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Product crack: AEGON Religare iMaximize

This is an online unit-linked insurance plan

This is an online unit-linked insurance plan (Ulip) re-launched by AEGON Religare Life Insurance Co. Ltd. Ulips invest your money in the markets and have a transparent charge structure compared with traditional insurance plans.

What’s on offer

It offers three options to pay premium: single, limited pay and regular. Since we recommend periodic investments for long-term vehicles, let’s look at the regular variant—including the limited pay variant. In terms of insurance benefit, you can choose from two options. The type-1 option will pay the beneficiary higher of the fund value or the sum assured upon the death of the policyholder during the policy tenor. The second option is a type-2 plan that pays both the sum assured and fund value upon death and packs in waiver of premium and periodic income benefit. So, upon death of the policyholder during the term, the beneficiary will get the sum assured straightaway. Subsequently the insurer will foot the remaining premiums, at the same time the beneficiary will get an annual income equal to the annual premium for the rest of the policy term. On maturity, the beneficiary gets the fund value and the policy terminates. If you are below 45 years of age, the sum assured is higher of 10 times the annual premium or half the policy term multiplied by the annual premium. If you are 45 years or more, the sum assured is at least seven times the annual premium and maximum is 10 times. The minimum death benefit, however, is at least 105% of all the premiums paid till date.

For investments, you get the fund value on maturity. There are three funds to choose from. One, an equity fund investing primarily in large-cap stocks. Two, a secure fund with a larger allocation in money market instruments. Three, a debt fund investing in a diversified portfolio of government debt, corporate debt, money market instruments and other fixed-income securities. If you choose type-2, on the policyholder’s death, the insurer moves the fund to a secure fund to protect the capital.

How does it work?

Being an online Ulip, this policy does not have a premium allocation charge; however, it levies a policy administrative charge of 100 per month. The fund management charge varies from 1% for the secure fund to 1.35% for the equity fund. Assuming a 35-year-old male buys this plan for an annual premium of 1 lakh for a term of 20 years, the sum assured would be 10 lakh. On maturity, assuming 8% growth, his maturity corpus will be around 40 lakh; a net return of 6.23% assuming he chooses the type-1 option. Under the second option, which is a type-2 plan, the fund value at an assumed rate of 8% would be 37.2 lakh and this is a net return of 5.59%.

Mint Money take

If you are looking at the type-1 option, you may find a better Ulip proposition online with no policy administration charge or even a discontinuance charge on early surrender. For type-2, the death benefits are customized to offer periodic income to the beneficiary which is good but this comes at an extra cost. Insurance component in this plan is restricted to 10 times the annual premium. Ulips right now are not very portable; invest only if you plan to stick for a long term.

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