Productcrack | Bharti AXA Life Future Invest

Productcrack | Bharti AXA Life Future Invest

What is it?

It is a unit-linked insurance plan (Ulip) available for a fixed term of 10 years. In this plan, you need to pay the premiums only for the first five years.

What do you get?

On maturity you get back the fund value. The policy also gives you a settlement option, where you can keep your corpus invested up to five years after maturity. You can withdraw a part of the corpus periodically or you can withdraw in lump sum. During this period, life cover is not available.

What’s special?

This policy has zero allocation charges. Policy allocation charge is the charge that gets deducted straight from the premium before any money is invested or buys you an insurance cover. Here the entire premium gets invested.

Other charges

The policy administration charge is 0.5% of the annual premium and is capped at 6,000 per annum. Because of this cap the effect of policy administration charge minimizes if you choose a higher premium.

Other charges in the policy drag the returns down. Let’s take an example of a 35-year-old paying an annual premium of 10 lakh. The sum assured in this case will be 1 crore. Assuming he chooses an equity fund and the fund grows at an assumed rate of 10%, under the death benefit option one, the policyholder will get a maturity corpus of 92.98 lakh. This is a return of 7.98%. In the second option, the policyholder will get 89.02 lakh or a return of 7.41%. But if you take a lower premium of say 50,000 per annum, even the first option will generate a return of just 6.32%.

Mint money take

Since we recommend type II Ulips that offer both the fund value and the sum assured on death, we took the second option of this plan and compared it with a term plus mutual fund combination. Assuming the mutual fund charges a fund management charge of 2% per annum, the investor is better off buying a term plan. This example, however, doesn’t take into consideration the double sum assured benefit on account of accidental death.

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