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  • HDFC Life Guaranteed Pension Plan

    Life Insurance
    • Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
    • Claim up to Rs. 1,50,000 deduction under section 80C**
    • Choose between annual and monthly premium payment options

    HDFC Life Guaranteed Pension is a participating deferred pension plan that provides the policyholder assured benefits on vesting or at death. The policy provides guaranteed additions on an annual basis and a lump sum vesting addition at the time of maturity. Individuals who seek guaranteed returns on their investments toward the retirement corpus can greatly benefit from this plan. The customer has the flexibility to select a premium payment term of 5, 7, or 10 years, and a policy term ranging from 10 to 20 years.

    Eligibility - Who is the HDFC Life Guaranteed Pension Plan for?

    The HDFC Life Guaranteed Pension plan has some eligibility criteria that need to be satisfied for the customer to be able to purchase the policy. These factors include limits on his/her age, and the number of years he/she would like to be insured for. The eligibility conditions of the plan are detailed in the table below:

    Minimum Entry Age 35 years
    Maximum Entry Age 65 years
    Minimum Vesting Age 55 years
    Maximum Vesting Age 75 years

    All ages mentioned above are with respect to the last birthday of the policyholder.

    You can choose to buy the policy with a term ranging between 10 and 20 years. This is however, subject to meeting the vesting age limits.

    Sum Assured and Premium Range - What you Get and What it Costs?

    Sum Assured:

    The policy offers multiple benefits in the form of Guaranteed Addition, Vesting Addition, Vesting Benefit, Death Benefit, etc. that are explained in the coverage section below.

    Premium:

    The sum assured at maturity of the policy is determined by the premium chosen by you. The premiums can be paid at annual, semi-annual, quarterly, and monthly frequencies.

    You can also choose the sum assured on vesting, and subsequently the premium will be determined on the basis of that amount. The minimum sum assured on vesting is Rs.81,145, and there is no limit on the maximum sum assured.

    The limits on premium, policy fees, and conversion factors are as tabulated below:

    Frequency Minimum Installment Premium (Rs.) Maximum Installment Premium Policy Fee per Installment Conversion Factor
    Annually 24,000 No limit 200 1
    Semi-annually 12,000 110 0.51
    Quarterly 6,000 60 0.26
    Monthly 2,000 25 0.0875

    Note: The minimum premium amounts are not inclusive of the education cess and applicable service tax.

    The premium rates for policies with frequencies other than annual can be calculated by multiplying the conversion factors with the annual premium rates, and adding the corresponding policy fee.

    Plan Coverage - What the HDFC Life Guaranteed Pension Plan Covers?

    HDFC Life Guaranteed Pension is an insurance plan that helps you build and secure your retirement funds, so that you have a substantial post-retirement income. The coverage under the HDFC Life Guaranteed Pension plan includes the following:

    • Guaranteed Additions - For each policy year that is completed, the Guaranteed Additions will be 3% of the Sum Assured at the time of vesting.
    • Vesting Addition – The value of vesting addition varies according to the policy term, as shown in the table below:
    Policy Term Vesting Addition, as a percentage of the Sum Assured
    10 years 30%
    11 years 33%
    12 years 36%
    13 years 39%
    14 years 42%
    15 years 45%
    16 years 48%
    17 years 51%
    18 years 54%
    19 years 57%
    20 years 60%

     

    • Vesting Benefit - When the policyholder survives till the date of vesting, and he/she has paid all premiums throughout the premium paying term, he/she is liable to receive the sum of the following amounts:
      • Sum Assured on vesting
      • Guaranteed Additions
      • Vesting Addition

    The way in which the Vesting Benefit is payable is detailed in the ‘Policy Proceeds’ section below.

    • Death Benefit - If the policyholder faces death during the policy term, the insurance company would pay the nominee the Assured Death Benefit. This amount is equivalent to the sum of the total premiums paid till date, compounded annually at a rate of 6% per annum. The minimum amount of death benefit at all times is 105% of the premiums paid by the policyholder.

    The nominee can choose to use the death benefit for the purchase of an immediate annuity from HDFC Life. Alternatively, he/she can withdraw the entire amount as a lump sum amount.

    • Policy Proceeds - According to current regulations, the policyholder can take the Vesting Benefit and Surrender Benefit in any of the following ways:
      • Take 1/3rd of the amount as tax-free cash in the form of a lump sum. The remaining amount must be converted to annuity which will have to be purchased from the insurance company.
      • The whole policy proceeds at the time of maturity can be used to buy an annuity from the insurer.
      • Utilise the entire policy proceeds for buying a single premium deferred pension plan from HDFC Life.

    If the policyholder chooses to convert the Surrender or Vesting Benefit to an annuity, then he/she will be required to purchase a new policy from the insurer.

    Add-On Plans – Additional Coverage under HDFC Life Guaranteed Pension Plan:

    This is not applicable for the plan.

    Exclusions - What HDFC Life Guaranteed Pension Plan doesn’t Cover?

    There are no exclusions under this plan.

    Other Key Features – Freelook Period, Surrender Values, Grace Period etc.

    • Grace Period

    This is the time after the premium due date when the policy is considered to be in-force with the complete risk cover. The HDFC Life Guaranteed Pension plan has a grace period of 30 days for policies with annual, semi-annual, and quarterly premium payment frequencies. For monthly frequency, the grace period is 15 days from the due date of premium.

    • Lapsation

    If the policy has not acquired a surrender value and the policyholder does not pay the premiums that are due under the policy within the allowed grace period, the policy will move into lapsed status. In this situation, the risk cover will not exist and benefits will not be payable. It is possible to revive a lapsed policy.

    • Paid Up

    After the policy has acquired a surrender value, if the policyholder stops paying premiums, the policy will move into the paid-up status at the end of the grace period.

    When a policy becomes paid-up:

    • The Paid-Up Sum Assured is equal to the Sum Assured at maturity multiplied by the ratio of the premiums paid to the total premiums payable under the policy.
    • The Guaranteed Additions accumulated on the policy will remain attached to it; however, there will not be any further Guaranteed Additions accrued.
    • The value of Vesting Addition will be calculated on the basis of the Paid-Up Sum Assured.

    When the policy is in paid-up status, the death benefit shall be equal to the premiums paid at a rate of 6% per annum. It should be noted that the minimum level of death benefit will always be 105% of the paid premiums.

    The vesting benefit for such a policy will be the sum of:

    • Paid-Up Sum Assured
    • Guaranteed Additions that were accumulated on the policy before it became paid-up
    • Vesting Addition that is calculated based on the Paid-Up Sum Assured

    It is possible to revive a paid-up policy.

    • Revival of Policies The lapsed or paid-up policy can be revived within the revival period based on certain terms and conditions specified by the insurer. To revive a policy,, all outstanding premiums should be paid, along with the corresponding taxes. The revival will be processed at a charge of Rs.250.

    As per current regulations, the revival period will be two years; however, this may be changed from time to time. When the policy is revived, the policyholder will receive all the contractual benefits that were agreed upon initially.

    • Surrender

    In order to enjoy all benefits included under the policy coverage, you will have to continue till the end of the policy term. However, it may not be possible to do so in all circumstances. The policy would attain a Guaranteed Surrender Value when:

    • The premiums for the first two years have been paid (for premium paying terms of 5 or 7 years)
    • The premiums for the first three years have been paid (for premium paying term of 10 years)

    Guaranteed Surrender Value (GSV) is the sum of the following:

    • Percentage of total paid premiums
    • Surrender value of accumulated Guaranteed Additions

    Based on the market conditions prevalent at the time of surrender, the insurer may pay a higher value, i.e., Special surrender Value (SSV).

    Policy Year Percentage of paid premiums for GSV Calculation
    Premium Paying Term of 5 years and 7 years Premium Paying Term of 10 years
    2 30% NA
    3 30% 30%
    4-7 50% 50%
    Final 2 years 90% 90%

    Tax Benefits – How you can save with HDFC Life Guaranteed Pension Plan?

    The premiums that you pay towards the HDFC Life Guaranteed Pension Policy will be eligible for tax benefits, according to Section 80CCC of the Income Tax Act, 1961.

    • You can take upto 1/3rd of the tax benefit as a commuted value that is tax-free, as detailed under Section 10(10A) of the Income Tax Act, 1961. You can also choose to use the remaining amount for the purchase of a life annuity from HDFC Life.
    • The tax benefits listed here are subject to changes based on the existing tax laws. So it is advisable to reconfirm the same with your tax consultant before investing in the HDFC Life Guaranteed Pension policy.

    Other Benefits – How you can save with HDFC Life Guaranteed Pension Plan?

    HDFC Life is a leading provider of insurance solutions in India. They offer a wide range of individual and group insurance schemes, including those for the purpose of Protection, Pension, Investment, and Health. The insurer settles claims in a hassle-free manner with a quick turnaround time. The claim settlement ratio of HDFC Life for the financial year 2013-14 was 99.41%. The insurance company also has an efficient claims assistance cell that provides help to customers throughout their claim journey.

    Why you should Buy Guaranteed Pension plan from HDFC Life?

    HDFC Life has a wide network of offices across the country, with 398 branches and 9,000 touch-points. This ensures that their products are easily accessible by one and all. The insurance company has a proficient financial consultancy team that offers financial solutions to customers within the country and abroad.

    HDFC Life Guaranteed Pension Plan FAQs:

    Q. Will the vesting benefit be automatically converted to annuity?

    A. No. The vesting benefit can be converted into annuity by purchasing an annuity plan from HDFC Life. The policyholder will have to complete a form for annuity proposal and also submit all required documents to the insurance company. The annuity payout will take place as per the timelines set by the insurer.

    Q. What are the benefits if I purchase this product as QROPS through the transfer of UK tax relieved assets?

    A. The following terms and conditions are applicable to QROPS policyholders:

    Surrender Benefits - Access to policy benefits in the form of annuitisation and tax free commutation is restricted till the insured attains 55 years of age or the policy acquires GSV, whichever is later.

    Cancellation in the Free-look period - The proceeds from cancellation during the free-look period shall be transferred to the fund house from where it was initially received.

    Q. Do I need to buy a pension plan if I have enrolled in my employer’s pension scheme?

    A. Ideally, the retirement fund that you accumulate should be equal to 20 times the value of your income in the year just before retirement. The rise in cost of living, medical inflation, and improved life expectancy are factors that you should consider when you plan for your retirement corpus. The pension provided by your employer may not be sufficient during the retirement years when you will not have any other source of income. So, you can consider purchasing a pension plan from HDFC Life to supplement the pension provided by your employer.

    Q. Do I need to buy a pension plan if I have various sources of income?

    During your earning years, having multiple sources of income is always welcome. But when you are older, your alternate employment may not provide you the same benefits as of now. The best way to ensure that you have a substantial income after you retire is by purchasing a pension plan that provides you good vesting benefits.

    Q. What happens to the nomination when the policy is required to be transferred or assigned?

    A. When a transfer or assignment of policy is required, the nomination will be automatically cancelled. The only exceptions to this case are when the assignment is made to the insurer, or to another assignee or transferee for availing a loan. If the policyholder intends to initiate a reassignment after the loan is repaid, the nomination will not get cancelled. It will be revived at the repayment of the loan.

    Q. Is Service Tax applicable on the policy?

    A. Service Tax is applicable on the premium of HDFC Life Guaranteed Pension policy. In the future, if any other form of statutory levy or indirect tax becomes applicable, the policyholder will have to pay the same.

    Q. When should I start planning for my retirement?

    A. The best time to start looking at retirement planning is during your 30s. Nevertheless, the earlier you start planning, the greater would be the amount that you would accrue in your retirement kitty. Pension plans contribute to your retirement corpus by compounding the amount each year. This ensures that you collect a large retirement sum at relatively low costs.

    Q. I already have a savings and investment plan from HDFC Life. Do I still need to buy a pension plan?

    A. A savings and investment plan serves a different purpose when compared to a retirement plan. Pension plans are designed to provide a steady source of income to the policyholder during the time when he/she would not have any other income. Retirement schemes also offer very less liquidity. This ensures that the customer’s savings remain secure for use during the retirement years.

    Q. Can I purchase multiple policies from HDFC Life?

    A. Yes, you can buy more than one policy from the insurer. The approval for this will, however, be subject to underwriting regulations.

    Q. How will I know if my claim is rejected?

    If the insurance company has rejected your claim, you will be notified of the same through a letter from the insurer. The reasons for rejection will also be clearly stated in the letter. You will receive this letter within 10 days of the rejection from the insurance company.

    Q. How long does it take for HDFC Life to process claims?

    Once HDFC Life receives all the required documents from the policyholder, they make the claim payout within 30 days. In case the claim needs additional investigation, this will be conducted at the earliest. After the investigation, the claim payout will be made according to the regulations of the company.