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Can the Shriram Life New Shri Life Plan serve as a dependable financial safety net for your loved ones in the event of an unfortunate mishap?
Can the Shriram Life New Shri Life Plan safeguard your loved ones and help you grow your wealth?
Can the Shriram Life New Shri Life Plan guarantee stability and financial growth for your hard-earned money?
This review evaluates the effectiveness of the Shriram Life New Shri Life Plan by analysing its features, benefits, pros, and cons. Additionally, it includes detailed illustrations and calculations of potential returns to provide a comprehensive understanding.
Table of Contents:
What is the Shriram Life New Shri Life Plan?
What are the features of the Shriram Life New Shri Life Plan?
Who is eligible for the Shriram Life New Shri Life Plan?
What are the benefits of the Shriram Life New Shri Life Plan?
Grace Period, Lapsed and Paid-up Policies and Revival of the Shriram Life New Shri Life Plan
Free Look Period of the Shriram Life New Shri Life Plan
Surrendering the Shriram Life New Shri Life Plan
What are the advantages of the Shriram Life New Shri Life Plan?
What are the disadvantages of the Shriram Life New Shri Life Plan?
Research Methodology of Shriram Life New Shri Life Plan
Benefit Illustration – IRR Analysis of Shriram Life New Shri Life Plan
Shriram Life New Shri Life Plan Vs. Other Investments
Shriram Life New Shri Life Plan Vs. Pure-term + PPF/ELSS
Final Verdict on Shriram Life New Shri Life Plan
What is the Shriram Life New Shri Life Plan?
Shriram Life New Shri Life Plan is a non-linked participating endowment plan. The plan acts as a reliable protection tool for your family and offers Reversionary Bonuses which may be added to your life cover year by year and also the maturity benefit.
What are the features of the Shriram Life New Shri Life Plan?
- Flexible premium payment options to suit your financial planning.
- Enjoy attractive discounts for opting for a higher sum assured.
- Reversionary bonuses boost your savings while enhancing life coverage.
- Additional protection is available through optional riders.
Who is eligible for the Shriram Life New Shri Life Plan?
| Eligibility Criteria | Minimum | Maximum |
| Age at entry | 30 days | 60 years |
| Maturity age | 18 years | 75 years |
| Policy term and Premium paying term | Policy term | Premium paying term |
| 10 years | 8, 10 years | |
| 15 years | 8, 10,15 years | |
| 20 years | 8, 10, 20 years | |
| 25 years | 8, 15, 25 years | |
| Maximum premium payment age | For PPT 8 & 10: 70 years For PPT 15, 20 & 25: 65 years |
|
| Sum assured | ₹ 50,000 | No Limit |
| Premium payment mode | Yearly, Half-yearly, Quarterly, Monthly | |
What are the benefits of the Shriram Life New Shri Life Plan?
1. Death Benefit
In case of death of the life assured during the Shriram Life New Shri Life Plan policy term, the following is payable to the nominee(s).
Sum Assured on Death + Accrued Reversionary Bonus (if any) + Terminal Bonus (if any)
Sum Assured on Death shall be higher of
- 10 times the Annualised Premium
- Basic Sum Assured
2. Maturity Benefit
In case of survival of the life assured up to the end of the Shriram Life New Shri Life Plan policy term, the following will be paid:
Basic Sum Assured + Accrued Reversionary Bonuses + Terminal Bonus (if any)
3. Bonuses
Revisionary bonuses
Simple Reversionary Bonuses (as a % of the Sum Assured) shall be declared every year after conducting a valuation exercise. The bonus declared shall be added to the Sum Assured and guaranteed to become payable either on death or maturity.
Terminal Bonus
The Company may pay a Terminal Bonus on death or maturity
Grace Period, Lapsed and Paid-up Policies and Revival of the Shriram Life New Shri Life Plan
Grace Period
A grace period of 30 days is allowed for payment of the 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 New Shri Life Plan policy.
Paid-up Policy
If the premium due remains unpaid at the expiry of the grace period after the first-year premium is paid, the policy will not lapse but will continue as a reduced paid-up policy.
Paid up Sum Assured = (Total premiums paid/Total premiums payable) x Sum Assured
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 of the Shriram Life New Shri Life 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 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering the Shriram Life New Shri Life 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 Shriram Life New Shri Life Plan policyholder will receive a Surrender Value, that is higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV)
What are the advantages of the Shriram Life New Shri Life Plan?
- Optional riders provide added protection to enhance your coverage.
- Premium discounts are offered for policies with a higher sum assured.
- Loan facility available, allowing you to borrow up to 80% of the surrender value.
- Enjoy tax benefits as per the prevailing tax regulations.
What are the disadvantages of the Shriram Life New Shri Life Plan?
- The sum assured may not provide sufficient coverage.
- The plan offers relatively low returns compared to alternatives.
- Benefits are not guaranteed, as they depend on annually declared bonuses.
Research Methodology of Shriram Life New Shri Life Plan
Let’s evaluate the returns offered by the Shriram Life New Shri Life Plan. This plan provides maturity benefits and bonuses at the end of the Shriram Life New Shri Life Plan policy term.
The decision to invest in this plan should hinge on its potential returns. Below is a benefit illustration for analysis:
Benefit Illustration – IRR Analysis of Shriram Life New Shri Life Plan
A 30-year-old male purchases the Shriram Life New Shri Life Plan with a basic sum assured of ₹3 Lakhs. He pays an annual premium of ₹31,517 for 10 years, with a policy term of 20 years.
| Male | 30 years |
| Sum Assured | ₹ 3,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 31,517 |
By paying premiums regularly, he qualifies for bonuses and the maturity benefit after 20 years. However, the bonuses are not guaranteed. The indicative benefits at investment scenarios of 4% and 8% are as follows:
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 31 | 2 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 32 | 3 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 33 | 4 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 34 | 5 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 35 | 6 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 36 | 7 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 37 | 8 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 38 | 9 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 39 | 10 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 40 | 11 | 0 | 3,00,000 | 0 | 3,00,000 |
| 41 | 12 | 0 | 3,00,000 | 0 | 3,00,000 |
| 42 | 13 | 0 | 3,00,000 | 0 | 3,00,000 |
| 43 | 14 | 0 | 3,00,000 | 0 | 3,00,000 |
| 44 | 15 | 0 | 3,00,000 | 0 | 3,00,000 |
| 45 | 16 | 0 | 3,00,000 | 0 | 3,00,000 |
| 46 | 17 | 0 | 3,00,000 | 0 | 3,00,000 |
| 47 | 18 | 0 | 3,00,000 | 0 | 3,00,000 |
| 48 | 19 | 0 | 3,00,000 | 0 | 3,00,000 |
| 49 | 20 | 0 | 3,00,000 | 0 | 3,00,000 |
| 50 | 4,71,000 | 7,44,000 | |||
| IRR | 2.61% | 5.61% | |||
At 4%: The total maturity benefit, including bonuses, is ₹4.71 Lakhs, with an IRR of 2.61% as per the Shriram Life New Shri Life Plan maturity calculator.
At 8%: The total maturity benefit, including bonuses, is ₹7.44 Lakhs, with an IRR of 5.61% as per the Shriram Life New Shri Life Plan maturity calculator.
After the 10-year premium payment period, the investment remains locked, and benefits are received only after 20 years.
For such a long-term commitment, the rate of return must outpace inflation to preserve the value of your investment. Unfortunately, the returns under this plan fall short oftackling inflation.
Additionally, the sum assured is insufficient to cover a family’s basic financial needs, making this plan inadequate as a long-term investment. Opting for the Shriram Life New Shri Life Plan could derail your financial planning and is not advisable for long-term investors.
Shriram Life New Shri Life Plan Vs. Other Investments
In this section, we compare the returns from the Shriram Life New Shri Life Plan with alternative investment options, using the same metrics as in the previous illustration.
The Shriram Life New Shri Life Plan provides a life cover of ₹3 Lakhs, which is inadequate. As per IRDAI guidelines, the minimum sum assured for a pure-term policy is ₹5 Lakhs. Let’s analyse an alternative scenario with a ₹5 Lakh life cover:
Shriram Life New Shri Life Plan Vs. Pure-term + PPF/ELSS
A pure-term life insurance policy with a sum assured of ₹5 Lakhs costs ₹3,300 annually for a 20-year policy term, with premiums payable for 10 years.
This leaves ₹28,217 annually available for investment during the premium-paying period. Over the next 10 years, this investment compounds to create a larger corpus.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 3,300 |
| Investment | ₹ 28,217 |
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 31 | 2 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 32 | 3 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 33 | 4 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 34 | 5 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 35 | 6 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 36 | 7 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 37 | 8 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 38 | 9 | -31,517 | 3,00,000 | -31,517 | 3,00,000 |
| 39 | 10 | -29,017 | 3,00,000 | -31,517 | 3,00,000 |
| 40 | 11 | -500 | 3,00,000 | 0 | 3,00,000 |
| 41 | 12 | -500 | 3,00,000 | 0 | 3,00,000 |
| 42 | 13 | -500 | 3,00,000 | 0 | 3,00,000 |
| 43 | 14 | -500 | 3,00,000 | 0 | 3,00,000 |
| 44 | 15 | -500 | 3,00,000 | 0 | 3,00,000 |
| 45 | 16 | 0 | 3,00,000 | 0 | 3,00,000 |
| 46 | 17 | 0 | 3,00,000 | 0 | 3,00,000 |
| 47 | 18 | 0 | 3,00,000 | 0 | 3,00,000 |
| 48 | 19 | 0 | 3,00,000 | 0 | 3,00,000 |
| 49 | 20 | 0 | 3,00,000 | 0 | 3,00,000 |
| 50 | 8,32,028 | 15,58,069 | |||
| IRR | 6.36% | 10.57% | |||
Depending on risk appetite, one can invest in debt or equity instruments. For this analysis, we consider both:
– PPF (Public Provident Fund): With annual contributions adjusted to meet the 15-year tenure requirement, the final maturity value is ₹8.32 Lakhs, offering an IRR of 6.36%.
– ELSS (Equity Linked Savings Scheme): The maturity value is ₹17.22 Lakhs. After deducting capital gains tax, the post-tax maturity value is ₹15.58 Lakhs, resulting in a post-tax IRR of 10.57%.
| ELSS Tax Calculation | |
| Maturity value after 20 years | 17,22,483 |
| Purchase price | 2,82,170 |
| Long-Term Capital Gains | 14,40,313 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 13,15,313 |
| Tax paid on LTCG | 1,64,414 |
| Maturity value after tax | 15,58,069 |
Unlike the Shriram Life New Shri Life Plan, which locks your investment for 20 years, these alternative investments provide liquidity, allowing you to access your corpus anytime. Moreover, both options deliver inflation-beating returns.
In terms of liquidity and returns, the Shriram Life New Shri Life Plan falls short compared to these alternatives, making it a less favourable choice for long-term investment.
Final Verdict on Shriram Life New Shri Life Plan
The Shriram Life New Shri Life Plan is an endowment policy that participates in the company’s profits (known as a participating or with-profit policy). It offers maturity benefits along with bonuses (profits) at the end of the term.
However, an analysis of this plan reveals that its returns are lower than the inflation rate.
Investing in products that fail to outpace inflation reduces your purchasing power over time, leaving you with less money to achieve your financial goals and it also has a high agent commission.
Additionally, the insurance coverage provided by the Shriram Life New Shri Life Plan is inadequate for an individual’s needs.
Since neither the investment nor the insurance aspect of this plan benefits the investor, it could derail your financial goals. This highlights a key takeaway: combining insurance and investment in a single product is rarely effective for either purpose.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
To achieve your goals, diversify your investments across various asset classes and ensure your life cover is sufficient to meet all your goals and liabilities in the event of an unforeseen situation.
Consulting a Certified Financial Planner can help you create a personalized financial plan tailored to your risk tolerance and investment horizon.
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