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Birla Sun Life Insurance-Empower Pension Plan

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Birla Sun Life Insurance-Empower Pension Plan Review

BSLI Empower Pension Plan is a Unit Linked Pension Plan which allows the policyholder to reap market returns and build up a considerable retirement corpus.


Highlights of the Birla Sun Life Insurance-Empower Pension Plan Review

  • This is a Unit Linked Plan where the premiums paid are invested in market linked funds so that they earn attractive returns.
  • The plan has Smart Option wherein the investment portfolio is managed automatically by the company in a pre-specified manner.
  • Three types of Guaranteed Additions are added to the Fund Value for an enhanced growth.


Working of the Birla Sun Life Insurance-Empower Pension Plan Review

  • The policyholder decides on the amount of premium he wants to pay and the premium paying mode.
  • He also decides the plan tenure and the risk profile (Aggressive, Moderate or Conservative) based on which his premiums would be allocated. 
  • The premium paid, after deducting the allocation charge is invested as per the Smart Option. Under this option, the net premium is allocated to Maximizer Guaranteed and Income Advantage Fund. The investment is managed by the company in both the funds as per a pre-specified proportion over the policy tenure. The allocation rate would depend on the risk profile chosen and the tenure. Over the policy tenure, the allocation would be automatically shifted to less risky funds to protect the returns from market volatility. 
  • If the policyholder dies during the tenure of the plan the death benefit is paid.
  • When the plan tenure ends, the Vesting benefit is paid.

COMPARE THIS PLAN WITH OTHER PENSION PLANS


Benefits and Features of Birla Sun Life Insurance-Empower Pension Plan Review

  • Vesting Benefit – The date when the plan term ends is called the Vesting date and on that date the Vesting Benefit is paid to the policyholder. The benefit would be higher of the following:
    Years to vesting Aggressive risk Moderate risk Conservative risk
    5 years - - 105%
    6-10 years 101% 106% 112%
    11-15 years 102% 110% 119%
    16-20 years 103% 114% 126%
    21-25 years 104% 118% 133%
    26-30 years 105% 122% 140%

    On the vesting date, the policyholder would have to choose any one of the following options of availing the vesting benefit. The options are:
    • Total Fund Value as on that date, or
    • The Guaranteed Vesting Benefit which depends on the risk profile and the vesting date.
      The minimum Guaranteed Vesting Benefit should be 101% of all premiums paid under the plan. The rate of the benefit depending on the vesting date and the risk profile as determined by the company is as follows:
    • 1/3rd of the vesting benefit could be withdrawn as lump sum and the remaining 2/3rd of the benefit could be used to buy an Immediate Annuity plan from the company 
    • The entire benefit can be used to buy an Immediate Annuity plan from the company 
    • The entire amount of vesting benefit can be used to purchase a Single Premium Deferred Annuity Plan from the company
    • If the policyholder is aged less than 55 years on the vesting date, he may choose to extend the vesting date to another available period. Additional premiums might be paid during this period and the Fund Value would be invested in the Advantage Guaranteed Fund for the deferment period.
  • Death Benefit – If the insured dies before the vesting date, higher of the following would be paid as death benefit:
    • Fund Value as on the date of death, or
    • Guaranteed Death Benefit.
      The Guaranteed Death Benefit would be the higher of the following:
    • 105% of all premiums paid till death
    • The aggregate premiums paid till death compounded at a guaranteed rate which is 0.5% p.a. for Aggressive Risk Profile, 1.5% p.a. for Moderate and 3% for Conservative Risk Profile.
      The nominee can either withdraw the entire death benefit in one lump sum or use it entirely or partially to purchase an annuity plan from the company.
  • Bonus – Being a ULIP plan, bonus is not declared.
  • Guaranteed Additions – Guaranteed Additions are added under the plan three times at specified intervals. Once started, they accrue every year thereafter. The period from which the additions start and the rate of addition are mentioned below:
From the end of the policy year Rate of addition
6th year 0.25% of the average Fund Value of the last 12 months
11th year 0.35% of the average Fund Value of the last 12 months
16th year 0.35% of the average Fund Value of the last 12 months
 
  • Claw-back Additions – As per the IRDA regulations, non-negative additions would be added to the Single Premium Fund Value to fulfill the maximum reduction in yield criteria from the end of the 5th policy year.
  • Loan –Loan is not available under the plan.
  • Tax benefit – Premiums paid under the plan would be exempt from tax under Section 80CCC. The part of vesting benefit commuted (1/3rd part which is taken as lump sum) would be exempt from tax under Section 10(10A).


Eligibility Criteria in Birla Sun Life Insurance-Empower Pension Plan Review

The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
 
  Minimum Maximum
Entry age (Last Birthday) 28 years 70 years
Vesting Age (Last Birthday) NA 80 years
Plan tenure 5 years 30 years
Premium payable Yearly – Rs.18,000
Half-yearly – Rs.24,000 annually
Quarterly – Rs.30, 000 annually
Monthly – Rs.36,000 annually
No limit
Premium Paying Term Equal to plan tenure
Premium payment mode Yearly, half-yearly, quarterly or monthly



Applicable charges in Birla Sun Life Insurance-Empower Pension Plan Review

Being a ULIP plan, there are certain charges applicable. The charges include the following:
  • Premium Allocation Charge – This charge is deducted on receipt of each premium before the premium is credited into the fund. The charges is:
Policy year % of basic premium paid
1 6%
2 – 3 5.5%
4 – 10 5%
11 year onwards 4%
 
  • Policy Administration Charge – A monthly charge of Rs.20would be charged as Policy Administration Charges in the first 5 policy years. From the 6th year, it would increase to Rs.25 per month and then inflate every year @5% p.a. subject to maximum of Rs.6000
  • Fund management Charge – These charges depend on the type of fund selected and are charged on a daily basis. The applicable charges are:
Fund Type Charge
Income Advantage Guaranteed 1 % per annum
Maximizer Guaranteed 1.35% per annum
 
  • Miscellaneous Charges – A charge of Rs.50 per transaction for any services rendered by the company is charged. The charge may increase any time subject to a maximum of Rs.500 per request.
  • Investment Guarantee Charge – 0.25% per annum of the fund value and any top-up fund value would be deducted as Investment Guarantee Charge. This charge might be increased subject to a maximum of 0.50% p.a.
  • Discontinuance Charge – Applicable for policies in which premiums are discontinued. The charges are:
Year of Discontinuance Annual Premiums up to Rs.25,000 Annual Premiums above Rs.25,000
1 Lower of 20% of annual premium or Fund Value up to a maximum of Rs.3000 Lower of 6% of annual premium or Fund Value up to a maximum of Rs.6000
2 Lower of 15% of annual premium or Fund Value up to a maximum of Rs.2000 Lower of 4% of annual premium or Fund Value up to a maximum of Rs.5000
3 Lower of 10% of annual premium or Fund Value up to a maximum of Rs.1500 Lower of 3% of annual premium or Fund Value up to a maximum of Rs.4000
4 Lower of 5% of annual premium or Fund Value up to a maximum of Rs.1000 Lower of 2% of annual premium or Fund Value up to a maximum of Rs.2000
5 year onwards Nil Nil



Additional Benefits of Birla Sun Life Insurance-Empower Pension Plan Review

  • Riders – There are no riders under this plan.
  • Top-up Premiums – Top-ups are not allowed under the plan.
  • Grace Period – A grace period of 30 days is allowed for annual, half-yearly and quarterly payment of premium and 15 days for monthly mode of premium payment.
  • Free Look Period – A cooling off period or a free look period of 15 days (30 days for distance marketing mode) is granted to the policyholder after the policy issuance to review the policy terms and conditions. If found unsatisfactory, the plan can be cancelled within this period and the premium paid would be refunded after deducting the relevant mortality charge, service tax, cess and stamp duty paid

 

How The Plan Works?

Step 1:Choose your policy premium.
You choose the policy premium amount you wish to pay every year till the vesting date. You can pay in monthly, quarterly, semi-annual or annual installments.
Please ask your financial advisor for details about the range of convenient payment methods we offer.
      
Step 2 Choose your vesting date
You choose a vesting date so as to have an accumulation period of 5 to 30 years.
      
Step 3 Choose your risk profile
You choose your risk profile based on your risk appetite – Aggressive | Moderate | Conservative.Once chosen, the risk profile cannot be changed.

Your Guaranteed Vesting Benefit is automatically determined based on the above choices.


Exclusions in Birla Sun Life Insurance-Empower Pension Plan Review

  • If the policyholder commits suicide anytime during the plan tenure, the available Fund Value would be paid to the nominee.


Surrendering the policy

  • Within the first 5 policy years

The policy has a 5 year lock-in period. If the policy is surrendered within the first 5 years, the funds in the Fund Value and any top-up premium Fund Value would be transferred to the Pension Discontinued Policy Fund after deducting the Discontinuation charges. The money would remain in the Pension Discontinued Policy Fund till the completion of 5 years and the Fund Management charges would be deducted as and when applicable. If the policyholder dies during this period, the Fund Value as on the date of death would be paid. Otherwise, after the completion of the lock-in period of 5 years, the Fund Value would be available as the Surrender Value
  • After 5 years
    If the plan is surrendered any time after the completion of 5 years, the available Fund Value would be available as Surrender Value.
    The policyholder can use the Surrender Value in any of the following ways:
    • 1/3rd of the surrender value could be withdrawn as lump sum and the remaining 2/3rd of the value could be used to buy an Immediate Annuity plan from the company 
    • The entire amount of surrender value can be used to purchase a Single Premium Deferred Annuity Plan from the company
    • The entire Surrender Value could be utilized to buy an Immediate Annuity Plan from the company.

Making the policy Paid-up

Paid-up is allowed only if premiums are paid for the first 5 years of the plan. If the policyholder does not want to revive or surrender his policy, the policy would be converted to a paid-up policy and no further premiums would be payable under the plan.


Revival

Revival is allowed within 2 years from the date of the first unpaid premium. The policyholder would be required to pay the outstanding premium and any interest charged by the insurer to revive his policy.
 
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