A plan with little to offer

Though the product comes with some frills, higher premium is a dampener

With online term insurance plans offering the best deals in the market, insurers are adding various frills to the plain vanilla offline term products to spice up the offering. Aditya Birla Sun Life Insurance’s Life Shield Plan is an offline policy and, hence, slightly expensive than the online policies in the market. The ‘decreasing cover’ option and ‘joint life protection’ are some features that the product offers. The former helps you keep pace with your loan or mortgage, while the latter can come in handy to cover your spouse who is not earning any income.

The product

The ABSLI Life Shield Plan essentially comes with four different options. Each of these has an add-on feature of waiver of premiums (if the life insured is diagnosed with critical illness or total and permanent disability) at an extra cost. The first option ‘level term assurance’ is a basic plan, wherein the sum assured remains constant through the policy term.

In the second option ‘increasing term assurance’, the insured can choose to increase the cover by 5 or 10 per cent every year (of the original amount).

‘Return of premiums’ is another option, where the insured will be returned all the premiums paid at maturity. Normally, under a term policy, the insured does not get anything on surviving the term.

Most of these features are offered by other online term policies as well.

Under the ‘decreasing cover’ option, the sum assured decreases in phases through your policy term with the idea that your liabilities towards various loans will reduce with time.

Aside from these options, the policy also offers a joint life protection feature, available only under the basic and increasing cover option. Under this option, your life (primary life insured) and your spouse’s life (secondary) can be covered under the same policy. The sum assured for your spouse will be 50 per cent of your sum assured. This option is only available if your life cover is greater than or equal to ₹50 lakh.

Our take

Given that ABSLI’s Life Shield is an offline policy, its premiums are higher than that offered by other online term insurance plans. For a 35-year old male, non-smoker, a cover of ₹1 crore for a 20-year policy term works out to an annual premium of ₹11,074 (inclusive of GST). Premiums on online policies work out to ₹9,000-10,500. Max Life is the cheapest with a premium of ₹9200.

So, if you are looking for a plain vanilla term plan, you can give ABSLI’s Life Shield a miss.

The premium under the ‘return of premium’ option under ABSLI Life Shield is about ₹31,752 for the same ₹1 crore cover for a 35-year male. While the idea of getting back all the premiums at the end of the policy term may sound tempting, it is strictly a no-go option. For starters, such a plan comes at a steep cost.

Two, it ideally earns you nothing; in fact, you receive less than the total premiums you paid as you are returned premiums exclusive of GST and other levies. You can instead invest the additional premium in FDs or other safer investments to earn a return.

Life Shield Plan’s decreasing sum assured option does offer a cheaper way of providing cushion to your family in case of long-term liabilities. But taking a constant cover can help your family pay off the debt and meet other exigencies too.

The joint life cover is a good option if your spouse is not earning. Life Shield offers an additional cover of 50 per cent of your sum assured to your spouse, irrespective of the occupation. This feature is also offered by AEGON and PNB Met Life. However, PNB Met Life restricts the cover for spouse to 25 per cent of sum assured if she is a housewife. However, given that both AEGON and PNB Metlife are online policies, the base premium is much lower.

Further, the policy does not offer much flexibility when it comes to pay-outs. You can either go for a lumpsum or choose a staggered payment. HDFC Life Click 2 Protect 3D Plus offers the most flexibility under the income option, allowing you to decide the annual income increase every year and the payout period.

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