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Birla Sun Life Insurance-Savings Plan
Birla Sun Life Insurance-Savings Plan Review
BSLI Savings Plan is a traditional, participating life insurance plan which provides dual benefits. It creates and grows a saving corpus and also provides life insurance protection.
Highlights of the Birla Sun Life Insurance-Savings Plan
This is a traditional savings plan wherein bonuses are declared by the insurer.
Premiums are payable either for the entire plan duration or for a limited tenure depending on the plan tenure chosen.
There is an inbuilt Accidental Death Benefit rider which provides additional Sum Assured in case of accidental death.
The plan earns Guaranteed Additions in the first 5 years which enhances the benefits payable.
Premium discounts are given for annual premium paying frequency.
COMPARE THIS PLAN WITH OTHER ENDOWMENT PLANS
Working of the Birla Sun Life Insurance-Savings Plan
The policyholder chooses the Sum Assured, plan term, premium paying term and frequency. Based on the policyholder’s age and the above criteria, the premium would be determined.
The Sum Assured is divided into three bands which are as follows:
Sum Assured Bands
Sum Assured range
Rs.30,000 to Rs.49,999
Rs.50,000 to Rs.149,999
Rs.1.5 lakhs to Rs.10 lakhs
Guaranteed Additions are added in the first five policy years.
Bonuses are added every year if the policy is in-force.
On death during the period, the death benefit is paid.
On maturity, the maturity benefit is paid.
Benefits and Features of Birla Sun Life Insurance-Savings Plan
Maturity Benefit – When the plan matures and the premiums have been duly paid, the following benefits would be paid:
Sum Assured + accrued Guaranteed Additions + vested reversionary Bonuses +Terminal Bonus, if any.
Death Benefit – If the insured dies during plan term and the policy is in force, the death benefit payable would be:
Guaranteed Death Benefit + accrued Guaranteed Additions + accrued reversionary bonuses + Terminal Bonus, if any.
The Guaranteed Death Benefit would be higher of the following:
10 times the annual premium
Sum Assured chosen on plan commencement
The death benefit payable should not be lower than 105% of all premiums paid till death.
If the insured dies due an accident, an additional Sum Assured would be paid as an Accidental Death Benefit which is inbuilt in the plan. The benefit would be equal to the Sum Assured of the plan.
Guaranteed Additions – The plan is eligible for Guaranteed Additions which are added in the first 5 years of the plan. The rate of these additions is Rs.40 per Rs.1000 Sum Assured and these additions are added at the end of each plan year.
Bonus –Simple reversionary bonuses are declared under the plan and are paid every year for which the policy is in-force. A terminal bonus may also be paid on death, surrender or maturity of the plan.
Loan –Loan can be taken on the policy after the policy has acquired a Surrender Value. The maximum amount of loan available is 85% of the acquired Surrender Value while the minimum amount is Rs.5000.
Tax benefit – Premiums paid under the plan would be exempt from tax under Section 80C up to a limit of Rs.1.5 lakhs. The death benefit or the maturity benefit received and the Survival benefit received would also be tax exempt under Section 10(10D) of the Income Tax Act.
Eligibility Criteria of Birla Sun Life Insurance-Savings Plan
The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
Entry age (Last Birthday)
10, 15 or 20 years
Depends on Sum Assured, term, PPT, age and gender
Premium Paying Term (PPT)
Term 10 years – equal to plan tenure
Term 15 years – 10 years or equal to plan tenure
Term 20 years – 10 years, 15 years or equal to plan tenure
Premium payment mode
Monthly, half-yearly, quarterly and annually
Additional Benefits of Birla Sun Life Insurance-Savings Plan
Riders –Riders are not available under the plan.
Premium Rebates – Discount in premiums @ 3% is allowed if the premiums are paid in the annual mode.
Grace Period – A grace period of 30 days is allowed for payment of premium after the due date for yearly, half-yearly and quarterly modes of premium payment. For monthly mode, the grace period allowed is reduced to 15 days. The life cover under the policy would continue during the grace period.
Free Look Period – A cooling off period or a free look period of 15 days (30 days for distance marketing channels) 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
Let's Understand The Plan With An Example:
Sachin is 35 years old. He wants to secure his family's financial future should anything unfortunate happen to him. He chooses to secure his life for a 20 year term with BSLI Savings Plan. Based on his life stage, his premium per year is set at Rs. 7,267. Total Maturity Benefit he can expect at the end of a 20 year term at 8% interest will be Rs. 2, 34,000 and Rs. 190, 000 at 4% interest rate. Plus, he can expect Guaranteed Additions which are up to Rs. 20,000 from the 5th year onwards. He can also expect Guaranteed Benefit of Rs. 1, 20,000 at the end of the policy term.
In case of Sachin's untimely demise, the Death Benefit his family can expect will be Rs.234,000 @8% interest rate and @4% it will be Rs. 190,000. The Estimated Bonuses the policy will earn are of Rs. 114,000 @8% interest rate and Rs. 70,000 @4% interest rate.
Note : The rates mentioned above are bound to change in future. Please contact the company for final rates applicable to you at the time of purchase.
Exclusions in Birla Sun Life Insurance-Savings Plan
If suicide is committed within a year of policy issuance or revival, higher of the premiums paid till death or the Surrender Value acquired would be paid provided the policy is in force
For the Accidental Death Benefit Rider, the benefit would not be paid if the death occurs due to suicide or self-inflicted injury, war, service in the armed forces, alcohol or drug abuse, aviation, acts of criminal nature, participation in hazardous sports or activities, disease or infection and radiation.
Non-Payment of premium in Birla Sun Life Insurance-Savings Plan
Premiums have to be paid for at least 3 years for becoming eligible to receive any benefit under the plan. After this compulsory period, the policyholder can surrender the policy or make it paid-up.
Making the policy Paid-up
If at least3 full years’ premium has been paid, the policy would become a paid-up policy if future premiums are not paid. The benefits under the plan would be calculated using the Paid-up values. Bonuses and Guaranteed Additions would not be declared under the policy. The paid-up values would be calculated as follows:
Paid-up value of Sum Assured = Sum Assured * (number of premiums paid / total number of premiums payable)
Paid-up Value of Guaranteed Additions = Guaranteed Additions * (number of premiums paid / total number of premiums payable)
Accrued bonuses would be paid along with the Paid-up values of the Sum Assured and Guaranteed Additions on death or maturity. However, in case of death, the value of bonus declared in the year of death would be reduced in the same manner as mentioned above. The Accidental Death Benefit amount payable would not be applicable in case of a paid-up policy.
Auto Cover Continuation Feature
The plan has an Auto Cover Continuation feature wherein, the cover continues for 2 years if the policy becomes a paid-up policy, i.e. 3 full years’ premiums have been paid. Under this feature, the policy would pay the full death benefit if death occurs in these 2 years of policy continuation even when the plan is in a paid-up state. The Accidental Death Benefit, however, would not be applicable. Moreover, Guaranteed Additions and bonuses would also not continue but the accrued additions and bonuses would be paid on death.
Surrendering the policy
Surrender is allowed only after the policy becomes paid-up, i.e. after3 full years’ premiums have been paid. On surrendering the policy, higher of the Guaranteed Surrender Value (GSV) or the Special Surrender Value (SSV) would be paid.
The SSV factors would be declared by the company based on its performance
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.