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HDFC Life - Assured Pension Plan

HDFC Life Assured Pension Plan is a ULIP Plan. The ULIP or unit linked plan offers handsome returns which are related to the market and loyalty additions as well. This is ideal for individuals who are looking to build a retirement corpus and want a healthy corpus that can take care of their post-retirement days. The plan has loyalty additions that come into the picture once the 11th year of the policy commences. You can choose to invest in Assured Pension Plan as soon as you are 18 years old.

Features of HDFC Life - Assured Pension Plan

To make things easier for you, here are all the salient features of the HDFC Life Assured Pension Plan. In other words, a quick glimpse of the plan.

  • You have the option to buy the policy once you reach 18 years of age.
  • The plan has a relatively lower maturity or vesting age of 45 years.
  • The plan offers you the ability to choose either from Single Pay or Limited Pay both in the same plan.
  • It offers loyalty additions in the form of pension multiplier, once you reach the 11th year of the policy.
  • If the policyholder dies while the plan is active, his/her nominees will receive either the fund value at the time of death or 105% of all the premiums paid till death, whichever is higher.
  • The plan offers vesting benefits along with healthy growth opportunities from the market.
  • You also get dual tax benefits under Section 80C and Section 10 (10D) as per the Income Tax Law of 1961.

Benefits of HDFC Life - Assured Pension Plan

It only makes sense to be aware of all the benefits that a plan can offer you over its entire term. Being clear of these benefits will help you plan your retirement and investments in a smarter way. Here are all the major benefits that you should be aware of, should you plan to buy the HDFC Life Assured Pension Plan.

  • Death Benefit Since it is an insurance product at its core, it is not unusual for it to have death benefits. If a policyholder loses his or her life before the completion of the policy, their nominees with receive the higher of the following

    • Fund value
    • 105% of the total premiums paid to date.

Once the death benefits are paid to the nominees, the policy would terminate thereafter. And, there would not be any more benefits that the insurer is liable to provide.

  • Pension Multiplier

If you have paid all the premiums of the policy diligently, you qualify for loyalty additions. These loyalty additions or pension multipliers would be added to the overall fund value. And the multiplier is applicable every alternative year post the completion of 11 years. These loyalty additions sum up to 1% of the average fund value for the immediate two previous years.

  • Vesting

Once a policy reaches its maturity or end of the term, it vests. And you are eligible to receive vesting benefits. The vesting benefit is usually the higher of either the total fund value accrued till date or the Assured Vesting Benefit. Calculating the Assured Vesting Benefit isn’t all that difficult also. Here is the formula for the same. [101% + 1% (Policy Term minus Premium Paying Term)] of the total premiums paid.

  • Postponement of Vesting Date

You can intimate the insurer to postpone the vesting date anytime before they initiate the annuitization. There aren’t any restrictions as to how many times you can change the vesting age. However, there is a limit on age. You can change the vesting age to a maximum of age 75 years and you have the options to do so as long as you are below 55 years.

Should you choose to defer the vesting date, the Assured Vesting Benefit and death benefit of the plan will still continue. However, it must be noted that the Assured Vesting Benefit would be calculated on the term of the policy that you had opted while buying the policy.

The available funds will be diverted to the Pension Conservative Fund and if there are any applicable charges, those will be deducted as well.

Eligibility criteria

Here is everything that you need to know about the eligibility criteria of investing in HDFC Life Assured Pension Plan.

ParticularsEligibility
Minimum Entry Age18 Years
Maximum Entry Age65 Years
Minimum Vesting Age45 Years
Maximum Vesting Age75 Years
Policy term for Single Pay10, 15 to 35 Years
Policy term for 8 Pay10, 15 to 35 Years
Policy term for 15 Pay15 to 35 Years

Premium Details of HDFC Life Assured Pension Plan

The premium of the HDFC Life Assured Pension Plan depends on choice of option and premium payment frequency that you choose. However, there is no upper limit on the premium that you can pay. The following table will help you get a better understanding of the policy premiums depending on the type that you opt for.

Premium payment FrequencyMinimum Premiums
Annual INR 24,000
Half YearlyINR 12,000
QuarterlyINR 6,000
MonthlyINR 2,000
Single PayINR 50,000

Tax benefits and other benefits with HDFC Life Assured Pension Plan

Buying an insurance product obviously comes with some tax benefits. Similarly, the HDFC Life Assured Pension Plan offers more than one benefits. The premiums that you pay towards HDFC Life Assured Pension Plan are tax deductible under Section 80CCC of the Income Tax Act of 1961. Under this section, you can make contributions up to INR 1.5 lakhs per year towards your pension plan. Though you do need to keep in mind, it is read along with Section 80C and 80CCD(1). In other words, all these three sections combined limit is INR 1.5 lakhs per year.

The tax benefits of the policy do not just end there. In the unfortunate event that a policyholder dies before the end of the policy term, the nominees of the policy will receive appropriate compensation. The compensation or the Death Benefit in this case, is non-taxable as per Section 10(10D) of the same Act. You can also utilize about 1/3rd of the benefits without having to pay any taxes on the same, provided that you invest the remaining portion into an annuity plan.

Apart from these tax benefits, you also get access to death benefits, vesting benefits and pension multiplier benefits. The details of which are mentioned above.

Plan Coverage

A quick look at the recent past and one would come to know that life expectancy has increased by a considerable margin. With access to better healthcare, it will only get better with time. However, inflation has also been constantly on the rise. Thus, the salary that you earn today or the savings that you have today, might not be enough for the future. This is exactly where HDFC Life Assured Pension Plan comes into the picture. The pension plan will ensure that you have accumulated enough corpus that your post-retirement phase will be much easier. This ULIP plan will help you invest enough amount to fund your future, once you decide to hang your boots. The pension plan uses the following methods to get to the same.

  • Pension Multiplier Once you reach the 11th year of your policy and haven’t missed a single installment, the pension multiplier comes into effect. For every alternate year, you will receive the benefit which can amount to 1% of average fund value for the previous two years. Considering that these plans usually run for a much longer duration, you can expect a handsome amount when your retirement arrives.
  • Vesting Vesting benefit or maturity benefit is yours for the taking if you complete the entire term of the plan. On successful completion, you will receive vesting benefit of either the fund value or Assured Vesting Benefit, whichever is higher. It is easy enough to calculate the Assured Vesting Benefit, the formula to which is explained above.
  • Death Benefit Uncertainty in the future is something that we can all be quite sure of. To tackle such unexpected situations, the plan offers death benefits. If the policyholder loses his or her life while the policy is still active, nominees are eligible for death benefits. The nominees of the policy will receive either the current fund value or 105% of the total premiums paid till date.
  • Deferment of vesting date Before the annuitization, you can inform HDFC Life to defer your retirement age. You can postpone the retirement age as many times as you like, as long as your age is less than 55 years and the maturity or vesting age is 75 years. On postponing the vesting date, you will not miss out on the Assured Vesting Benefits or the death benefits. However, the Assured Vesting Benefits is calculated on the term that you had opted for while buying the policy.
  • Add-ons The Assured Pension Plan does not offer any add-ons that you can buy to enhance the policy capabilities. Assured Pension Plan offers investment funds viz; Pension Conservative Fund, Pension Income Fund, Pension Equity Plus Fund with low, moderate and high risks. Based on your risk appetite and the retirement corpus that you are planning to achieve, you can opt for either of the fund options. Each of them have different exposures to the market and thus the different risk levels.

Documents Required To Buy the Plan

If you decide to buy the HDFC Life Assured Pension Plan, here is a list of the documents that you might have to furnish.

  • Identity Pr oof

    • Passport
    • Aadhaar card
    • PAN card
    • Voter’s ID
  • Address Proof

    • Passport
    • Aadhaar Card
    • Utility bill such as electricity, telephone etc.
    • PAN Card
    • Proof of Age
    • Passport
    • Voter’s ID
    • Aadhaar card
  • Proof of income of the applicant

  • Attested copy of the bank statement of the applicant.

Review of HDFC Life – Assured Pension Plan

HDFC Life Assured Pension Plan has received fairly positive reviews. This includes insurance experts as well as users. There are a lot of positive things that go on for the plan. For starters, HDFC Life has an impressive claim settlement ratio of 97.8% of individual claims and 99.27% ratio for group claims for the year 2017-18.

The plan has a grace period of 30 days if you choose to pay the premiums annually, half-yearly or quarterly. The grace period is the duration after the due date of the policy, where the policy features are still intact. The grace period for a plan with monthly premiums is 15 days from the premium due date. These smaller features along with the several benefits that the plan has to offer, have made it a sensible pension building choice.

While the plan offers a lot of benefits if you stay invested for a longer period of time, it doesn’t penalize the ones who do not. Should you feel that the plan does not suit your needs, or you wish to surrender, you can do so. Unlike some other plans and policies, the surrender charges aren’t as exorbitant.

The plan is relatively easy to revive in the case of discontinuity as well. You can revive within 2 years of the policy discontinuity by paying all the pending dues along with the premiums. This plan is ideal for individuals looking for a way to secure their retirement.

HDFC Life Assured Pension Plan

If the claim is rejected, how will I be informed?

The insurer will inform you directly regarding the rejection of the claim. They would send you a detailed letter with the reason for the claim rejection within 10 days of when the decision was taken.

What is the maximum time the insurer takes for processing the claim?

The claim processing time is largely dependent on the documents that a policyholder or their nominees submit. If all the documents are proper, HDFC Life would settle the case within 30 days or even earlier. However, if there is a need for an investigation, the settlement would only happen at the end of the investigation.

Can I buy multiple policies from HDFC Life?

Yes. You can buy multiple policies from HDFC Life. If you already have an existing policy and wish to buy Assured Pension Plan or have purchased Assured Pension Plan and wish to buy another policy, you can do so. However, underwriting approval decides the acceptance of the new policy.

Can I avail a loan on my policy?

HDFC Life Assured Pension Plan does not offer any loan benefits for their policyholders. Thus, you cannot take any loans on the same.

What is the right time to start planning for retirement?

There isn’t any yardstick to measure the same. However, the earlier you start investing in your retirement, the better chance you have at securing better post-retirement phase. If you are in your late 20s or early 30s, this is the best time to invest. Early planning would result in better and bigger retirement corpus.

Should I consider a pension plan, even though my employer provides with one?

The simple answer is yes. Even though your employer might provide a pension plan, the cost of living and other expenses will only go north. If you invest at the right time and build a healthy retirement fund, you can spend your retirement without worrying much about the finances. If your employer already provides with a pension plan, this would act as a supporting or supplemental plan.

Should I consider the Assured Pension Plan if I already have another policy from HDFC Life?

The intent of buying the Assured Pension Plan is to secure your retirement. Your other policy could mostly be an investment or savings plan. And fundamentally both are quite different. Most of the investment plans cater to mid-term to long term goals. However, with a pension plan, you can focus on your life post-retirement. Starting early would allow you to build the corpus by investing a very small amount on a monthly basis.

Can I customize the plan?

The HDFC Life Assured Pension Plan is highly flexible. This allows potential policy buyers to customize or tweak the plan as per their needs. For starters, you can choose the payment schedule either as monthly, quarterly, half-yearly or annually. Similarly, depending on your needs you can change the term of the plan and premium payment frequency.

What is a free look period?

HDFC Life provides a 15 days free look period. If you are not happy with the policy or its features, you can cancel the policy within this period with minimal charges. The 15-day period starts from the day you receive the policy.

What is the minimum period for which I need to pay the policy premiums?

HDFC Life Assured Pension Plan has limited premium payment term of 8, 10 and 15 pay along with single pay option also.