Saral Pension from SBI Life – Features & Benefits
Retiring is perhaps one of the most painful phases of life if you don’t have a pension plan in place. Depending on your kids for taking care of you is quite a big deal. Gone are those days when taking care of parents was sense of responsibility that was deeply embedded in everyone. Such moralities don’t exist today. Moral values have degraded and are gradually becoming non-existent. Micro families have taken over, increased peer pressure eats up every second that could have possibly been given to parents, increasing inflation is taking a toll on individual balance sheets. In short, it is a grim scenario of economic mayhem. What do you do in this situation? Just one thing – secure your future after retirement with a pension plan that will provide a steady income stream and help you sustain your life without becoming dependent on your children.
Saral Pension from SBI Life is one of the best options out there in market that will help you achieve your financial freedom post retirement. Let us take a look at features and benefits of this financial product and find out what to expect.
Key Features of Saral Pension
Saral Pension comes with a host of features however; the primary features of the pension plan include:
- For five (5) years in a row, a guaranteed bonus is offered by this plan. The nature of the bonus is simple revisionary. However, the bonus has two different phases spread over the 5-year period timeline. First three years offer 2.50% bonus on the total sum assured while the next two years offer 2.75% bonus on total sum assured. However, it is to be noted that this bonus is applicable only on those policies which are active. Those that are no longer active will not offer any bonus.
- Several interesting maturity benefits are tagged with the Saral Pension plan. The company promises simple revisionary bonus and there may be (this is not promised) terminal bonus. In addition to the bonus earnings, the policy holder also enjoys a minimum of 0.25% interest earning every year. This interest earning comes at a compounded rate and is applicable on total premium payments at the end of each year. Compounding takes place once a year.
- Saral Pension also offers the option of taking a rider of term insurance from SBI Life. This is known as Preferred Term Rider.
- The plan offers two types of annuity purchase options upon maturity. After maturity, the policy holder can use the entire sum assured (plus whatever additional comes in in form of bonus and interest earnings) to purchase annuity immediately. Alternately the policy holder can withdraw 1/3rd of the total payouts and use the remaining to purchase annuity.
- Saral Pension offers the flexibility of deferring maturity date in case the original maturity date is below 55 years. The policy holder can defer the maturity way up to 70 years of age.
- As far as tax benefits are concerned, there will be tax benefits as allowed by 1961 Income Tax Act. Tax benefits can change over time and hence, it is advisable to consult a tax expert about the possible tax benefits that can be enjoyed under Saral Pension.
While those were the key features of the pension plan from SBI Life, let us take a look at the primary benefits offered by the plan.
Key Benefits of Saral Pension
There are three primary benefits that we need to look at – Maturity Benefits, Tax Benefits and Death Benefits.
|Maturity||On maturity of the policy, the policy holder in entitled to get the sum assured along with bonus of simple revisionary nature, terminal bonus (if there is any) and the interest earnings.||The total proceeds after the policy matures can be used for following:
· Immediate annuity can be purchased using the entire proceeds.
· 1/3rd of the entire proceeds can be withdrawn and remaining can be used for annuity purchase.
· A deferred pension product with the provision of a single premium can be purchased using the total proceeds.
· Accumulation period can be extended or the maturity period can be deferred in case the policy holder is below 55 years at the time of maturity. Maximum extension allowed in up to 70 years.
|Tax||There will be tax exemptions under Income Tax Act because payments made towards pension policies have provisions for tax exemptions but with some restrictions. It is advised that the policy holder talks to a tax advisor to prevent attracting of taxes. Also, Income Tax Department can make changes to tax exemption policies from time to time. Thus, staying updated is important for every policy holder.|
|Death||This is an unfortunate scenario but in case the policy holder dies, SBI Life will pay out to the nominee. The amount paid will be the greater of 105% of sum of all premiums ever paid by the policy holder or the sum of all premiums paid and compounded annually at 0.25% annual interest along with maturity bonuses of simple revisionary nature and terminal bonus (if there is any).||The nominee will have the following options:
· Take the entire proceeds as a lump sum payout.
· Purchase an annuity using the entire proceeds or a part of the total proceeds at rates prevailing at that point in time. If the nominee decides to purchase an annuity product, he or she will have to purchase one from SBI Life. Also the annuity can be purchased only at prevailing rates of annuity.
Now that we have gone through the features and benefits of Saral Pension by SBI Life, let us take a look at some of the basic conditions laid down by the actuary.
Conditions of Saral Pension
|Conditions||Minimum Allowed||Maximum Allowed|
|Entry Age computed from last birthday||18 years.||65 years if single premium is chosen.|
|60 years if regular premium is chosen.|
|Exit Age computed from last birthday||40 years.||70 years.|
|Policy Term||5 years if single premium is selected.||40 years.|
|10 years if regular premium is selected.|
|Sum Assured at maturity||1 lakh rupees.||There is no maximum limit.|
|Premium to be paid||7,500 in a single year.||There is no maximum limit.|
|Monthly||Premium for 1st three months must be paid while purchasing the policy. All remaining premiums are deducted using ECS either from bank account or from credit card.Monthly premium is 8.4% of overall yearly premium.|
|Half-yearly||50.2% of the total annual premium is to be paid every 6 months.|
|Yearly||100% of the entire annual premium to be paid once every year.|
|Single Premium||Premium to be paid only once. No more premiums are to be paid for the rest of the policy life until the policy matures.|
That’s all! Pretty much everything important has been covered in this article about Saral Pension from SBI Life. Still, not all details have been covered. Kindly talk to your agent to disclose all details before you decide to purchase the pension plan.