Guaranteed Monthly Income Plan

Benefits:

• Short Policy Terms
  The plan offers you flexibility to choose your policy terms. You can choose either 6 years or 11 -year policy terms depending on your financial goals.
• Guaranteed Monthly Income for a Payout Period of 10 years after your policy termIt is the number of years the policy will be active.
  The plan lets you choose the guaranteed monthly income you desire. This income is guaranteed to be paid for a period of 10 years (120 months) from the end of policy termIt is the number of years the policy will be active., payable at payout dates*.
• Monthly Income Boosters ("MIB") 12^th year onwards
  Over and above the guaranteed monthly income, the plan also offers MIB starting year 12, which are payable at payout dates. This ensures that your chosen monthly income is cushioned against inflation.
• Complete Safety of your investments and transparency of returns
  The investments will be made only in highly secure investments ensuring minimal risk and low volatility. A single Monthly Income Booster (MIB) rate is applied to renewal premiums received on all policies within a particular month. The MIB rate will be determined using the prevailing 5-year Government Security Benchmark Interest Rate as on the last working day (end of day) of the previous month, obtained from Fixed Income Money Market and Derivatives Association of India (FIMMDA).

*Note: In practice all the monthly payout transactions would be effected on selected payout dates, once per week or four times in a month. The payouts will happen, every month, on the next closest payout date following the monthly anniversary.

Key Features

Monthly Income Boosters (MIB):

From Policy Year 2 onwards, upon receipt of each due premiumA regular payment made to the insurance company to keep the policy in force., the policy will accrue Monthly Income Boosters till the end of policy termIt is the number of years the policy will be active.. For the purpose of applying Monthly Income Booster rates for renewal premiums received on policies, all the premiums received within a particular month will be applied a Monthly Income Booster Rate corresponding to FIMMDA 5-Year Government Security Benchmark Rate as on the last working day (end of day) of the previous month.

The following table illustrates the current benchmark rates for the past few months

The 5 Year G-Sec Benchmark Rate of 7.55% as on 30^th April will be applied for renewal premiums received from 1^st May to 31^st May 2013. This corresponds to MIBs of:

For 6 Pay - 76% of GMI chosen
For 11 Pay - 46% of GMI chosen

MIB Rates will vary with Benchmark interest rate as per the table mentioned below:

5 Year G-Sec Benchmark rate in the past 10 years

Survival Benefits (Payable during the Payout Period of 10 years after the completion of Policy Term)

• For 6 Pay Variant: The monthly income booster accrued in year 2 will be payable along with monthly income of Year 12 only (starting from payout date in the 133^rd month till payout date of 144^th month) and monthly income booster accrued in Year 3 will be paid out with monthly income in Year 13 only (starting from payout date in the 145^th month till payout date of 156^th month) and so on and so forth. It is to be noted that for 5 years after the policy termIt is the number of years the policy will be active., i.e., from year 7 to year 11, only the Guaranteed Monthly Income (GMI) will be payable.

• For 11-Pay Variant: The monthly income booster accrued in year 2 will be payable along with guaranteed monthly income of year 12 only (starting from payout date in the 133^rd month till payout date of 144^th month) and monthly income booster accrued in year 3 will be paid out with guaranteed monthly income in year 13 only (starting from payout date in the 145^th month till payout date of 156^th month) and so on and so forth.

Guaranteed Terminal Benefit

For the 6-year variant, 150% of annual premiumA regular payment made to the insurance company to keep the policy in force. will be paid along with last guaranteed monthly income payment and for the 11-year variant, 200% of annual premiumA regular payment made to the insurance company to keep the policy in force. will be paid along with last guaranteed monthly income payment.

Death Benefit

• Death event before end of Policy Term
  • All premiums paid by the policyholder prior to date of death are immediately paid to the NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner..
  • The NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. will receive Guaranteed Monthly Income ("GMI") payable at payout date of every month from the Policy Anniversary following the date of intimation of death till the end of Policy Term.
  • The NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. will receive GMI along with MIB as and when due during the Payout Period due to funding of premiumA regular payment made to the insurance company to keep the policy in force..
  • Guaranteed Terminal Benefit at the end of Payout Period.

  At the time of the death of the life insured, the NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. shall have the option to receive a lump-sum payout as the death benefit in lieu of all the immediate and future benefits secured under the Policy. This lump-sum payout shall consist of:

  • For 6 pay – Ten times the annual premiumA regular payment made to the insurance company to keep the policy in force. along with all accrued Monthly Income Boosters
  • For 11 pay – Eighteen times the annual premiumA regular payment made to the insurance company to keep the policy in force. along with all accrued Monthly Income Boosters

  On payment of such lump-sum amount, the Company shall be completely discharged of all its obligations under this Policy.

• Death event After Policy Term (Payout Period)
  • Guaranteed Monthly Income along with MIB will be paid as and when due for the outstanding Payout Period.
  • Guaranteed Terminal Benefit at the end of Payout Period.

Death Benefit during Reduced Paid Up Status

• Death event before end of Policy Term
  • All premiums paid by the policyholder prior to date of death are immediately paid to the NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. in full.
  • The NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. will receive prorated GMI payable at payout date of every month from the Policy Anniversary following the date of intimation of death till the end of Policy Term.
  • The NomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. will receive prorated GMI along with accrued MIB in full as and when due during the Payout Period.
  • Prorated Guaranteed Terminal Benefit at the end of Payout Period.

  At the time of the death of the life insured, the nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. shall have the option to receive a lump-sum payout as the death benefit in lieu of all the immediate and future benefits secured under the Policy. This lump-sum payout shall consist of:

  • For 6 pay – Ten times the annual premiumA regular payment made to the insurance company to keep the policy in force., reduced in proportion of number of premiums paid to the number of premiums payable, along with all accrued Monthly Income Boosters (in full)
  • For 11 pay – Eighteen times the annual premiumA regular payment made to the insurance company to keep the policy in force., reduced in proportion of number of premiums paid to the number of premiums payable, along with all accrued Monthly Income Boosters (in full)

  On payment of such lump-sum amount, the Company shall be completely discharged of all its obligations under this Policy.

• Death event After Policy Term (Payout Period)
  • Prorated GMI along with accrued MIB in full will be paid as and when due for the outstanding Payout Period.
  • Prorated Guaranteed Terminal Benefit at the end of Payout Period.

Please note: All benefit payments will be made through direct bank transfer (NEFT/RTGS) only, however we may put an alternative process for exceptions.

Surrender Benefit

The policy acquires a surrender value from the end of third policy year after three annual premiumA regular payment made to the insurance company to keep the policy in force.s have been paid. There is the Guaranteed Surrender Value (GSV), which is 30% of all premiumA regular payment made to the insurance company to keep the policy in force.s paid, excluding the first year premiumA regular payment made to the insurance company to keep the policy in force. and a Special Surrender Value (SSV).

In practice, a Special Surrender Value (SSV) will be paid to the policyholder, which will always be higher than the Guaranteed Surrender Value (GSV). The Special Surrender Value (SSV) can be changed by the Company (but will never be below GSV) basis changing investment returns and/or market values of underlying assets.

How does the Guaranteed Monthly Income Plan work for you?

Mr. Bhalla is 35 old and runs a trading company. He wants to purchase a monthly income which can pay for his children's college expenses.

Step 1: Mr. Bhalla decided that he needs an income of Rs. 2000 to pay for children's college expenses.

Step 2: Mr. Bhalla looks at both 6 year policy termIt is the number of years the policy will be active. variant as well as 11 pay variant. Mr. Bhalla decides that for his purpose the 11 year term is a better option.

Step 3: The premiumA regular payment made to the insurance company to keep the policy in force. for his policy comes out to be Rs. 21,936

Here are the four scenarios that can now happen in this policy

Scenario 1:

Mr. Bhalla pays all his premiums and lives on till end of the policy termIt is the number of years the policy will be active. he will get his Guaranteed Monthly Income, MIB and the Guaranteed Terminal Benefit. Below diagram tells us what will Mr. Bhalla get ^#. He will get

• Guaranteed Monthly Income of Rs. 2,000 starting year 12 ( 133^rd month)
• Along with guaranteed monthly income, he will also get the accrued MIB from year 12 to year 21
• At end of 10 year payout period along with the last Guaranteed Monthly Income and MIB , he will also get a Guaranteed Terminal Benefit of 150% of the premiumA regular payment made to the insurance company to keep the policy in force. i.e. Rs. 43,872

Scenario 2:

Mr. Bhalla pays his premiums for 5 years but dies during the 5^th year. In such a case the nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. of Mr. Bhalla has the option to choose from two death benefits:

• Option 1 – Death benefit across policy termIt is the number of years the policy will be active. and payout period
  • All the 5 premiums back as lump sum.
  • Starting the next policy anniversaryThe anniversary of the date of issue of policy as shown in the policy., post intimation of death, the chosen guaranteed monthly income of Rs. 2,000 starts.
  • The nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. also gets all the payouts that would have accrued to Mr. Bhalla had he continued to live and pay his premiums. These payouts include the guaranteed monthly income; MIB and the guaranteed terminal benefit are paid to the nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner..
• Option 2 – Lumpsum death benefit
  • 18 times annual premiumA regular payment made to the insurance company to keep the policy in force. – 18 * 21,936 = Rs. 394,848
  • All accrued MIBs for year 2 to 5 = 12,720 * 4 = Rs. 50,880

The following tables illustrate the two death benefit options basis present value of the future benefits to the customer.

In case death happens in 3^rd policy year

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In case death happens in 5^th policy year

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In case death happens in 10^th policy year

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Scenario 3:

Mr. Bhalla pays his policy premiumA regular payment made to the insurance company to keep the policy in force. for 5 years but due to extraneous circumstances does not pay further premiums. In such a case his policy goes into Reduced Paid Up till the payout period. At start of payout period he will be paid

• Reduced Paid Up Guaranteed Income: A reduced monthly income will be paid in the payout period. The reduced monthly income will be calculated as per the following formula [Number of premiums paid/Number of Premiums due]* Chosen Guaranteed income.

  Hence in the above case his Reduced Guaranteed Income = 5/11*2000= Rs. 909 will be paid to him in his payout

• The MIB: These will be paid out from year 12 to year 15. These will be paid in the same amount as they were credited and there will be no reduction. Since no further premiums were paid from year 6 onwards no MIB will be given after year 16.
• Reduced Guaranteed Terminal Benefit: A reduced terminal benefit will paid at end of payout period, as per the following formula [Number of premiums paid/Number of PremiumA regular payment made to the insurance company to keep the policy in force.s due]* Annual PremiumA regular payment made to the insurance company to keep the policy in force. *200%.

Hence in above case Reduced Guaranteed Terminal Benefit will be (5/11)*21,936*200%= Rs. 19,942

Scenario 4:

Mr. Bhalla pays his policy premiumA regular payment made to the insurance company to keep the policy in force. for 5 years but due to extraneous circumstances does not pay further premiums. In such a case his policy goes into Reduced Paid Up till the payout period. He however expires in year 8 of the policy. In such a case nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. of Mr. Bhalla has the option to choose from two death benefits:

• Option 1 - Death benefit across policy termIt is the number of years the policy will be active. and payout period
  • All the 5 premiums that Mr. Bhalla has paid will be returned.
  • The reduced Guaranteed Monthly Income, as explained in the case 3, will be given to the nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. starting next policy anniversaryThe anniversary of the date of issue of policy as shown in the policy. post intimation of death.
  • All the MIB credited when premiums were paid from year 2 to year 5, as explained in case 3, will be paid as they were due without any reduction.
  • The reduced guaranteed terminal benefit, as explained in case 3, will be paid out at end of payout period.
• Option 2 - Lumpsum death benefit
  • Eighteen times the annual premiumA regular payment made to the insurance company to keep the policy in force., reduced in proportion of number of premiums paid to the number of premiums payable –18 * (5/11) * 21,936 = Rs. 179,476
  • All accrued MIBs from year 2 to 5 = 12,720 * 4 = Rs. 50,880

If the nomineeA person or firm into whose name the policy is transferred in order to facilitate transactions, while leaving the customer as the actual owner. has chosen the Option 2 of receiving the death benefit as lumpsum, then the death benefit would be as follows

^# Assuming 5 year G Sec rates are constant at 8%.

*Kindly note that the above is only an illustration and does not in any way create any rights and/or obligations. The actual experience on the contract may be different from illustrated. The non-guaranteed low and high rates mentioned above relate to assumed investment return at different rates and may vary depending upon market conditions. The premiumA regular payment made to the insurance company to keep the policy in force. mentioned is exclusive of service tax charges.

Max Life Term RiderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. (UIN – 104B019V01) :

The Term riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. allows you to purchase additional life insurance cover at lower cost. The benefit under Term RiderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. is paid in addition to the base plan in the event of death of the life insured in case of an inforce policy.

However if the term riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. is opted and the policy goes in the Reduced Paid up mode or is in lapsed status, the term riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. benefit will terminate and no benefits would be payable on the death of the life insured .

Term RiderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. benefit can be opted only during the base policy termIt is the number of years the policy will be active. of 6 or 11 years as chosen by you.

RiderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. sum assuredThe sum assured is the minimum amount payable to the assured or his/her dependants on the death of the life assured. cannot be greater than the base policy sum assuredThe sum assured is the minimum amount payable to the assured or his/her dependants on the death of the life assured. and RiderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. premiumA regular payment made to the insurance company to keep the policy in force. cannot exceed 30% of the base policy premiumA regular payment made to the insurance company to keep the policy in force..