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Can investing in the Shriram Life Assured Savings Plan effectively support all your family’s goals?
Is the Shriram Life Assured Savings Plan the ideal solution to protect and grow your savings with assured benefits?
Can you afford to miss out on the peace of mind offered by the Shriram Life Assured Savings Plan for long-term financial security?
This review delves into the features, benefits, and advantages of the Shriram Life Assured Savings Plan, providing a detailed illustration for better understanding.
Table of Contents:
What is the Shriram Life Assured Savings Plan?
What are the features of the Shriram Life Assured Savings Plan?
Who is eligible for the Shriram Life Assured Savings Plan?
What are the benefits of the Shriram Life Assured Savings Plan?
Grace Period, Lapsed and Paid-up Policy and Revival of Shriram Life Assured Savings Plan
Free Look Period for Shriram Life Assured Savings Plan
Surrendering Shriram Life Assured Savings Plan
What are the advantages of the Shriram Life Assured Savings Plan?
What are the disadvantages of the Shriram Life Assured Savings Plan?
Research Methodology of Shriram Life Assured Savings Plan
Benefit Illustration – IRR Analysis of Shriram Life Assured Savings Plan
Shriram Life Assured Savings Plan Vs. Other Investments
Shriram Life Assured Savings Plan Vs. Pure-term + PPF/ELSS
Final Verdict on Shriram Life Assured Savings Plan
What is the Shriram Life Assured Savings Plan?
Shriram Life Assured Savings Plan is a Non-linked Non-Participating Life Insurance Individual Savings Plan. Shriram Life Assured Savings Plan helps to build your savings while ensuring your family is taken care of financially, even in your absence.
What are the features of the Shriram Life Assured Savings Plan?
- Life covers are available without the need for medical tests.
- Guaranteed life cover and returns disclosed upfront.
- Enhanced maturity benefits for higher premium payments (up to 174%).
- Double coverage for accidental death under Option 2.
- Flexibility to customize the Shriram Life Assured Savings Plan policy term and premium payment term.
Who is eligible for the Shriram Life Assured Savings Plan?
| Eligibility Criteria | Minimum | Maximum |
| Entry Age | 3 years | 55 years |
| Maturity Age | 18 years | 65 years |
| Policy term | 7, 10 and 15 years | |
| Premium paying term | Regular – Equal to Policy Term Limited – For Policy Term of 7 years: 5 years For Policy Term of 10 years: 5,8 years For Policy Term of 15 years: 8, 10 years |
|
| Premium paying mode | Yearly / Half-Yearly / Quarterly / Monthly | |
| Minimum premium | Yearly – 8,000 Quarterly – 2,500 Half Yearly – 4,500 Monthly – 1,000 |
|
| Basic Sum assured | ₹ 40,000 | No limit |
What are the benefits of the Shriram Life Assured Savings Plan?
Death benefit
Option 1 (Life Cover):
The death benefit is equal to one “Death Sum Assured,” payable if the Shriram Life Assured Savings Plan policy is in force.
- In case of death of life assured due to an accident during the waiting period
- In case of death of life assured after the waiting period due to any reason other than an accident
In case of death of life assured during the waiting period due to other than an accident, the death benefit is equal to 100% of the Total Premiums Paid till date will be payable.
Option 2 (Life Cover with in-built accidental death cover):
In case of death of the life assured due to an accident at any time during the Shriram Life Assured Savings Plan policy time, an additional benefit which is equal to one more “Death Sum Assured” will be paid to the nominee(s) or beneficiary, provided the policy is in force.
This benefit will be payable in addition to the death benefit payable under option 1 (Life Cover).
Maturity benefit
In case of survival of the life assured up to the end of the Shriram Life Assured Savings Plan policy term, the Guaranteed Maturity Sum Assured will be payable immediately in a lump sum and the policy will be terminated
Guaranteed Maturity Sum Assured = Maturity Benefit Factor * Basic Sum Assured
Grace Period, Lapsed and Paid-up Policy and Revival of Shriram Life Assured Savings 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 Shriram Life Assured Savings Plan policy will lapse and no benefits will be payable under the policy
Paid-up Policy
If you have paid at least one-year premium in full and you discontinue paying your premiums, then your policy will get converted into a paid-up policy. Under the paid-up policy, all your benefits (i.e. Death Benefit and Maturity Benefit) will be reduced proportionately
Revival
You can revive a lapsed or paid-up policy within a revival period of five years from the date of the first unpaid premium
Free Look Period for Shriram Life Assured Savings Plan
If a policyholder disagrees with any of the Shriram Life Assured Savings Plan policy terms or conditions, or otherwise and has not made any claim, he shall have the option to return the policy within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering Shriram Life Assured Savings 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 policy, the policyholder will receive a Surrender Value, which is higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV).
What are the advantages of the Shriram Life Assured Savings Plan?
- Option 2 includes an inbuilt accidental death benefit rider.
- Flexible premium payment terms to suit your convenience.
- Enjoy tax benefits under Sections 80C and 10(10D) of the Income Tax Act.
- Access policy loans up to 90% of the surrender value.
- Guaranteed benefits ensure financial security.
What are the disadvantages of the Shriram Life Assured Savings Plan?
- The sum assured may fall short of covering the family’s essential needs.
- The returns offered are comparatively low.
- No loyalty additions are provided for staying invested in the plan.
Research Methodology of Shriram Life Assured Savings Plan
The Shriram Life Assured Savings Plan aims to instil a disciplined saving habit. However, as an investor, it’s essential to ensure that your savings are invested wisely.
Ideally, your investments should generate returns that outpace inflation over the long term, aiding in wealth accumulation. Let’s evaluate the returns of the Shriram Life Assured Savings Plan based on the figures in the policy brochure.
Benefit Illustration – IRR Analysis of Shriram Life Assured Savings Plan
Consider a 30-year-old male investing in the Shriram Life Assured Savings Plan with a sum assured of ₹7.5 lakhs. The premium payment term is 15 years, aligned with a policy term of 15 years, requiring an annual premium of ₹50,000.
| Male | 30 years |
| Sum Assured | ₹ 7,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 50,000 |
At the end of the Shriram Life Assured Savings Plan policy term, the Guaranteed Maturity Sum Assured is paid as a maturity benefit, amounting to ₹11.26 lakhs.
This cash flow translates to an Internal Rate of Return (IRR) of 4.94% as per the Shriram Life Assured Savings Plan’s Maturity Calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -50,000 | 7,50,000 |
| 31 | 2 | -50,000 | 7,50,000 |
| 32 | 3 | -50,000 | 7,50,000 |
| 33 | 4 | -50,000 | 7,50,000 |
| 34 | 5 | -50,000 | 7,50,000 |
| 35 | 6 | -50,000 | 7,50,000 |
| 36 | 7 | -50,000 | 7,50,000 |
| 37 | 8 | -50,000 | 7,50,000 |
| 38 | 9 | -50,000 | 7,50,000 |
| 39 | 10 | -50,000 | 7,50,000 |
| 40 | 11 | -50,000 | 7,50,000 |
| 41 | 12 | -50,000 | 7,50,000 |
| 42 | 13 | -50,000 | 7,50,000 |
| 43 | 14 | -50,000 | 7,50,000 |
| 44 | 15 | -50,000 | 7,50,000 |
| 45 | 11,26,875 | ||
| IRR | 4.94% |
While the guaranteed benefit offers security, the returns are relatively low compared to other debt instruments. A long-term investment with such modest returns may hinder your ability to build sufficient wealth.
As a result, the Shriram Life Assured Savings Plan may not provide an adequate corpus to meet your financial goals.
Shriram Life Assured Savings Plan Vs. Other Investments
To evaluate the Shriram Life Assured Savings Plan, we compared its returns with alternative investment options using the same metrics from the previous example. While the plan offers the dual benefits of life cover and investment, we separated these components for a clearer analysis.
Shriram Life Assured Savings Plan Vs. Pure-term + PPF/ELSS
A pure-term life insurance policy with a sum assured of ₹7.5 lakhs costs an annual premium of ₹3,100 for a policy term of 15 years. After accounting for the insurance premium, the remaining ₹46,900 can be directed toward long-term investment goals.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 7,50,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 3,100 |
| Investment | ₹ 46,900 |
Based on your risk profile, you can invest in either debt or equity instruments. For this analysis, we considered two scenarios: the Public Provident Fund (PPF) and the Equity-Linked Savings Scheme (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 | 7,50,000 | -50,000 | 7,50,000 |
| 31 | 2 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 32 | 3 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 33 | 4 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 34 | 5 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 35 | 6 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 36 | 7 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 37 | 8 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 38 | 9 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 39 | 10 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 40 | 11 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 41 | 12 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 42 | 13 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 43 | 14 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 44 | 15 | -50,000 | 7,50,000 | -50,000 | 7,50,000 |
| 45 | 12,71,993 | 18,17,013 | |||
| IRR | 6.36% | 10.44% | |||
PPF Scenario: The maturity value after 15 years is ₹12.71 lakhs, with a combined IRR of 6.36% for the pure-term policy and PPF investment.
ELSS Scenario: The maturity value after 15 years is ₹19.58 lakhs. After deducting capital gains tax, the post-tax maturity value is ₹18.17 lakhs, resulting in a combined IRR of 10.44% (post-tax).
| ELSS Tax Calculation | |
| Maturity value after 15 years | 19,58,229 |
| Purchase price | 7,03,500 |
| Long-Term Capital Gains | 12,54,729 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 11,29,729 |
| Tax paid on LTCG | 1,41,216 |
| Maturity value after tax | 18,17,013 |
These comparisons highlight that aligning investments with your risk profile and time horizon can yield significantly higher returns. In contrast, the Shriram Life Assured Savings Plan falls short in offering adequate life insurance and delivering competitive investment returns.
Final Verdict on Shriram Life Assured Savings Plan
The Shriram Life Assured Savings Plan provides guaranteed returns on your savings. However, relying solely on this guarantee may not be ideal for long-term investments.
The key focus for long-term investments should be achieving returns that surpass inflation to address the increasing costs of your financial goals.
An analysis of the Shriram Life Assured Savings Plan reveals that its guaranteed benefits fall short of delivering inflation-beating returns.
While the security of guaranteed benefits is appealing, the plan may not enable you to build the corpus required to meet your financial objectives and it also has a high agent commission.
One of the Shriram Life Assured Savings plan’s major drawbacks is the bundling of insurance and investment. A more effective approach is to opt for a pure-term life insurance policy and invest separately for your financial goals.
This strategy allows you to address both insurance and investment needs more efficiently.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
For tailored financial planning based on your risk profile, time horizon, and goals, consider consulting a Certified Financial Planner. They can help you strategically allocate your savings and ensure you stay on track to achieve your financial objectives.
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