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Is the Shriram Life Deferred Annuity Plan your ultimate solution for post-retirement income, or does it fall short of expectations?
Is the Shriram Life Deferred Annuity Plan a wise investment for your future, or are there hidden factors to consider?
Does the Shriram Life Deferred Annuity Plan strike the perfect balance between security and returns, or are there better plans out there?
This review examines its features, benefits, and drawbacks, along with a detailed Internal Rate of Return (IRR) calculation to assess its effectiveness.
Table of Contents
What is the Shriram Life Deferred Annuity Plan?
What are the features of the Shriram Life Deferred Annuity Plan?
Who is eligible for the Shriram Life Deferred Annuity Plan?
What are the benefits of the different annuity options of the Shriram Life Deferred Annuity Plan?
Option 1: Annuity payable for life without Return of Purchase price
Paid-up Value and Revival of Shriram Life Deferred Annuity Plan
Free Look Period for Shriram Life Deferred Annuity Plan
Surrendering Shriram Life Deferred Annuity Plan
What are the advantages of the Shriram Life Deferred Annuity Plan?
What are the disadvantages of the Shriram Life Deferred Annuity Plan?
Research Methodology of Shriram Life Deferred Annuity Plan
Benefit Illustration – IRR Analysis of Shriram Life Deferred Annuity Plan
Shriram Life Deferred Annuity Plan Vs. Other Investments
Shriram Life Deferred Annuity Plan Vs. Pure-term + ELSS
Final Verdict on Shriram Life Deferred Annuity Plan
What is the Shriram Life Deferred Annuity Plan?
Shriram Life Deferred Annuity Plan is a Non-Linked Non-Participating Individual General Annuity Savings plan. By combining the elements of long-term investment growth and insurance protection, it offers individuals the opportunity to create a steady and reliable income stream to support their retirement lifestyle.
What are the features of the Shriram Life Deferred Annuity Plan?
- Four annuity options to suit different financial needs
- Guaranteed annuity rates for a lifetime of steady income
- Return of purchase price in case of terminal illness
- Choice between Single Life or Joint Life annuity
- Option to boost annuity payouts through top-up premiums and loyalty additions
- Flexibility to modify the premium payment term and deferment period
- Additional benefits like premium waiver and incentives for higher purchase prices
Who is eligible for the Shriram Life Deferred Annuity Plan?
| Eligibility Criteria | Limits |
| Entry Age | Minimum 40 years (age last birthday) for primary annuitant 30 years (age last birthday) for secondary annuitant |
| Maximum 75 Years (Age last birthday) for primary annuitant 80 Years (Age last birthday) for secondary annuitant | |
| Premium | Minimum Yearly: Rs. 60,000, Half Yearly: Rs 31,000, Quarterly: Rs 15,000 and Monthly: Rs 6,000; Rs. 3,00,000 for Single Pay |
| Maximum No Limit subject to Board approved underwriting policy. | |
| Premium paying term | Single Pay Limited/Regular: 5-10 |
| Annuity Mode | Yearly, half-yearly, quarterly, monthly |
| Policy Term | Whole Life |
| Minimum Vesting Age | 45 Years |
| Maximum Vesting Age | 80 Years |
| Deferment Period | 5 – 10 Years |
| Annuity | Minimum ₹ 12000 |
| Maximum No Limit subject to Board approved underwriting policy. | |
| Premium | Min: For Limited &Regular Pay Yearly: ₹60,000; Half-yearly: ₹31,000; Quarterly: ₹15,500 and Monthly: ₹6,000 For Single Pay – ₹ 3,00,000Max: No limit, Subject to board-approved underwriting policy |
What are the benefits of the different annuity options of the Shriram Life Deferred Annuity Plan?
Option 1: Annuity payable for life without Return of Purchase price
During deferment period
In case of death of the annuitant provided the Shriram Life Deferred Annuity Plan policy is in force, the death benefit i.e.125% of the purchase price shall be paid to the nominee(s) and the policy will be terminated.
After deferment period
The annuity will be paid at a uniform rate in arrears for the lifetime of the annuitant. In case of the death of the annuitant, the annuity payments will cease and the policy will be terminated.
Option 2: Annuity payable for life with return of purchase price on his/her death or terminal illness
During deferment Period
In case of death of the annuitant provided the policy is in force, the death benefit i.e. 125% of the purchase price shall be paid to the nominee(s) and the policy will be terminated.
After deferment period
The annuity will be paid at a uniform rate in arrears for the lifetime of the annuitant. In case of the death of the annuitant, the annuity payments will cease and the Shriram Life Deferred Annuity Plan policy will be terminated by paying the death benefit i.e. purchase price to the nominee(s).
In case of terminal illness of the annuitant, the purchase price will be returned to the annuitant, and the policy will be terminated.
Option 3: Annuity payable for life with a provision of 100% of the annuity to the secondary annuitant on the death of the primary annuitant without return of purchase price
During deferment Period
In case of death of the last surviving annuitant or simultaneous death of both the annuitants provided the policy is in force, the death benefit i.e. 125% of the purchase price shall be paid to the nominee(s) and the policy will be terminated
After deferment period
The annuity will be paid at a uniform rate in arrears for the lifetime of the primary annuitant. In case of the death of the primary annuitant, the annuity payments will continue to be paid to the secondary annuitant for life.
If the secondary annuitant predeceases, the annuity payments will continue to be paid to the primary annuitant for life. In case the secondary annuitant dies after the death of the primary annuitant the annuity payments will cease and the policy will be terminated.
Option 4: Annuity payable for life with a provision of 100% of annuity to the secondary annuitant on death of the primary annuitant and return of purchase price on death or terminal illness of the last survivor
During deferment Period
In case of death of the last surviving annuitant or simultaneous death of both the annuitants provided the policy is in force, the death benefit i.e. 125% purchase price shall be paid to the nominee(s) and the policy will be terminated
After deferment period
The annuity will be paid at a uniform rate in arrears for the lifetime of the primary annuitant. In case of the death of the primary annuitant, the annuity payments will continue to be paid to the secondary annuitant for life.
If the secondary annuitant predeceases, the annuity payments will continue to be paid to the primary annuitant for life and on the death of the primary annuitant the death benefit i.e. purchase price is paid to the nominee(s).
In case the secondary annuitant dies after the death of the primary annuitant the annuity payments will cease and the Shriram Life Deferred Annuity Plan policy will be terminated by paying the death benefit i.e. purchase price to the nominee(s).
In case of terminal illness of the secondary annuitant after the death of the primary annuitant, the annuity payments will cease and the purchase price will be returned to the secondary annuitant, and the policy will be terminated.
If the secondary annuitant predeceases, and in case the primary annuitant is diagnosed with a terminal illness, the annuity payments will cease and the purchase price will be returned to the primary annuitant, and the policy will be terminated.
Paid-up Value and Revival of Shriram Life Deferred Annuity Plan
Paid-up Value
If the premium due remains unpaid at the expiry of the grace period after at least one full year premium has been paid, the Shriram Life Deferred Annuity Plan policy will not lapse but will continue as a paid-up policy till the end of the policy term or till death, whichever is earlier.
Revival
A lapsed policy can be revived within a revival period of five years from the date of the first unpaid premium by paying all outstanding premiums
Free Look Period for Shriram Life Deferred Annuity Plan
In the event a Shriram Life Deferred Annuity Plan policy holder 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 to the insurer for cancellation within 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering Shriram Life Deferred Annuity Plan
Before deferment period
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. Single premium policies acquire surrender value at inception.
On surrendering the Shriram Life Deferred Annuity Plan policy, you will receive a Surrender Value, which is higher of the Special Surrender Value (SSV) or the Guaranteed Surrender Value (GSV).
After deferment period
Policies under annuity option 2&4 are eligible for surrender after the deferment period. The Surrender Value will be the present value of the expected outstanding (Paid-up) Annuity Benefits as on the date of surrender.
What are the advantages of the Shriram Life Deferred Annuity Plan?
- Death benefits can be received as a lump sum, in instalments, or through annuitisation.
- Waiver of premium option available under joint life annuity plans.
- Loyalty additions (a percentage of the base annuity) are added, provided all premiums are fully paid before the first annuity payout.
- Flexibility to extend or reduce the deferred period and premium payment term.
- Choice of premium payment and annuity frequency to suit individual preferences.
- Option to enhance annuity payouts through top-up premiums.
- Incentives for higher purchase prices to maximize returns.
What are the disadvantages of the Shriram Life Deferred Annuity Plan?
- Annuity income is fully taxable as per applicable tax laws.
- Surrender and loan options are available only under specific annuity plans.
- No annual increase in annuity payouts to offset inflation.
Research Methodology of Shriram Life Deferred Annuity Plan
The Shriram Life Deferred Annuity Plan provides multiple annuity options to match different cash flow preferences. While some may prefer a fixed income, others might opt for an annuity with a return of the purchase price.
However, evaluating cash flows alone isn’t sufficient to determine the best plan. To make an informed decision, let’s calculate the Internal Rate of Return (IRR) using the figures from the Shriram Life Deferred Annuity Plan policy brochure.
Benefit Illustration – IRR Analysis of Shriram Life Deferred Annuity Plan
Consider a 40-year-old male investing ₹1 lakh annually in the plan for 10 years, with a deferment period of another 10 years. He selects Option 2: Annuity payable for life with a return of purchase price upon death or terminal illness.
| Male | 40 years |
| Sum Assured | ₹ 12,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,00,000 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,00,000 | 12,50,000 |
| 41 | 2 | -1,00,000 | 12,50,000 |
| 42 | 3 | -1,00,000 | 12,50,000 |
| 43 | 4 | -1,00,000 | 12,50,000 |
| 44 | 5 | -1,00,000 | 12,50,000 |
| 45 | 6 | -1,00,000 | 12,50,000 |
| 46 | 7 | -1,00,000 | 12,50,000 |
| 47 | 8 | -1,00,000 | 12,50,000 |
| 48 | 9 | -1,00,000 | 12,50,000 |
| 49 | 10 | -1,00,000 | 12,50,000 |
| 50 | 11 | 0 | 12,50,000 |
| 51 | 12 | 0 | 12,50,000 |
| 52 | 13 | 0 | 12,50,000 |
| 53 | 14 | 0 | 12,50,000 |
| 54 | 15 | 0 | 12,50,000 |
| 55 | 16 | 0 | 12,50,000 |
| 56 | 17 | 0 | 12,50,000 |
| 57 | 18 | 0 | 12,50,000 |
| 58 | 19 | 0 | 12,50,000 |
| 59 | 20 | 0 | 12,50,000 |
| 60 | 21 | 0 | 12,50,000 |
| 61 | 22 | 82,803 | |
| 62 | 23 | 82,803 | |
| 63 | 24 | 82,803 | |
| 64 | 25 | 82,803 | |
| 65 | 26 | 82,803 | |
| 66 | 27 | 82,803 | |
| 67 | 28 | 82,803 | |
| 68 | 29 | 82,803 | |
| 69 | 30 | 82,803 | |
| 70 | 31 | 82,803 | |
| 71 | 32 | 82,803 | |
| 72 | 33 | 82,803 | |
| 73 | 34 | 82,803 | |
| 74 | 35 | 82,803 | |
| 75 | 36 | 82,803 | |
| 76 | 37 | 82,803 | |
| 77 | 38 | 82,803 | |
| 78 | 39 | 82,803 | |
| 79 | 40 | 82,803 | |
| 80 | 41 | 82,803 | |
| 81 | 42 | 82,803 | |
| 82 | 43 | 82,803 | |
| 83 | 44 | 82,803 | |
| 84 | 45 | 82,803 | |
| 85 | 10,00,000 | ||
| IRR | 3.58% |
Assuming a life expectancy of 85 years, he receives an annual annuity of ₹82,803, and the purchase price is refunded at age 85. The resulting IRR is 3.58% as per the Shriram Life Deferred Annuity Plan maturity calculator, which is lower than returns from traditional debt instruments.
Additionally, the investment remains locked in, with surrender permitted only under specific conditions after the deferment period.
The key disadvantages of the Shriram Life Deferred Annuity Plan are low returns, a fixed annuity without inflation adjustments, and limited liquidity due to fund lock-in.
Shriram Life Deferred Annuity Plan Vs. Other Investments
The illustration highlights that while the Shriram Life Deferred Annuity Plan provides regular cash flow, its returns are not attractive enough to justify investment. A more efficient approach is to separate insurance and investment rather than combining them in a single product.
Shriram Life Deferred Annuity Plan Vs. Pure-term + ELSS
Insurance Component: A pure-term life insurance policy with a ₹12.5 lakh sum assured costs ₹15,400 per year for a 20-year term with a 10-year premium payment period.
Investment Component: The remaining ₹84,600 per year is invested separately based on risk preference. Equity investments suit high-risk investors, while debt investments are better for risk-averse individuals.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 12,50,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 15,400 |
| Investment | ₹ 84,600 |
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,00,000 | 12,50,000 |
| 41 | 2 | -1,00,000 | 12,50,000 |
| 42 | 3 | -1,00,000 | 12,50,000 |
| 43 | 4 | -1,00,000 | 12,50,000 |
| 44 | 5 | -1,00,000 | 12,50,000 |
| 45 | 6 | -1,00,000 | 12,50,000 |
| 46 | 7 | -1,00,000 | 12,50,000 |
| 47 | 8 | -1,00,000 | 12,50,000 |
| 48 | 9 | -1,00,000 | 12,50,000 |
| 49 | 10 | -1,00,000 | 12,50,000 |
| 50 | 11 | 0 | 12,50,000 |
| 51 | 12 | 0 | 12,50,000 |
| 52 | 13 | 0 | 12,50,000 |
| 53 | 14 | 0 | 12,50,000 |
| 54 | 15 | 0 | 12,50,000 |
| 55 | 16 | 0 | 12,50,000 |
| 56 | 17 | 0 | 12,50,000 |
| 57 | 18 | 0 | 12,50,000 |
| 58 | 19 | 0 | 12,50,000 |
| 59 | 20 | 0 | 12,50,000 |
| 60 | 21 | 0 | 12,50,000 |
| 61 | 22 | 82,803 | |
| 62 | 23 | 82,803 | |
| 63 | 24 | 82,803 | |
| 64 | 25 | 82,803 | |
| 65 | 26 | 82,803 | |
| 66 | 27 | 82,803 | |
| 67 | 28 | 82,803 | |
| 68 | 29 | 82,803 | |
| 69 | 30 | 82,803 | |
| 70 | 31 | 82,803 | |
| 71 | 32 | 82,803 | |
| 72 | 33 | 82,803 | |
| 73 | 34 | 82,803 | |
| 74 | 35 | 82,803 | |
| 75 | 36 | 82,803 | |
| 76 | 37 | 82,803 | |
| 77 | 38 | 82,803 | |
| 78 | 39 | 82,803 | |
| 79 | 40 | 82,803 | |
| 80 | 41 | 82,803 | |
| 81 | 42 | 82,803 | |
| 82 | 43 | 82,803 | |
| 83 | 44 | 82,803 | |
| 84 | 45 | 82,803 | |
| 85 | 2,00,29,794 | ||
| IRR | 8.34% |
The accumulated corpus in an ELSS fund grows to ₹51.64 lakh after 20 years. After deducting capital gains tax, the post-tax corpus is ₹46.40 lakh. This corpus is invested in an instrument offering 7% annual returns, generating an annuity-like cash flow.
With an annual withdrawal of ₹82,803 until age 85, a ₹2 crore corpus remains. The IRR for this approach is 8.34%, significantly higher than the deferred annuity plan.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 51,64,335 |
| Purchase price | 8,46,000 |
| Long-Term Capital Gains | 43,18,335 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 41,93,335 |
| Tax paid on LTCG | 5,24,167 |
| Maturity value after tax | 46,40,168 |
Key Advantages:
- Inflation Protection – You can increase annual withdrawals to keep up with rising costs.
- Liquidity & Flexibility – Full access to the corpus for emergencies or adjusted withdrawals based on your needs.
These benefits are missing in the Shriram Life Deferred Annuity Plan, making the alternative investment a more strategic and rewarding choice.
Final Verdict on Shriram Life Deferred Annuity Plan
The Shriram Life Deferred Annuity Plan is designed to provide a steady lifetime income with features like single or limited premium payment options, return or no return of premium, and single or joint life coverage.
However, despite committing your savings during the premium payment term and waiting through the deferment period, the annuity payout remains modest.
While lifetime income is a key advantage, it shouldn’t be the only factor in choosing this plan. A closer analysis reveals that its returns are lower than traditional debt instruments, making it less effective for building a strong retirement corpus and it also has a high agent commission.
The key Drawbacks of the Shriram Life Deferred Annuity plan is
- Lack of liquidity – Your funds are locked in, with limited flexibility and
- No inflation protection – The annuity remains fixed, reducing purchasing power over time.
Retirement planning should be personalized, not a one-size-fits-all approach. Instead of relying solely on an annuity plan, consider diversified investments that generate inflation-adjusted income throughout retirement.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
Building a nest egg for retirement is a crucial financial goal. For a tailored strategy, consult a Certified Financial Planner who can help you create a plan that aligns with your long-term financial needs and goals.
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