Aditya Birla Sun Life Insurance (ABSLI) has introduced a novel income protection plan within its term insurance portfolio, known as Income Suraksha. In contrast to traditional term insurance policies that provide a one-time payout, ABSLI’s Income Suraksha stands out for its unique feature of monthly income disbursements that have the potential to accumulate in a compounded manner.
This fresh perspective on term insurance could potentially redefine the existing landscape by offering substantial benefits to policyholders and their beneficiaries. Furthermore, the plan is priced competitively and includes additional options for enhanced coverage.
Key features
Unlike conventional term insurance plans that offer a lump sum payout, ABSLI’s Income Suraksha sets itself apart with its innovative feature of monthly income payments that have the potential to grow in a compounded manner.
Aditya Birla Sun Life Insurance (ABSLI) offers the flexibility to customise their protection with two plan options.
One can shield your family from inflation by choosing the Increasing Income Protection Option, which provides increasing income over time.
With ABSLI, one can have the freedom to select either a Limited or Regular Premium Payment Term.
Additionally, you can enhance your insurance coverage by adding appropriate rider options for an extra premium.
Payout structure
For example, a standard term insurance policy will offer a sum assured of Rs 1 crore in the event of the policyholder’s death during the policy term. The amount received is at the discretion of the nominee. Comparing Income Suraksha plan to a standard term insurance policy, the payout under the Income Suraksha plan ranges from Rs 90 lakh to Rs 1.5 crore, offered at a pricing level comparable to traditional term insurance.
In the case of the Income Suraksha plan, assuming a fixed monthly income of Rs 1 lakh for a policy term of 30 years, the payout structure varies depending on the timing of the unfortunate event.
If the mishap occurs in the first year, the policy will pay Rs 12 lakh per year for the remaining 29 years, totaling Rs 3.5 crore or Rs 1.5 crore when discounted back to the first month of payment at a 7% discount rate.
On the other hand, if the unfortunate event happens on the last day of the policy term, the nominee is guaranteed 10 years of Rs 12 lakh per year, totaling Rs 1.2 crore or Rs 90 lakh when discounted to the first month.
Income Suraksha plan offers a feature where the income can increase annually by 5% during the policy term, up to 1.5 times the original amount.
The monthly income set at the beginning of the policy is compounded yearly at 5%, regardless of whether a payout is activated. This adjustment expands the potential payout range to Rs 1.2-2 crore when considering discounted values.
Plan structure
Under the Income Suraksha plan, for a 35-year-old male earning a monthly income of 1 lakh and opting for a 30-year policy term, the annual premium amounts to Rs 20,760.
Should the same plan involve a 5 per cent yearly compounding of income, the annual premium rises to Rs 30,000. Notably, the Income Suraksha plan offers a first-year discount of 7 per cent for salaried customers and an additional 2 per cent discount for female customers.
Additionally, the plan provides various add-on riders for purchase, such as waiver of premium, hospital care, critical illness, and surgical care riders. With the accidental death and disability rider, beneficiaries receive a 100 per cent lumpsum payment of the sum assured.
For comparison, a standard term insurance plan with a sum assured of Rs 1 crore for the same age bracket typically ranges between Rs 17,000 and Rs 21,000 annually with other insurers.
Suitable investors
The Income Suraksha plan is designed to cater to policyholders who are providing support to elderly parents or beneficiaries who may not have the financial capability to manage a large lumpsum payment. As term insurance payouts are not subject to taxation, they serve as a direct financial lifeline for the beneficiaries.
Moreover, the plan emphasizes the fundamental aspect of term insurance. During the initial years, policyholders often have greater financial responsibilities such as home loans, providing regular financial support to family members, and bearing the costs of their children’s education. It is during this crucial period that the insurance payout is at its peak in the Income Suraksha plan, providing an additional option to compound the payout for further financial security.