HDFC Life Personal Pension Plus Plan

HDFC Life Personal Pension Plus is a participating pension plan that is offered to customers who are looking to plan ahead for their retirement. Purchasing this policy assures you stable and secure returns on your investment and will serve as your post retirement income. This policy allows you to choose your investment term, anywhere between 10 and 40 years. The plan can be purchased on a single life basis only, with monthly, quarterly, half-yearly, or annual premium frequencies. You can also enjoy tax benefits for the premiums paid.

Eligibility - Who is HDFC Life Personal Pension Plus for?

The HDFC Life Personal Pension Plus can be bought if you fulfill certain criteria set by the insurer. This is with respect to your age and the number of years for which you would require insurance. These eligibility requirements are detailed in the table below:

Minimum Entry Age	18 years
Maximum Entry Age	65 years
Minimum Vesting Age	55 years
Maximum Vesting Age	75 years
Minimum Policy Term	10 years
Maximum Policy Term	40 years

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

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

Sum Assured:

The sum assured on vesting is determined by the premium that you choose to pay. Premiums can be paid either monthly, quarterly, semi-annually, or annually. You can also choose to receive a specific sum assured on vesting, and then your premiums will be determined based on that.

Minimum Sum Assured on Vesting	Rs.2,04,841
Maximum Sum Assured	No limit on this amount

Premium:

The premium for insurance cover can be paid at intervals agreed upon with the insurer and predefined in the policy documentation.

Details on the premium are as follows:

Frequency of premium payment	Minimum installment premium (exclusive of education cess and service tax)	Maximum installment premium	Policy fee per installment	Conversion factor
Annually	Rs.24,000	No limits	Rs.200	1
Semi-annually	Rs.12,000		Rs.110	0.51
Quarterly	Rs.6,000		Rs.60	0.26
Monthly	Rs.2,000		Rs.25	0.0875

The premium for frequencies other than annual is calculated by multiplication of the annual premium rates with the corresponding conversion factors, and then adding the policy fee for the frequency.

Plan Coverage - What HDFC Life Personal Pension Plus Covers?

 

Retirement is a crucial phase in your life, as the income stops but expenses don’t. Your savings from today may not be sufficient to meet the costs that are incurred post retirement. It is hence, important to plan ahead for this phase, as the power of compounding enhances the retirement kitty manyfold on starting early. The HDFC Life Personal Pension Plus plan helps you build a healthy retirement corpus for your post-retirement goals. The benefits offered by the plan are as follows:

• Vesting Benefit - If the policyholder survives till the vesting date and has paid all due premiums, he/she will receive an amount that is the larger one among the following:
  • Sum Assured on vesting plus the accrued bonuses
  • Assured Benefit that is equivalent to 101% of all premiums paid till date

The way in which the vesting benefit is paid to the policyholder is determined by the regulations cited in the ‘Policy Proceeds’ section below.

• Death Benefit - If the policyholder faces death before the policy matures, he/she would be paid an Assured Death Benefit that is equal to 101% of all premiums (excluding taxes) paid till death. He/she will also receive the bonuses accrued by the policy. It should be noted that the minimum level of death benefit throughout the duration of the policy is 105% of the premiums paid. The nominee of the policyholder can use the death benefit partly or fully, to purchase an immediate annuity from HDFC Life. Alternatively, the nominee can choose to withdraw the whole death benefit in the form of a lump sum amount.

Add-On Plans – Additional Coverage under HDFC Life Personal Pension Plus:

Add-on plans are not applicable for this policy.

Exclusions - What HDFC Life Personal Pension Plus doesn’t Cover?

This plan does not have any exclusions.

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

Free-Look period - If you do not agree to the terms and conditions mentioned in the policy, you can choose to return the policy to the insurer with relevant reasons, within 15 days from the day on which the policy was received. If the policy was purchased through distance marketing, i.e., through channels where there is no face-to-face interaction such as telephone or internet, the free-look period will be 30 days. When the insurer receives the cancellation letter with the original policy document, the premium shall be refunded after deducting the stamp duty. Once you return the policy, you cannot revive, reinstate, or restore it again.

Surrender - It is important to continue on your insurance policy till the end of the tenure, in order to benefit from it the most. However, there may be situations where you are unable to do so. If you have paid the premium for the first three years, the policy will acquire a Guaranteed Surrender Value (GSV). The GSV is a percentage of all paid premiums, as per the terms and conditions. When the policy acquires GSV, the surrender value of the bonuses will be applicable. The amount that will be paid to you on surrender is detailed in the ‘Policy Proceeds’ section.

Grace Period - This is the time after the due date of the premium during which the policy will be in-force with the complete insurance cover. The HDFC Life Personal Pension Plus policy has a grace period of 30 days from the premium due date, for annual, semi-annual, and quarterly frequencies. The grace period for a policy with monthly frequency is 15 days from the due date of premium. If you raise a valid claim under the policy during this time, the insurer will honour the claim, as usual.

Lapsation - If the policyholder does not pay the due premium within the grace period, the policy will move into the lapsed status, provided that it has not acquired a surrender value. In the case of lapsed policies, the risk cover will not exist and benefits are not payable. It is possible to revive a lapsed policy, if required.

Paid-up - If the policyholder does not pay the premiums after the policy acquires surrender value, the policy will be converted to paid-up status when the grace period ends. After a policy moves to paid-up status:

• The paid-up sum assured will be the sum assured at policy maturity by the ratio of premiums paid to the premiums payable under the insurance policy.
• The reversionary bonus accumulated on the policy at the date it moves into paid-up status will still be attached to the policy. However, a policy that is in paid-up status will not accrue any bonuses in the future.

The death benefit for a policy in paid-up status will be 101% of all premiums paid till death. Bonuses accrued on the policy till the time it was made paid-up will also be paid to the nominee.

The vesting benefit of a policy in paid-up status is the sum of the following:

• Paid-up Sum Assured
• Bonuses accumulated when the policy was made paid-up

The policyholder has the option of reviving his/her paid-up policy in the future.

Revival - A lapsed or paid-up policy can be revived within the revival period, based on the insurer’s terms and conditions.

• To revive the policy, you will be required to pay all the outstanding premiums, the corresponding interests, and relevant taxes. You will be charged an amount of Rs.250 for the revival.
• The revival period is two years, as per the current regulations. However, this may be changed from time to time.
• When you revive the policy, you will receive all contractual benefits as before.

Policy Proceeds - According to regulations, you can choose to take the Vesting Benefit and Surrender Benefit as described below:

• You can receive up to 1/3rd of the benefit as a lump sum amount in cash, that is free from tax. The remaining amount will be converted to an annuity that will have to be purchased from HDFC Life.
• You can alternatively use the entire policy proceeds at maturity to buy an annuity from the insurer.
• Otherwise, you can use the entire proceeds to buy a single premium deferred pension plan from HDFC Life.

In case you decide to convert the benefit into annuity, it will be through the purchase of a new insurance policy from the insurer.

Tax Benefits – How you can save with HDFC Life Personal Pension Plus?

The premiums paid under the policy are eligible for tax benefits under Section 80CCC of the Income Tax Act, 1961. Up to 1/3rd of the benefit can be availed as a commuted value (that is tax-free), as defined under section 10(10A) of the Income Tax Act, 1961. The remaining amount can be used to buy a life annuity from HDFC Life.

Other Benefits – How you can save with HDFC Life Personal Pension Plus?

HDFC Life is a frontrunner in providing long-term insurance solutions in the country with a claim settlement ratio of 99.41% for FY 2013-14. Benefits of purchasing the HDFC Life Personal Pension Plus plan include:

• You can opt to pay through EMI, if you have an HDFC Bank Credit Card.
• HDFC Life has an efficient claims assistance cell that helps customers throughout the claim settlement process.
• The insurer offers you the facility to buy the policy online with minimal paperwork.

Why you should Buy Personal Pension Plus from HDFC Life?

HDFC Life has a wide network of offices across the country where they deliver long-term insurance solutions in an effective manner. They have 398 offices and 9,000 touch-points in India for easy access to their products. They also have a strong financial consultancy framework in the country and abroad.

HDFC Life Personal Pension Plus FAQs:

Q. If I already have an investment and savings plan, do I still need to buy a pension plan?

A. Pension plans are configured to provide you a regular income post retirement. The motive of savings and investment schemes are hence, different from pension plans. In addition, pension plans do not offer much liquidity and your savings will be secured to offer you maximum benefits during the retirement years.

Q. How early do I need to plan for retirement?

A. It is advisable to plan for your retirement when you are in your thirties. The earlier you start accumulating funds in your retirement kitty, the greater would be your savings. This is due to the fact that interests will be compounded to assure you greater savings at smaller initial investments.

Q. Do I need to buy a retirement plan if I have several sources of income?

A. Having diverse incomes is useful during your earning years. However, when you enter into retirement, your alternate sources of income may not be as successful as they are today. Increase in life expectancy, medical inflation, and the steep climb in cost of living makes it imperative to have a substantial amount set aside for expenses during your retirement life. A pension plan is ideal in assuring you a good retirement kitty for your future needs.

Q. My employer has made arrangements for my pension. Do I still need to buy a pension plan?

A. Your employer-funded pension may not be sufficient to pay for your post-retirement expenses. You should factor medical inflation and the rise in cost of living when you plan to save for your retirement kitty. As a thumb rule, you should look to accumulate at least 20 times the value of your income in the year preceding retirement. So, it is advisable to opt for a pension plan that will supplement your employer-funded pension.

Q. How much of my income should be invested for retirement planning?

A. First, you need to evaluate the amount of money that would be required to lead a good post-retirement life. Compare it with your current investments, and identify the balance amount. This is the amount that you should be investing for. On a broad level, it is understood that you need to save an amount that ranges from 10% to 25% of your income for securing a comfortable life post retirement. However, you should consider your age, your current investments and your new investments when you arrive at this amount.

Q. What are the benefits if HDFC Life Personal Pension Plus is purchased as Qualifying Recognised Overseas Pension Scheme (QROPS)?

A. The following terms apply to QROPS policyholders:

Surrender Benefits - If the policy has been purchased as QROPS through the transfer of UK tax relieved assets, the access to benefits of the policy, such as annuitisation and tax free commutation would be restricted. The restriction would continue till the policyholder reaches the age of 55 or the policy gets GSV, whichever comes later.

Cancellation during Free-Look period - If the policy was purchased as QROPS, the proceeds from the cancellation of policy during the free-look period will be moved back to the fund house from where the funds were received at the time of policy purchase.

Q. What are the bonuses associated with the policy?

A. The bonuses that you can avail with the HDFC Life Personal Pension Plus plan are as follows:

Reversionary Bonus - This bonus is a percentage of the sum assured on vesting, and it would be provided at the end of the financial year. The bonus will be paid on vesting if all due premiums have been borne by the policyholder. It should be noted that the reversionary bonus depends on the investment returns, mortality, tax, expenses, etc.

Interim Bonus - If the vesting benefit is payable before the declaration of the subsequent reversionary bonus, an interim bonus may be added. When this happens, the policy will not participate in the next declaration of reversionary bonus.

Terminal Bonus - This bonus may be added to the policy at the time it matures. This enables the company to pay a share of the surplus amount at the end, depending on how the experience is over the term of the policy. This is not a guaranteed benefit, as it is dependent on the future.

Q. How long does the insurer take for claim processing?

A. When HDFC Life receives all relevant information from the claimant, they will process the claim within 30 days. However, if the insurance company requires an investigation before the claim is processed, they will initiate this at the earliest possible time. The results of the investigation will decide when the payout will be made.

Q. How will I be informed if my claim is rejected?

A. Once your claim is rejected the insurer will send you a letter stating the same. You will receive this rejection letter within 10 days of the decision.

Q. Is it possible to buy more than one policy from the insurer?

A. Yes, you can purchase more than one policy from HDFC Life. However, this is subject to underwriting approval.