum |
Maximum |
|
Age at entry |
30 days |
55 years |
|
Maturity age |
– |
70 years |
|
Policy term |
8/10/12/15 years |
|
|
Premium paying term |
Same as the policy term |
|
|
Benefit payout period |
Equal to the policy term |
|
|
Premium Mode |
Yearly, Half-Yearly, Quarterly, Monthly |
|
|
Annualised premium |
₹ 15,000 |
No limit |
|
Basic Sum assured |
₹ 1,20,000 |
No limit |
What are the benefits of the Shriram Life Assured Income Plan?
Death benefit
In case of death of the life assured during the policy Shriram Life Assured Income Plan term, the Death Sum Assured will be paid. Death Sum Assured i.e. Sum assured payable on death is defined as the highest of –
- For Policy term 8: 8 times Annualised Premium
- For Policy term 10 & above: 10 times the Annualised Premium if the age is less than 45 years and 7 times the annualised premium if the age is 45 years and above
- 105% of Total Premiums Paid till the date of death
- Maturity Sum Assured (which is defined as Discount Factor* Assured Income)
The death benefit will be paid to the nominee(s) in any of the following options chosen by them:
- Lump sum
- Assured Income payouts
- 50% Death benefit as a lump sum and the remaining 50% as regular payouts i.e. the payouts will be 50% of the original payouts
Maturity benefit
In case of survival of the life assured up to the end of the policy term, and receipt of all the due premiums, the assured income payouts will be paid as scheduled at the start of each year after the end of the policy term during the Benefit Payout Period.
Assured Income = Assured Income factor * Annualised Premium
If the life assured dies after the commencement of the assured income, the outstanding assured income payouts will continue as scheduled to the nominee(s).
Grace period, Lapsed and Paid-up Policy and Revival of Shriram Life Assured Income Plan
Grace Period
A grace period of 30 days is allowed for payment of due premium for non-monthly modes and 15 days for monthly modes.
Lapsed Policy
If at least one full-year premium has not been paid and the premium due is not paid till the end of the grace period, the policy will lapse and no benefits will be payable under the Shriram Life Assured Income Plan policy.
Paid-up Policy
Policies that have acquired surrender value (at least one full-year premium has been paid) will become paid up if no further premiums have been paid.
Revival
A lapsed or paid-up policy can be revived within a revival period of five years from the date of the first unpaid premium.
Free Look Period for Shriram Life Assured Income Plan
In the event a policyholder disagrees with any of the policy terms or conditions, or otherwise and has not made any claim, he shall have the option to return the policy within a period of 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering Shriram Life Assured Income Plan
To get the surrender value, you must have paid at least the first full policy year’s premium(s) and completed the first policy year.
On surrendering the Shriram Life Assured Income Plan policy, you will receive a Surrender Value, which is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV)
What are the advantages of the Shriram Life Assured Income Plan?
- Loans of up to 90% of the surrender value can be availed under the plan.
- Policyholders have the option to choose a lump sum maturity benefit instead of assured income payouts.
- The plan offers flexibility in receiving the death benefit, tailored to the policyholder’s requirements.
What are the disadvantages of the Shriram Life Assured Income Plan?
- The plan does not provide life coverage during the income benefit payout period.
- Regular payouts may be prone to spending on discretionary expenses.
- Opting for yearly income benefits reduces the potential for compounding growth on the investment.
Research Methodology of Shriram Life Assured Income Plan
The Shriram Life Assured Income Plan offers regular income after the premium-paying term. However, before committing to this plan, it’s essential to evaluate its potential returns.
Using figures from the Shriram Life Assured Income Plan policy brochure, we analyse the returns and compare them with alternative investment options.
Benefit Illustration – IRR Analysis of Shriram Life Assured Income Plan
Consider a 30-year-old male choosing the Shriram Assured Income Plan with a 15-year policy term and a 15-year premium payment period, contributing ₹50,000 annually. The sum assured is ₹5,00,000.
|
Male |
30 years |
|
Sum Assured |
₹ 5,00,000 |
|
Policy Term |
15 years |
|
Premium Paying Term |
15 years |
|
Annualised Premium |
₹ 50,000 |
After completing the premium payments, the policyholder receives an annual survival benefit of ₹99,750 for the next 15 years.
This cash flow yields an Internal Rate of Return (IRR) of 4.71% as per the Shriram Life Assured Income Plan maturity calculator, which is below the inflation rate, making it ineffective as a long-term investment option.
|
Age |
Year |
Annualised premium / Maturity benefit |
Death benefit |
|
30 |
1 |
-50,000 |
5,00,000 |
|
31 |
2 |
-50,000 |
5,00,000 |
|
32 |
3 |
-50,000 |
5,00,000 |
|
33 |
4 |
-50,000 |
5,00,000 |
|
34 |
5 |
-50,000 |
5,00,000 |
|
35 |
6 |
-50,000 |
5,00,000 |
|
36 |
7 |
-50,000 |
5,00,000 |
|
37 |
8 |
-50,000 |
5,00,000 |
|
38 |
9 |
-50,000 |
5,00,000 |
|
39 |
10 |
-50,000 |
5,00,000 |
|
40 |
11 |
-50,000 |
5,00,000 |
|
41 |
12 |
-50,000 |
5,00,000 |
|
42 |
13 |
-50,000 |
5,00,000 |
|
43 |
14 |
-50,000 |
5,00,000 |
|
44 |
15 |
-50,000 |
5,00,000 |
|
45 |
16 |
99,750 |
|
|
46 |
17 |
99,750 |
|
|
47 |
18 |
99,750 |
|
|
48 |
19 |
99,750 |
|
|
49 |
20 |
99,750 |
|
|
50 |
21 |
99,750 |
|
|
51 |
22 |
99,750 |
|
|
52 |
23 |
99,750 |
|
|
53 |
24 |
99,750 |
|
|
54 |
25 |
99,750 |
|
|
55 |
26 |
99,750 |
|
|
56 |
27 |
99,750 |
|
|
57 |
28 |
99,750 |
|
|
58 |
29 |
99,750 |
|
|
59 |
30 |
99,750 |
|
|
IRR |
4.71% |
Moreover, the sum assured is insufficient. According to the brochure, the nominee can opt for the Assured Income payout, or a lump sum death benefit, or a combination of both. However, none of these options adequately cover expenses or life goals.
The regular income provided by the plan does not account for inflation, diminishing its value over time.
While the plan spans 15 years, the modest returns and limited life coverage make it less appealing for long-term investors. For those seeking effective wealth creation or substantial life coverage, this plan may not be the best choice.
Shriram Life Assured Income Plan Vs. Other Investments
The return analysis reveals that the Shriram Life Assured Income Plan delivers relatively low yields. By reallocating the same premium, it’s possible to achieve better cash flows through more efficient strategies.
Although the Shriram Life Assured Income Plan combines life insurance with investment, separating these components often yields improved results. Let’s examine this approach using the same premium from the earlier example.
Shriram Life Assured Income Plan Vs. Pure-term + PPF/ELSS
A pure-term life insurance policy with a sum assured of ₹5 lakhs costs an annual premium of ₹2,100 for a 15-year policy term and premium payment period. This leaves ₹47,900 annually, which can be invested based on your risk tolerance.
|
Pure Term Life Insurance Policy |
|
|
Sum Assured |
₹ 5,00,000 |
|
Policy Term |
15 years |
|
Premium Paying Term |
15 years |
|
Annualised Premium |
₹ 2,100 |
|
Investment |
₹ 47,900 |
Low-risk investors might prefer debt instruments like the Public Provident Fund (PPF). High-risk investors could opt for equity-based investments such as Equity-Linked Savings Schemes (ELSS).
|
Term Insurance + PPF |
Term insurance + ELSS |
||||
|
Age |
Year |
Term Insurance premium + PPF |
Death benefit |
Term Insurance premium + ELSS |
Death benefit |
|
30 |
1 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
31 |
2 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
32 |
3 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
33 |
4 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
34 |
5 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
35 |
6 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
36 |
7 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
37 |
8 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
38 |
9 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
39 |
10 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
40 |
11 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
41 |
12 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
42 |
13 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
43 |
14 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
44 |
15 |
-50,000 |
5,00,000 |
-50,000 |
5,00,000 |
|
45 |
16 |
99,750 |
99,750 |
||
|
46 |
17 |
99,750 |
99,750 |
||
|
47 |
18 |
99,750 |
99,750 |
||
|
48 |
19 |
99,750 |
99,750 |
||
|
49 |
20 |
99,750 |
99,750 |
||
|
50 |
21 |
99,750 |
99,750 |
||
|
51 |
22 |
99,750 |
99,750 |
||
|
52 |
23 |
99,750 |
99,750 |
||
|
53 |
24 |
99,750 |
99,750 |
||
|
54 |
25 |
99,750 |
99,750 |
||
|
55 |
26 |
99,750 |
99,750 |
||
|
56 |
27 |
99,750 |
99,750 |
||
|
57 |
28 |
99,750 |
99,750 |
||
|
58 |
29 |
99,750 |
99,750 |
||
|
59 |
30 |
9,42,942 |
23,77,399 |
||
|
IRR |
6.79% |
8.84% |
|||
For both scenarios, the accumulated investment value is later shifted into an instrument offering a 7% annual return to generate annual withdrawals equivalent to the Shriram Life Assured Income Plan’s payouts.
PPF Scenario: The maturity value is ₹9.42 lakhs, which is transferred to a 7% yielding investment to support annual withdrawals. The IRR for this cash flow is 6.79%.
ELSS Scenario: The pre-tax maturity value is ₹19.99 lakhs. After accounting for capital gains tax, the post-tax value is ₹18.55 lakhs, which is reinvested at 7% to support annual withdrawals. The IRR for this cash flow is 8.84%.
|
ELSS Tax Calculation |
|
|
Maturity value after 15 years |
19,99,982 |
|
Purchase price |
7,18,500 |
|
Long-Term Capital Gains |
12,81,482 |
|
Exemption limit |
1,25,000 |
|
Taxable LTCG |
11,56,482 |
|
Tax paid on LTCG |
1,44,560 |
|
Maturity value after tax |
18,55,422 |
By avoiding annual withdrawals, the returns could be even higher, offering greater flexibility to manage cash flows according to actual needs.
In comparison, the Shriram Life Assured Income Plan’s low returns and lack of flexibility make it less appealing. Opting for separate life insurance and investment strategies not only enhances returns but also provides better control over your financial goals.
Final Verdict on Shriram Life Assured Income Plan
The Shriram Life Assured Income Plan is a traditional life insurance product that combines insurance with investment by accumulating premiums to provide annual payouts.
While the plan offers death benefits as a lump sum or in instalments, these are inadequate to meet your family’s future financial needs.
The plan’s annual withdrawals hinder the compounding effect, reducing overall returns. For generating regular income, separating life insurance from investments is a more effective strategy.
Due to its limited life coverage and relatively low returns, the Shriram Life Assured Income Plan is not ideal for those seeking a steady income and it also has a high agent commission.
Instead of relying on insurance plans for regular income, building a diversified investment portfolio tailored to your risk profile, life goals, and time horizon will better support your evolving financial needs.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
To protect your family from uncertainties, securing a pure-term life insurance policy is essential. For a personalized financial strategy, consulting a Certified Financial Planner is highly recommended, as they can help you choose the right products based on your unique circumstances.
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