Productcrack | Unit-linked insurance plan (Ulip)2 min read . Updated: 03 Aug 2011, 09:49 PM IST
Productcrack | Unit-linked insurance plan (Ulip)
Name of the product
AEGON Religare Life Insurance Co. Ltd’s iMaximize Plan.
What is it?
It is a Ulip that can only be bought online.
What do you get?
If you pay regular premiums, you have two death benefit options. First (option I), to get the higher of the sum assured, the fund value and 105% of all the premiums paid. Second (option II), to get the higher of the sum assured and 105% of all the premiums paid. In option II, you also get a premiums waiver benefit, under which the company bears all future premiums on your behalf and your beneficiary gets a periodic income equivalent to the regular premium as and when due. On maturity, the beneficiary receives the fund value. But if you take a single-premium plan, the second option is not available.
This policy has no premium allocation charge, which is a straight deduction from your premiums before any money is either invested or buys you a cover.
The policy also gives you two investment strategies: trigger portfolio strategy and self-managed portfolio strategy. Under the trigger strategy, the premiums paid are invested in accelerator fund, which is an equity fund. As soon as the fund value in accelerator fund equals or exceeds 110% of all the premiums paid, the excess amount is switched to a secure fund, which is a debt fund. The idea is to secure the gains of an equity fund by directing it to a debt fund.
Also, from the 12th policy year, the policyholder gets a special unit, which is equal to 0.45% of the average fund value in the preceding year. This addition will happen every year.
What are the costs?
The fund management charge ranges between 1% and 1.35%. The policy administration charge is Rs100 per month. The mortality cost will depend on your age, term, sum assured and the kind of death benefit you choose.
For example, under option I, a 35 year old buying this policy for an annual premium of Rs1 lakh, a sum assured of Rs10 lakh and a term of 20 years will get around Rs53.61 lakh or a return of 8.68% on maturity, assuming the fund grows at 10%. Option II is slightly expensive. In the same example, the 35 year old will get Rs50.70 or a return of 8.11% on maturity, assuming the same growth rate.
Mint money take
The costs are fairly low. You could choose option II to save for your kid’s future.