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Can the Shriram Life Pension Plus Plan provide this consistent income and meet all your post-retirement financial needs?
Can the Shriram Life Pension Plus Plan secure both life insurance and wealth growth in a single plan?
Can the Shriram Life Pension Plus Plan ensure your golden years are truly golden, backed by a robust ULIP plan?
In this review, we will analyse a case study to evaluate the plan’s suitability. Additionally, we will examine its features, benefits, and drawbacks to help you make an informed decision.
Table of Contents:
What is the Shriram Life Pension Plus Plan?
What are the features of the Shriram Life Pension Plus Plan?
Who is eligible for the Shriram Life Pension Plus Plan?
What are the benefits of the Shriram Life Pension Plus Plan?
What are the fund options in the Shriram Life Pension Plus Plan?
What are the charges in the Shriram Life Pension Plus Plan?
Grace Period, Discontinuance and Revival of Shriram Life Pension Plus Plan
Free Look Period of Shriram Life Pension Plus Plan
Surrendering Shriram Life Pension Plus Plan
What are the advantages of the Shriram Life Pension Plus Plan?
What are the disadvantages of the Shriram Life Pension Plus Plan?
Research Methodology of Shriram Life Pension Plus Plan
Benefit illustration – IRR Analysis of Shriram Life Pension Plus Plan
Shriram Life Pension Plus Plan Vs. Other Investments
Shriram Life Pension Plus Plan Vs. Pure-term + PPF/ELSS
Final Verdict on the Shriram Life Pension Plus Plan
What is the Shriram Life Pension Plus Plan?
Shriram Life Pension Plus is a Unit-linked Non-Participating Pension Plan. It helps to build a large corpus. On vesting, it enables the policyholder to have a steady regular income for life by purchasing an immediate annuity policy.
What are the features of the Shriram Life Pension Plus Plan?
- Flexible policy terms ranging from 10 years to 15–35 years
- No cap on top-up premiums
- A variety of funds and investment strategies to suit your needs
- Unlimited free switching and premium redirection options
- Loyalty additions to boost your overall benefits
Who is eligible for the Shriram Life Pension Plus Plan?
| Eligibility Criteria | Minimum | Maximum |
| Entry age | 20 years | 65 years |
| Vesting age | 40 to 80 years | |
| Policy term | 10, 15 to 35 years | |
| Premium payment frequency | Regular/Limited: Yearly and Monthly | |
| Premium Paying Term (PPT) | Regular: Same as policy term | |
| Limited | ||
| Policy term | PPT | |
| 10 years | 6 years | |
| 15 to 19 years | 6/10 years | |
| 20 to 35 years | 6/10/15 years | |
| Single: Single pay | ||
| Premium | Regular- Yearly: 25,000 & Monthly: 4,000 Limited- Yearly: 48,000 & Monthly: 4,000 Single- 1,00,000 |
No limit |
What are the benefits of the Shriram Life Pension Plus Plan?
1. Death benefit
In case of the death of the policyholder during the Shriram Life Pension Plus Plan policy term, the nominee will receive the higher of
- Fund Value
- Assured death benefit
Total fund value is defined as the sum of base premium fund value plus top-up fund value.
Assured death benefit is defined as 105% of total premiums paid.
Utilisation of death benefit
The nominee(s) shall utilise these proceeds by exercising one of the following options
- Utilize the entire proceeds of the policy or part thereof for purchasing an annuity at the then prevailing annuity/pension rate from Shriram Life Insurance Company Limited. However, the nominee(s) shall be given the option to purchase an annuity from any other insurer at the then prevailing annuity rate to the extent of percentage (currently 50% of the entire proceeds of the policy net of commutation).
- Withdraw the entire proceeds of the policy
2. Vesting Benefit
On survival of the policyholder up to the end of the Shriram Life Pension Plus Plan policy term, he will receive the higher of
- Fund Value
- Assured vesting benefit
Where Assured vesting benefit is defined as 101% of total premiums paid.
Utilisation of vesting benefit
The policyholder can utilise the vesting benefit to either
- To utilise the entire proceeds to buy an immediate annuity or deferred annuity from Shriram Life Insurance Company Limited at the then prevailing annuity rate or the policyholder shall be given the option to purchase an immediate annuity or deferred annuity from any other insurer.
- To commute up to 60% and utilise the balance amount to purchase an immediate annuity or deferred annuity from the Shriram Life Insurance Company Limited at the then prevailing annuity rate or the policyholder shall be given the option to purchase available annuity from any other insurer
- The policyholder shall be given the option to purchase an immediate annuity or deferred annuity from another insurer at the then prevailing annuity rate to the extent of a certain percentage (currently 50% of the entire proceeds of the policy net of commutation).
3. Loyalty additions
Loyalty additions shall be credited to the base premium fund value of the policy in the form of additional units over the duration of the Shriram Life Pension Plus Plan policy.
What are the fund options in the Shriram Life Pension Plus Plan?
Shriram Life Pension Plus Plan Policyholder has the option to choose (except Discontinued Policy fund) any one of the following funds or a combination of funds at the time of proposal.
| S no | Fund Name | Asset Allocation | Risk Profile | ||
| Equity | Debt (Govt and Corporate bonds) | Money market/ Liquid/ Cash | |||
| 1 | Pension Protector fund | _ | 60%-100% | 0-40% | Low |
| 2 | Pension Balancer fund | 20%-50% | 30%-70% | 0-40% | Medium |
| 3 | Pension Maximiser fund | 30%-70% | 20%-50% | 0-40% | Moderately High |
| 4 | Pension Multicap fund | 60%-100% | _ | 0-40% | Very high |
| 5 | Preserver fund | _ | 80%-100% | 0-20% | Low |
| 6 | Defender fund | 0-35% | 45%-100% | 0-20% | Low |
| 7 | Balancer fund | 40%-60% | 20%-60% | 0-20% | Moderately High |
| 8 | Maximus fund | 0-70% | 30%-100% | 0-20% | High |
| 9 | Accelerator fund | 90%-100% | _ | 0-10% | Very high |
| 10 | Tyasser fund | 90%-100% | _ | 0-10% | Very high |
| Govt. Securities | Money market/ Liquid/ Cash | ||||
| Pension Discontinued Policy fund | 60%-100% | 0-40% | Low | ||
What are the charges in the Shriram Life Pension Plus Plan?
i.) Premium Allocation Charge
This charge depends on the premium size and policy year. The balance premium after deduction of the premium allocation charge will be allocated as units in the unit fund(s) in the proportion chosen by the Shriram Life Pension Plus Plan policyholder.
This charge is guaranteed throughout the term of the policy.
| Year | Premium allocation charge |
| 1 | 6% of premium |
| 2 and 3 | 4.25% of premium |
| 4 to 10 | 4% of premium |
| 11+ | 1% of premium |
| Single premium | 4% of single pay |
| Top-up premium | 1.5% of top-up premium |
ii.) Policy Administration Charge
This charge is expressed as a percentage of annualised premiums. This charge will be deducted at the start of each policy month.
| Regular and Limited premium policies | Single premium policies |
| 0.20% of the annualised premium for both annual and monthly modes | 0.09% of single premium for the first 5 years and 0.030% of single premium thereafter |
iii.) Mortality Charge
Mortality charges will be charged on Sum at Risk at the beginning of each policy month.
Sum at Risk= Death benefit minus total fund value
iv.) Discontinuance Charges
The discontinuance charges will be charged from the fund value on the date of discontinuance in case the policy is discontinued. It depends on the year of discontinuance, premium amount and fund value.
v.) Fund Management Charges
These charges will be levied on a daily basis on the unit fund.
| Fund | FMC p.a. |
| Preserver, Defender | 1.25% |
| Pension Protector, Pension Balancer, Pension Maximiser, Pension Multicap, Balancer, Maximus, Accelerator, Tyasser | 1.35% |
| Pension Discontinued policy fund | 0.50% |
vi.) Fund Switching charges
Nil.
vii.) Premium redirection charge
Nil
Inference from the charges: The charges outlined above are extra costs for investors, which are not applicable to other market-linked products. Over time, these charges can significantly reduce long-term returns.
Grace Period, Discontinuance and Revival of Shriram Life Pension Plus Plan
For regular/ limited premium payment policies
Grace Period
The grace period is 30 days for payment of the yearly premium and 15 days for payment of the monthly premium from the due date of the premium.
Discontinuance
Discontinuance of a policy before the end of the lock-in period of 5 years: the policy shall be discontinued at the expiry of the grace period.
The fund will be moved to the Pension Discontinued Policy Fund after deducting applicable discontinuance charges.
At the end of the lock-in period, the Shriram Life Pension Plus Plan policyholder shall exercise one of the options (as specified in the utilisation of vesting benefit) with Pension Discontinued Policy Fund proceeds.
Discontinuance of a policy after a lock-in period of 5 years: the Shriram Life Pension Plus Plan policy shall be converted into a reduced paid-up policy as per the terms and conditions of the policy.
The Shriram Life Pension Plus Plan policyholder can exercise one of the options (as specified in the utilisation of vesting benefit) to utilize the Pension discontinued policy fund proceeds.
Revival
The plan provides the option to revive the policy within the revival period of three years from the date of the first unpaid premium (FUP).
Free Look Period of Shriram Life Pension Plus Plan
The policyholder has the option to review the terms and conditions of the policy. If the insured disagrees with any of those terms or conditions, he has the option to return the policy within 30 days from the date of receipt of the policy document, whether received electronically or otherwise.
Surrendering Shriram Life Pension Plus Plan
Surrender of a policy before the end of the lock-in period of 5 years: the policyholder can utilize the proceeds of the Pension Discontinued Policy Fund at the end of the lock-in period or date of surrender whichever is later.
The Shriram Life Pension Plus Plan policyholder can exercise either of the options as specified in the utilisation of the vesting benefit.
Surrender of a policy after a lock-in period of 5 years: surrender value, after a lock-in-period of five years from the date of inception of the policy, will be the fund value as on the date of surrender and the policyholder can exercise either of the options as specified in the utilisation of vesting benefit.
What are the advantages of the Shriram Life Pension Plus Plan?
- Top-up premiums are permitted.
- Policyholders can switch units between funds without any charges.
- Future premiums can be redirected to different funds from those initially selected at policy inception.
- Partial withdrawals (on specified conditions) are allowed only after the lock-in period is complete.
- Offers 10 investment fund options to choose from.
What are the disadvantages of the Shriram Life Pension Plus Plan?
- Premiums are invested after deducting applicable charges.
- Only 60% of the benefits can be withdrawn, limiting access to the full amount.
- Loan facilities are not available under this plan.
- A mandatory requirement to purchase an annuity with the proceeds is a significant disadvantage.
Research Methodology of Shriram Life Pension Plus Plan
The Shriram Life Pension Plus Plan is designed to help you save for retirement, with the accumulated savings providing a steady income during your post-retirement years.
Unlike other insurance-cum-savings products that offer periodic payments or lump sum payouts, this plan includes a vesting benefit. Let’s explore this with an example.
Benefit illustration – IRR Analysis of Shriram Life Pension Plus Plan
A 40-year-old male invests an annual premium of ₹1 lakh in the Shriram Life Pension Plus Plan. The premium payment term and policy term are both 15 years, with a vesting age of 55 years. The death benefit is the higher of 105% of the premiums paid or the fund value.
| Male | 40 years |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 1,00,000 |
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 40 | 1 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 41 | 2 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 42 | 3 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 43 | 4 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 44 | 5 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 45 | 6 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 46 | 7 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 47 | 8 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 48 | 9 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 49 | 10 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 50 | 11 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 51 | 12 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 52 | 13 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 53 | 14 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 54 | 15 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 55 | 17,10,596 | 23,83,674 | |||
| IRR | 1.62% | 5.60% | |||
The following illustration assumes a non-guaranteed gross return of 8% p.a. or 4% p.a. for benefit projection:
At 4% p.a.: The vesting benefit is ₹17.10 lakhs, yielding an IRR of 1.62% as per the Shriram Life Pension Plus Plan maturity calculator.
At 8% p.a.: The vesting benefit is ₹23.83 lakhs, yielding an IRR of 5.60% as per the Shriram Life Pension Plus Plan maturity calculator.
Premiums paid, along with loyalty additions, accumulate into a vesting benefit at age 55. Unlike a maturity benefit, this amount cannot be encashed directly. Instead, you are required to use the corpus to purchase an annuity plan, with an option to commute up to 60% of the benefit.
If 100% of the vested benefit is then invested in an annuity plan for regular income, the brochure estimates an annual annuity of ₹1.41 lakhs (4% scenario) and ₹2.05 lakhs (8% scenario) based on Shriram Life’s Immediate Annuity Plus Plan.
However, these annuity amounts are not guaranteed, as the actual rate will depend on the prevailing rates at the time of purchase.
Since the accumulated amount (vesting benefit) must be invested in an annuity plan at the prevailing rates, which are not part of this policy, you lose the flexibility to use the funds for personal goals or other investments.
This lack of control and relatively low returns make the Shriram Life Pension Plus Plan a less favourable choice for retirement planning.
Shriram Life Pension Plus Plan Vs. Other Investments
Retirement planning involves two critical phases: the accumulation phase, where you save and grow your wealth, and the distribution phase, where you receive regular income post-retirement.
The Shriram Life Pension Plus Plan focuses solely on the accumulation phase, with the distribution phase falling outside its scope. To overcome this limitation, let’s explore alternative investment options.
Shriram Life Pension Plus Plan Vs. Pure-term + PPF/ELSS
Let us analyse a scenario using the same parameters from the previous illustration. A pure-term life insurance policy with a sum assured of ₹15 lakhs costs ₹9,800 annually for a 15-year term.
After paying the term insurance premium, you are left with ₹90,200 from your annual budget of ₹1 lakh, which can be invested based on your risk preference.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 9,800 |
| Investment | ₹ 90,200 |
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 40 | 1 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 41 | 2 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 42 | 3 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 43 | 4 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 44 | 5 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 45 | 6 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 46 | 7 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 47 | 8 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 48 | 9 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 49 | 10 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 50 | 11 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 51 | 12 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 52 | 13 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 53 | 14 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 54 | 15 | -1,00,000 | 15,00,000 | -1,00,000 | 15,00,000 |
| 55 | 24,46,350 | 34,80,128 | |||
| IRR | 5.90% | 9.95% | |||
Low-risk option: PPF (Public Provident Fund)
Investing ₹90,200 annually in a PPF account yields a maturity value of ₹24.46 lakhs, with an IRR of 5.90%. While this is comparable to the 8% return scenario of the Shriram Life Pension Plus Plan, the key advantage is immediate access to the maturity proceeds, which the pension plan does not offer.
High-risk option: ELSS (Equity Linked Savings Scheme)
Investing the same amount in an ELSS fund generates a maturity corpus of ₹37.66 lakhs. After deducting capital gains tax, the post-tax maturity value stands at ₹34.80 lakhs, with a post-tax IRR of 9.95%.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 37,66,146 |
| Purchase price | 13,53,000 |
| Long-Term Capital Gains | 24,13,146 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 22,88,146 |
| Tax paid on LTCG | 2,86,018 |
| Maturity value after tax | 34,80,128 |
Unlike the Shriram Life Pension Plus Plan, these options provide flexibility in using the accumulated funds.
The corpus can be allocated across diversified asset classes to generate regular income, ensuring inflation-adjusted returns during retirement. A well-balanced investment portfolio, coupled with periodic rebalancing, ensures financial stability in your golden years.
In comparison, the Shriram Life Pension Plus Plan limits your options and flexibility, making it a less attractive choice for retirement planning.
Final Verdict on the Shriram Life Pension Plus Plan
The Shriram Life Pension Plus Plan differs slightly from traditional endowment plans, which provide insurance coverage and maturity benefits at the end of the term.
Instead, the Shriram Life Pension Plus Plan offers vesting benefits—accumulated savings that are intended to generate regular income post-retirement. However, the provision of regular income falls outside the scope of this plan.
This plan combines a savings component with an annuity purchase requirement. Its suitability is questionable, as the plan does not provide details about the workings of the annuity.
Even if the accumulated corpus generates regular income, it may not keep pace with rising expenses, reducing the plan’s overall appeal and it also has a high agent commission.
Effective retirement planning requires calculating the required corpus and selecting appropriate investments to achieve that goal. Starting early and maintaining disciplined investments are essential to meeting retirement objectives.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
To ensure a secure retirement, diversify your investment portfolio across various asset classes, such as equities, fixed-income instruments, and other assets, based on your risk tolerance.
Regularly review and adjust your strategy to remain aligned with your goals. Consulting a Certified Financial Planner can help you create a tailored retirement plan suited to your needs.
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