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.

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.

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.

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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.

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.