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Reliance Life Smart Pension Plan

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Reliance Life Smart Pension Plan
 
Reliance Life Smart Pension Plan is a Unit Linked Insurance Deferred Annuity Plan.
 
How it works – In this plan, premium can be paid in a Lumpsum under Single Premium Paying Term, for a Limited Period under Limited Premium Paying Term and also for the entire policy tenure under Regular Premium Paying Term. There is Loyalty Additions in this plan which starts from the end of sixth policy year and paid at the end of every third policy year.
 
The premium, net of charges is invested in the Pension Smart Fund 1
 

There are 2 stages in this plan- Accumulation Stage and Distribution Stage. In the Accumulation Stage, the premium needs to be paid to build up the desired Fund Value for the Annuity Corpus. In the Distribution Stage at policy maturity, i.e. at Vesting, the Annuity Phase starts according to the Annuity Option chosen.

 

How Pension plans works

 

When the policy matures, the higher of the Fund Value or the Assured Benefit of 101% of all regular Premium Paid Is paid to the policyholder as Vesting Benefit which on Vesting, the Annuitant has the following options:
  • Withdraw 1/3rd of the Vesting Benefit as Tax Free under section 10(10)A and utilize the remaining to purchase annuity from Reliance Life
  • Use the entire amount to purchase annuity from Reliance Life
  • Can defer the Distribution Stage by extending the Accumulation Stage for another 5 years, provider the annuitant’s age is less than 55 years of age at that time
 
At the time of Vesting, there are 3 available options for Annuity now, which is taken from Reliance Immediate Annuity Plan.
  • Life Annuity- Annuity continues as long as the Annuitant is alive and nothing is payable thereafter
  • Life Annuity with Return of Purchase Price on death- Annuity continues as long as Annuitant is alive and when the Annuitant dies, the entire Purchase Price, i.e. the amount paid as Single Premium to purchase the Annuity, would be returned to the nominee of the Annuitant as Death Benefit and the policy terminates thereafter
  • Annuity Guaranteed for 5, 10 or 15 years and then Life thereafter- Annuity would be paid for a minimum period of 5, 10 or 15 years as chosen irrespective of whether the Annuitant is alive or not and if the Annuitant outlives that period, Annuity would be paid as long as the Annuitant is alive and nothing is payable thereafter
 
In case of death of the Annuitant within the Policy Tenure, i.e. before the Annuity payout starts, the nominee will receive the higher of the Fund Value or 105% of total premiums paid till date as Death Benefit which can be taken by the nominee as a lumpsum or as annuity.
However, if the Annuitant dies after the Annuity has begun, Death Benefit depends upon the Annuity Option chosen:
  • Life Annuity- Nothing is payable to the nominee after the death of the Annuitant
  • Life Annuity with Return of Purchase Price- the entire Purchase Price is payable to the nominee after the death of the Annuitant
  • Annuity Certain and then Life thereafter- If the Annuitant dies:
    • Within the Certain Period of 5, 10 or 15 years as chosen, the Annuity continues till the remaining Certain Period and then the policy terminates
    • After the Certain Period, nothing is payable to the Annuitant

 

 

 

Key Features of Reliance Life Smart Pension Insurance Plan
 
  • It is a Deferred Annuity plan with Regular, Limited as well as Single Premium Paying facility
  • There is only 1 plan for investment in this plan
  • There is Loyalty Additions every 3 years in this plan from the end of the 6th Policy Year onwards
  • If the Annuitant is less than 55 years of age, there is an option to defer the Vesting by a minimum of 5 years
  • There are 5 riders in this plan
  • There are 2 stages in this plan:
    • Accumulation Stage, where premium needs to be paid to create the annuity corpus
    • Distribution Stage, where Annuity needs to be opted among 3 possible options:
      • Life Annuity
      • Annuity Certain for 5, 10 and 15 years and then Life thereafter
      • Life Annuity with Return of Purchase Price
  • On maturity, the Annuity corpus is the Fund Value, subject to 101% of all regular Premium Paid

 

COMPARE THIS PLAN WITH OTHER PENSION PLANS

 

Benefits you get from Reliance Life Smart Pension Insurance Policy
 
Death Benefit – In case of death of the Annuitant within the Policy Tenure, the nominee will receive the higher of the Fund Value or 105% of total premiums paid till date as Death Benefit which can be taken by the nominee as a lumpsum or as annuity.
However, if the Annuitant dies after the Annuity has begun, Death Benefit depends upon the Annuity Option chosen:
  • Life Annuity- Nothing is payable to the nominee after the death of the Annuitant
  • Life Annuity with Return of Purchase Price- the entire Purchase Price is payable to the nominee after the death of the Annuitant as Death Benefit and the policy terminates
  • Annuity Certain and then Life thereafter- If the Annuitant dies:
    • Within the Certain Period of 5, 10 or 15 years as chosen, the Annuity continues till the remaining Certain Period and then the policy terminates
    • After the Certain Period, nothing is payable to the Annuitant
 
Vesting Benefit – When the policy matures, the higher of:
  • The Fund Value
  • Assured Benefit of 101% of all regular Premium Paid
Is paid to the policyholder as Vesting Benefit
 
On Vesting, the Annuitant has the following options:
  • Withdraw 1/3rd of the Vesting Benefit as Tax Free under section 10(10)A and utilize the remaining to purchase annuity from Reliance Life
  • Use the entire amount to purchase annuity from Reliance Life
  • Can defer the Distribution Stage by extending the Accumulation Stage for another 5 years, provider the annuitant’s age is less than 55 years of age at that time
 
 
Income Tax Benefit - Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a deduction from the taxable income each year under section 80C and 1/3rd of the Maturity proceeds are tax free under section 10(10)A subject to fulfilment of terms and conditions
 
 
Eligibility conditions & other restrictions in Reliance Life Smart Pension Policy                     
 

 

 
Minimum
Maximum
Policy Term (in years)
10 for Single
15 for Regular
30
Premium Payment Term (in years)
Single
Equal to Policy Tenure
Entry Age of Annuitant (in years)
18
65
Age at Vesting / Maturity (in years)
45
75
Regular Pay Premium (in Rs.)
20,000 p.a. for Term 20 and more
36,000 p.a. for Term 15 to 19
No Limit
Limited Pay Premium (in Rs.)
48,000 p.a. for Term 10 to 19
24,000 p.a. for Term 20 and more
No Limit
Single Pay Premium (in Rs.)
50,000
No Limit
Payment modes
Single, Yearly, Half-Yearly, Quarterly and Monthly
 
 
Sample Illustration of Annuity Payouts of Reliance Life Smart Pension Plan
 
The below illustration is for a healthy Male of 35 years (non-tobacco user) opting for a

Annual Premium = Rs 50,000; Policy Term= 15 and 20 years. Return of Investment = 8%

 

Sample Payouts in Reliance Life Smart Pension Plan

 

Additional Features and Benefits of Reliance Life Smart Pension Plan
 
Riders – There are 5 Additional Riders in this plan along with Regular and Limited Premium Paying Tenure:
  1. Reliance Accidental Death and Total and Permanent Disablement Rider
  2. Reliance Term Life Insurance Benefit Rider
  3. Reliance New Major Surgical Benefit Rider
  4. Reliance New Critical Conditions (25) Benefit Rider
  5. Reliance Life Insurance Family Income Benefit Rider
 
 
Loyalty Additions – There is Loyalty Additions in this plan which starts from the end of sixth policy year and paid at the end of every third policy year, which is added to the Fund Value

 

Policy Year
Guaranteed Loyalty Additions as a % of Annualized Premium/Single Premium
3
1%
9
2%
12
3%
15
4%
18
5%
21
6%
24
7%
27
8%
30
9%
 
 
Investment Fund Options
In this plan, there is only 1 Fund for Investment- Pension Smart Fund 1.
 
 
Top-up – Premium can be paid anytime except in the last five policy years. The minimum top-up premium is Rs. 5000. There is a Lock-In for of 5 years for the Top-up premiums and Top-Up premium payment made should always be less than or equal to the 25% of all the base premiums paid till that time.
 
 
Switching – There is only 1 fund and hence there is no concern for switching in this plan.
 
 
Charges in Reliance Life Smart Pension Plan
 
Premium Allocation Charge – This charge is deducted from the Premium Paid by you

 

Policy Year
Premium Allocation Charge
1st Year
8%
2nd to 5th Year
5.5%
6th to 9th Year
5%
10th Year onwards
3%
 
 
Policy Administration Charge— This is the charge for the administrative working of the policy and is deducted by cancellation of units on a monthly basis.  For Regular and Limited Plans, Rs 40 p.m. from 6th Policy Year onwards

 

Policy Year for Single Plan
Policy Administration Charge as % of Single Premium
1st
NIL
2nd to 5th
1.5%
6th onwards
0.75%
 
 
Fund Management Charge– This charge is deducted by adjusting the NAV of the units on a daily basis.

 

Type
Charge
Pension Smart Fund 1
1.35%
Discontinued Fund
0.5%
 
 
Discontinuation Charge— This charge is for discontinuing the plan before the end of the Policy Tenure.

 

Year of Discontinuation
Annual Premium <= Rs 25,000 p.a.
Annual Premium > Rs 25,000 p.a.
1st
Lower of 20% of (Annual Premium or Fund Value) subject to a maximum of Rs 3,000
Lower of 6% of (Annual Premium or Fund Value) subject to a maximum of Rs 6,000
2nd
Lower of 15% of (Annual Premium or Fund Value) subject to a maximum of Rs 2,000
Lower of 4% of (Annual Premium or Fund Value) subject to a maximum of Rs 5,000
3rd
Lower of 10% of (Annual Premium or Fund Value) subject to a maximum of Rs 1,500
Lower of 3% of (Annual Premium or Fund Value) subject to a maximum of Rs 4,000
4th
Lower of 5% of (Annual Premium or Fund Value) subject to a maximum of Rs 1,000
Lower of 2% of (Annual Premium or Fund Value) subject to a maximum of Rs 2,000
5th onwards
NIL
NIL
 
 
Mortality Charge — This charge is paid for the Life Coverage provided according to the Sum At Risk. This is based on the mortality rates which are specified for all ages and amount of cover being provided.
 
Service Tax would be applicable on the charges depending on the applicable rates.
 
 
What happens if?
 
You stop paying the premium before 5 years - If the policy holder stops paying the premium, the insurance cover will cease and the fund value net of any discontinuance charge will be transferred to the Discontinued Policy Fund. The Discontinued Policy Fund will earn a minimum guaranteed interest rate of 4% and the proceeds from this will be payable after the fifth policy anniversary. In case of death of the Life Assured during this period, only the accumulated Fund Value will be payable to the nominee.
The policy can be revived as well but within a period of 2 years from the Date of Discontinuance of the Policy or before completion of the Lock-in period of 5 policy years, whichever is earlier.
 
You stop paying the premium after 5 years - If the policy holder stops paying the premium after 5 years, then there is no Surrender/Discontinuance Charges and the Fund Value is paid to the policy holder and the policy will terminate immediately.
 
You want to surrender the policy – If the policy holder wants to surrender the policy before completing 5 years, then the insurance cover will cease and the Fund Value net of any discontinuance charge, if at least 5 years’ premiums have not been paid, will be transferred to the Discontinued Policy Fund. The Discontinued Policy Fund will earn a minimum guaranteed interest rate of 4% and the proceeds from this will be payable after the fifth policy anniversary. In case of death of the Life Assured during this period, only the accumulated fund value will be payable to the nominee.
 
If the policyholder surrenders the policy after completion of 5 policy years, then there is no Surrender/Discontinuance Charges and the Fund Value is paid to the policy holder and the policy will terminate immediately.
 
Once a policy is surrendered in full, it cannot be reinstated.
At the time of Surrender the policyholder will have the following options to use the surrender value:-
  • To commute to the extent allowed under Income Tax Act (upto a maximum of 33.33% of the entire corpus) and the balance amount must be applied to purchase immediate annuity from Reliance Life Insurance Company Ltd.
  • To utilize the surrender value to purchase a single premium deferred pension product of the same type from Reliance Life Insurance Company Ltd., if any.
 
You want a loan against your policy - There is no loan available under this plan.

 
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