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HDFC Life Single Premium Pension Super Plan

HDFC Life Single Premium Pension Super is a single premium unit linked pension plan that assists you in securing your finances post-retirement. The plan creates a corpus over the term of the policy, and this helps in generating an income for life, for utilisation after your earning years. The plan provides you the flexibility to choose the amount of the single premium, with an option to invest through top-up premiums in the future. A significant feature of the plan includes the provision of an assured maturity benefit of 101% of the single premium and all top-up premiums paid by the life insured. The policyholder can also plan his/her retirement date, and can avail a guaranteed regular income on the annuity that is purchased from the insurer.

Eligibility - Who is HDFC Life Single Premium Pension Super for?

There are certain eligibility conditions that need to be satisfied for a customer to purchase the HDFC Life Single Premium Pension Super plan. These factors are related to the age of the customer and the number of years of insurance that he/she would be purchasing. The eligibility criteria is detailed below:

Minimum Entry Age 40 years
Maximum Entry Age 75 years
Minimum Vesting Age 50 years
Maximum Vesting Age 85 years

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

It should be noted that the plan can only be purchased on a single life basis for a policy term of 10 years.

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

Sum Assured:

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

Premium:

The premiums for the HDFC Life Single Premium Pension Super plan have the following limits:

Limits Single Top-up Premium
Minimum Rs.25,000 Rs.10,000
Maximum No Limit No Limit
  • Each top-up premium has a lock-in period of 5 years, except when the policy is completely surrendered.
  • The top-up premium can be paid throughout the policy term as well.

Plan Coverage - What HDFC Life Single Premium Pension Super Covers?

HDFC Life Single Premium Pension Super plan is an ideal channel to create a retirement fund so that you can enjoy a post retirement income for life. Since the plan is a unit linked product, it safeguards your investments and provides you maximum benefits when you need it the most.

The coverage under HDFC Life Single Premium Pension Super includes the following:

  • Vesting Benefit – At the end of the policy term, the policy will mature. The Vesting Benefit will be the highest among the following:
    • Fund Value
    • 101% of the total premiums, i.e., single premium and top-up premium paid will be provided as assured benefit

The way in which this vesting benefit will be paid to you is based on regulations, and is described in the ‘Policy Proceeds’ section below.

  • Death Benefit - In the case of unfortunate death of the policyholder before the policy vests, his/her nominee will receive the highest amount from the following:
    • Fund Value
    • 105% of the total premiums (single premium and top-up premium) paid

The nominee of the policyholder can take the amount as annuity from HDFC Life or withdraw the proceeds completely.

  • Policy Proceeds - According to current regulations, you can choose to take the Vesting Benefit and Surrender Benefit in any of the following ways:
    • You can choose to take 1/3rd of the proceeds as a lump sum cash amount that is free of tax. The remaining amount is converted to an annuity that will have to be bought from HDFC Life.
    • The entire policy proceeds can be used to buy annuity according to prevailing regulations.
    • You can use the whole proceeds for the purchase of another single premium deferred pension plan from HDFC Life.
    • You can extend the accumulation period by 5 years, if your vesting age is less than 55 years at the time of policy maturity. During the extended period, benefits such as the Surrender Benefit and Death Benefit will continue as is. However, top-up premiums cannot be paid during that time.

In case you would like to convert these benefits to an annuity, you will be required to buy a new policy from the insurance company.

Add-On Plans – Additional Coverage under HDFC Life Single Premium Pension Super Plan:

This is not applicable for the plan.

Exclusions - What HDFC Life Single Premium Pension Super doesn’t Cover?

There are no exclusions under this plan.

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

  • Surrender Benefit - If the life insured surrenders the policy within 5 years from commencement,
    • The fund value will be moved to the Discontinued Policy Fund, and will earn a minimum return, as per IRDAI guidelines. The current minimum interest rate for the Discontinued Policy Fund is 4% per annum. The rate may be revised in the future based on IRDAI regulations.
    • The excess income earned in the discontinued fund that is above the minimum guaranteed interest rate will be split out into the discontinued policy fund. This amount will not be given to shareholders.
    • Since the policy is a single premium product, the Discontinuance charges will be nil.

If the life insured surrenders the policy after 5 years, the available amount is the fund value, and it will be paid out as explained in the ‘Policy Proceeds’ section.

  • Free-look Period

If the policyholder does not agree to the terms and conditions mentioned in the policy, he/she can return the same to the insurer within 15 days. If the policy was purchased through distance marketing, then the free-look period will be 30 days. Distance marketing refers to insurance policies that are not sold through face-to-face interactions. Policy sales via telephone and the internet can be classified as distance marketing. Once the insurer receives the letter with the original policy documents, the value of units allocated to the insured will be refunded. A policy that is returned cannot be reinstated, restored, or revived again.

Tax Benefits – How you can save with HDFC Life Single Premium Pension Super?

The premiums paid for the HDFC Life Single Premium Pension Super plan are eligible for tax benefits, as per Section 80CCC of the Income Tax Act, 1961.

  • The policyholder can take 1/3rd of the benefit as a commuted value that is tax-free. This is described in Section 10(10A) of the Income Tax Act, 1961. The remaining amount can be utilised for the purchase of a life annuity from HDFC Life at the prevalent rates.
  • The tax benefits mentioned above could change based on tax laws. So, you should re-confirm the same with your tax consultant before policy purchase.

Other Benefits – How you can save with HDFC Life Single Premium Pension Super?

HDFC life offers a wide range of insurance solutions across the country, including insurance schemes related to Pension, Protection, Health, and Investment. The insurance company had a competitive claim settlement ratio of 99.41% in the financial year 2013-14. The claims assistance service of the insurer is very efficient, and they provide solutions with a short turnaround time.

Why you should Buy Single Premium Pension Super from HDFC Life?

HDFC Life is a front-runner in providing insurance solutions across the country. They have a wide reach, spanning 398 offices and 9,000 touch-points. This ensures that their products are always accessible to customers. The insurance company also has a strong financial consultancy group that has been delivering financial solutions throughout India and abroad.

HDFC Life Single Premium Pension Super Plan FAQs:

Q. What is the best time to start planning for my retirement?

A. The early 30s are an optimum time to take a look at retirement planning. However, the earlier you start planning, the greater would be the amount that you would collect in your retirement corpus. The power of compounding ensures that you accumulate a large retirement sum with comparatively low investments.

Q. I am in possession of an investment and savings plan from HDFC Life. Do I still need to buy a separate insurance policy for retirement planning?

A. A savings and investment plan would have different targets in comparison to a retirement policy. Pension plans are designed to offer the policyholder a good amount as monthly income during his/her retirement years. These schemes also offer limited liquidity; hence, the customer’s savings would be intact for use during the years when it is required the most.

Q. My employer already offers me a pension scheme. So, do I need to buy one individually?

A. In the ideal scenario, you should build a retirement corpus that equates to at least 20 times the value of your income in the year just before retirement. You should factor the cost of living, medical inflation, and increase in life expectancy when you contribute towards your retirement kitty. Your employer’s pension plan may not have sufficient cover to support your post-retirement expenses. So, you should look to purchase an individual pension plan to supplement the benefits provided by your employer’s plan.

Q. Currently, I have multiple sources of income. Is it necessary for me to purchase a pension plan for retirement?

A. Having multiple incomes is useful during your ‘working years’. But when you enter into retirement, you may not get the same benefits from your alternate employment as today. In order to ensure that you have a steady source of income after you retire, you should look to purchase a pension plan early in life. Then the policy would accumulate sufficient funds in your retirement corpus for use during the retirement period.

Q. What are the plan charges?

A. Various charges associated with the HDFC Life Single Premium Pension Super plan are as follows:

Premium Allocation Charge - After this charge is deducted from the premium, the remaining amount is utilised in buying units. This percentage of your premium that is invested for the purchase of units is called Premium Allocation Rate.

Premium Premium Allocation Rate Premium Allocation Charge
Single Premium 97.50% 2.50%
Top-up Premium 99.00% 1.00%

Fund Management Charge - The FMC is already included in the daily unit price. This amount is 1.35% per annum of the fund’s value, and is charged on a daily basis.

Policy Administration Charge - A charge of 0.13% of the total premiums will be levied as policy administration charge. This amount is deducted monthly, and has a limit of Rs.500 per month. The charge is taken through cancellation of units from the fund, and it is guaranteed for the entire policy duration.

Mortality Charge - The death cover offered to the policyholder attracts a charge, the amount of which depends upon the age of the insured and the level of coverage provided by the policy. This charge is deducted by cancellation of units from the fund, and is guaranteed for the entire policy term.

Miscellaneous Charges - If the policyholder initiates a policy alteration request, he/she will be charged Rs.250 per request. Charges for administrative services introduced later would also be levied under this category.

Investment Guarantee Charge - The Investment Guarantee Charge is already included in the daily unit price. This amount is 0.40% per annum of the fund value, charged on a daily basis. This charge is applicable only on in-force policies and not on the Discontinued Policy Fund. The charge is also guaranteed for the entire policy term.

Q. What are the risk factors associated with this plan?

A. Unit Linked Life Insurance plans are different from traditional insurance plans, and are hence subject to different risk factors. The premium that is borne by the policyholder is exposed to investment risks of the capital market. The NAVs of the units may increase or decrease on the basis of fund performance and other factors that affect the capital market. The insured is advised to understand the risks and corresponding charges from the insurance agent or the policy documentation. It should be noted that the past performance of fund options do not influence their future performance.

Q. What is the investment fund corresponding to this plan?

A. The single premium and top-up premium along with the charges would be invested in the fund known as Pension Super Plus 2012.

Fund SFIN Details Asset Class
Cash, Money Market Instruments, Deposits Liquid Mutual Fund Government Securities, Fixed Income Instruments Equity Risk and Returns Rating
Pension Super Plus 2012 ULIF04818/06/12 PenSuPls12101 The fund will manage the allocation between equity and debt instruments dynamically, so that proceeds equal to the guaranteed benefit are provided 0% - 40% 40% - 100% 0 - 60% Medium

The fund has a dynamic asset allocation between fixed income assets and equities. This is dependent on interest rate levels and market movements. The returns from the fund will be different from an investment that is purely in the equity market. As the fund reaches maturity, the allocation will shift to fixed interest or cash.

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

A. The following terms apply to QROPS policyholders:

Vesting Benefits - If the policy was purchased as QROPS through the transfer of UK tax relieved assets, the access to policy benefits, i.e., annuitisation or tax-free commutation will be restricted. This continues till the life insured reaches 55 years of age or the vesting age, whichever is later.

Surrender Benefits - In this case, the access to policy benefits in the form of annuitisation or tax-free commutation will be restricted. This will be the case till the life insured is 55 years old or the lock-in period ends, whichever is later.

Cancellation during the Free-Look period - The proceeds arising from the cancellation of the policy during the free-look period will be sent back to the fund house from where it originated.

Q. How long does it take for the completion of claim processing?

A. When the insurer receives all the necessary documentation from the policyholder, they make the claim payout within 30 days. But if the claim requires additional investigation, this will be initiated by the insurance company without any delay. After the investigation, the claim payout will be made as per the company regulations.

Q. Can I buy more than one policy from the same insurer?

A. Yes, you can buy multiple policies from HDFC Life. However, this decision will be subject to underwriting approval.

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

A. If your claim has been rejected by the insurance company, you will receive a letter stating the same. The letter will also elaborate on the reasons for the rejection. You will receive this letter within 10 days of the decision from the insurer.