Shriram New Shri Vidya Plan
Could Shriram Life’s New Shri Vidya Plan help fulfil your child’s dreams?
Can the Shriram Life New Shri Vidya Plan provide the perfect balance between financial security and your child’s education goals?
Can the Shriram Life New Shri Vidya Plan be your trusted partner in building a brighter tomorrow for your child?
In this review, we’ll explore the Shriram Life New Shri Vidya Plan’s features, benefits, and drawbacks to determine if it aligns with your financial goals.
What is Shriram Life’s New Shri Vidya Plan?
What are the features of the Shriram Life New Shri Vidya Plan?
Who is eligible for the Shriram Life New Shri Vidya Plan?
What are the benefits of the Shriram Life New Shri Vidya Plan?
Grace Period, Lapsed and Paid-up Policy and Revival of Shriram Life New Shri Vidya Plan
Free Look Period for Shriram Life New Shri Vidya Plan
Surrendering Shriram Life New Shri Vidya Plan
What are the advantages of the Shriram Life New Shri Vidya Plan?
What are the disadvantages of the Shriram Life New Shri Vidya Plan?
Research Methodology of Shriram Life New Shri Vidya Plan
Benefit Illustration – IRR Analysis of Shriram Life New Shri Vidya Plan
Shriram Life New Shri Vidya Plan Vs. Other Investments
Shriram Life New Shri Vidya Plan Vs. Pure-term + ELSS
Final Verdict on Shriram Life New Shri Vidya Plan
Shriram Life New Shri Vidya Plan is a Non-Linked Participating Endowment Life Insurance Plan. Shriram Life New Shri Vidya Plan offers survival benefits to adjust according to your child’s education requirements and also insurance coverage in case any unfortunate event happens to you.
| Eligibility conditions | Minimum | Maximum |
| Age at entry | 18 years | 50 years |
| Maturity age | 28 years | 70 years |
| Policy term and Premium paying term | Policy term | Premium paying term |
| 10 | 10 | |
| 15 | 8, 10, 15 | |
| 20 | 20 | |
| 25 | 25 | |
| Sum Assured | ₹ 1,00,000 | No limit |
| Minimum annualised premium | ₹ 8,000 | |
| Mode of premium payment | Yearly, Half-yearly, Quarterly, Monthly | |
In case of death of the life assured during the Shriram Life New Shri Vidya Plan policy term, the following benefits are paid to the nominee or beneficiary.
Sum assured on death shall be higher of
The additional death benefit can be taken in any one of the following options.
In case of survival of the life assured up to the end of each of the last four years of the Shriram Life New Shri Vidya Plan policy, provided all the due premiums have been paid, 25% of the Sum Assured at the end of each of the last four years will be paid.
Accrued Reversionary Bonuses and Terminal Bonus (if any) will be paid at Maturity.
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 New Shri Vidya Plan policy will lapse and no benefits will be payable under the policy
Paid-up Policy
The Shriram Life New Shri Vidya Plan policy will acquire a surrender value on payment of at least the first full policy year’s premium(s) and completed the first policy year. Policies that have acquired surrender value will become paid up if no further premiums have been paid.
The basic sum assured will be reduced as defined below. Reduced paid-up sum assured = Basic Sum Assured X No. of Premiums paid / Total No. of Premiums payable
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
If 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.
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).
The Shriram Life New Shri Vidya Plan provides guaranteed survival benefits in the last four years of the policy term and non-guaranteed bonuses as maturity benefits. Let’s examine the cash flow pattern using a benefit illustration from the policy brochure.
A 30-year-old male purchases the Shriram Life New Shri Vidya Plan with a base sum assured of ₹4 lakhs, a policy term of 15 years, and a premium payment term of 10 years. The annual premium is ₹49,480.
| Male | 30 years |
| Sum Assured | ₹ 4,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 49,480 |
Over the last four years of the Shriram Life New Shri Vidya Plan policy, he receives a guaranteed survival benefit of ₹1 lakh per year, along with a maturity benefit (based on the bonus rate) at the end of the policy term. The projected benefits for investment scenarios of 4% and 8% are illustrative and subject to the company’s performance.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 30 | 1 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 31 | 2 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 32 | 3 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 33 | 4 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 34 | 5 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 35 | 6 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 36 | 7 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 37 | 8 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 38 | 9 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 39 | 10 | -49,480 | 4,00,000 | -49,480 | 4,00,000 |
| 40 | 11 | 0 | 4,00,000 | 0 | 4,00,000 |
| 41 | 12 | 0 | 4,00,000 | 0 | 4,00,000 |
| 42 | 13 | 1,00,000 | 4,00,000 | 1,00,000 | 4,00,000 |
| 43 | 14 | 1,00,000 | 4,00,000 | 1,00,000 | 4,00,000 |
| 44 | 15 | 1,00,000 | 4,00,000 | 1,00,000 | 4,00,000 |
| 45 | 16 | 2,20,000 | 4,00,000 | 4,51,000 | 4,00,000 |
| IRR | 0.53% | 4.33% | |||
At a 4% scenario, the maturity benefit amounts to ₹1.20 lakh, resulting in an IRR of 0.53% as per the Shriram Life New Shri Vidya Plan’s Maturity Calculator. This offers no real value addition to the investment.
At an 8% scenario, the maturity benefit increases to ₹3.51 lakh, with an IRR of 4.33% as per the Shriram Life New Shri Vidya Plan’s Maturity Calculator. Even then, the returns fall short compared to most debt instruments.
The analysis clearly shows that despite the guaranteed component, the overall returns are insufficient. With education inflation at 8%-10%, these payouts will hardly cover rising education costs.
Moreover, the sum assured is inadequate to address basic family needs. Opting for the Shriram Life New Shri Vidya Plan could significantly derail your financial goals.
Let’s explore an alternative scenario where the same premium is used more effectively to achieve the desired cash flow. This can be accomplished by separating insurance and investment, unlike traditional policies that combine them. Here’s how:
Under the Shriram Life New Shri Vidya Plan, the death benefit includes the sum assured and survival benefits, even after death. In the previous example, the sum assured was ₹4 lakh, with a ₹1 lakh survival benefit in the last four years.
Now, consider opting for a pure-term life insurance policy with a higher sum assured of ₹8 lakh for a 15-year term and a 10-year premium payment term. The annual premium for Shriram Life New Shri Vidya Plan policy is just ₹4,200. This leaves ₹45,280 (out of ₹49,480) available for investment based on individual risk tolerance.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 4,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 4,200 |
| Investment | ₹ 45,280 |
For high-risk investors, equity instruments like ELSS (Equity Linked Savings Scheme) can be chosen. For low-risk investors, debt instruments are suitable.
| Term insurance + ELSS | |||
| Age | Year | Term Insurance premium + ELSS | Death benefit |
| 30 | 1 | -49,480 | 4,00,000 |
| 31 | 2 | -49,480 | 4,00,000 |
| 32 | 3 | -49,480 | 4,00,000 |
| 33 | 4 | -49,480 | 4,00,000 |
| 34 | 5 | -49,480 | 4,00,000 |
| 35 | 6 | -49,480 | 4,00,000 |
| 36 | 7 | -49,480 | 4,00,000 |
| 37 | 8 | -49,480 | 4,00,000 |
| 38 | 9 | -49,480 | 4,00,000 |
| 39 | 10 | -49,480 | 4,00,000 |
| 40 | 11 | 0 | 4,00,000 |
| 41 | 12 | 0 | 4,00,000 |
| 42 | 13 | 1,00,000 | 4,00,000 |
| 43 | 14 | 1,00,000 | 4,00,000 |
| 44 | 15 | 1,00,000 | 4,00,000 |
| 45 | 16 | 6,98,443 | 4,00,000 |
| IRR | 7.16% | ||
Assuming the ELSS fund is selected, the accumulated post-tax value at the end of the term is ₹8.50 lakh. To match the survival benefit of the Shriram Life New Shri Vidya Plan, the investment is redirected to an instrument yielding 7% p.a. This enables annual withdrawals, and the calculated IRR for this cash flow is 7.16%.
| ELSS Tax Calculation | |
| Maturity value after 12 years | 8,89,960 |
| Purchase price | 4,52,800 |
| Long-Term Capital Gains | 4,37,160 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 3,12,160 |
| Tax paid on LTCG | 39,020 |
| Maturity value after tax | 8,50,940 |
For comparison, the cash flow pattern mirrors the Shriram Life New Shri Vidya Plan. However, if no withdrawals are made, the returns would be even higher.
This analysis underscores that separating insurance and investment provides better liquidity, flexibility, and returns, making it a more efficient approach to achieving life goals.
The Shriram Life New Shri Vidya Plan provides guaranteed cash payouts and life coverage. However, relying solely on the guaranteed payouts as a deciding factor for choosing this product is not advisable.
The returns analysis shows that the plan delivers sub-par returns, often lower than those of debt instruments.
To achieve long-term goals, investment returns must outpace inflation. Unfortunately, the returns offered by the Shriram Life New Shri Vidya Plan fall short of helping you meet significant life goals.
While the Shriram Life New Shri Vidya Plan includes a lump sum death benefit, monthly payouts, and survival benefits, the overall coverage is insufficient to secure your child’s future and it also has a high agent commission.
No readymade children’s plan adequately addresses the rising costs of education. To achieve your child’s educational goals, it’s better to invest separately based on your risk tolerance and investment horizon.
Rather than depending on the rigid cash payouts of a children’s plan, start investing early and plan proactively.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
Having sufficient life insurance coverage is essential to support all your investment goals. A pure-term life insurance policy is recommended, as it provides adequate coverage at affordable premiums. To build a diversified investment portfolio and ensure the right level of insurance, consult a Certified Financial Planner.
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