ULIPs are a good option for long term investment. It gives you a chance of enjoying a life cover and reaping the benefits of equity or debt investment simultaneously.
ULIPs that came till 2009 are still showing horror movies to many insured individuals. Due to high allocation charges and policy administration charges, most people refrained from investing in ULIPs. The new norms have brought about a lot of standardisation to the offerings by the companies. So, it might not be easy to pick a plan amongst the new ULIPs. Out of the new lot, we help you find the plan that suits you best. Here are some simple points to look at before you pick a new ULIP.
|Key Features||Edelweiss Tokio Wealth Plus||ICICI Prudential Life time Classic|
|Fund Management Charge||1.35%||1.35%|
|Frequency to Premium Payment||Monthly, Quarterly, half yearly, Annually||Monthly , Annually|
|Maturity Benefit Option||Option 1- lump sum
Option 2- Instalments
|Investment Strategy||1. Self managed
2. Managed By Edelweiss
|Managed by ICICI Life|
|Partial Withdrawal||After 5 Years||After 5 Years|
|Additional Benefits||1. Top Up Premium
2. Rising Star Benefit
|Tax Benefits||Tax Benefits for all||Tax Benefits for all|
Edelweiss-Tokio Life – WEALTH PLUS
Amongst the latest entrants in the sphere of low-cost ULIPs, Edelweiss Tokio’s Wealth Plus has done away with premium allocation as well as policy administration charges.
The core expense from a policyholder’s point of view is the fund management charge, in addition to mortality charges for providing the life cover. The life insurer allocates additional units at the rate of 1% in the initial five years as an incentive, which is enhanced to 3%, 5% and 7% in subsequent five-year blocks to get policyholders to stay invested for the longterm.
For instance, if your premium is Rs 1 lakh, the insurer will contribute an additional Rs 1,000 (extra allocation) annually during the first five years. This amount will go up to Rs 3,000 and Rs 5,000 (premium boosters) from years 6-10 and 11-15 respectively.
What are various Benefits under Edelweiss Tokio Life Wealth ULIP Plan?
1) Additional Allocation Benefits: This plan aims to invest 100% of your premiums in the fund. Over and above, one would get additional allocation as indicated above
2) Maturity Benefit: At the end of the Policy Term, on survival you will receive the Fund Value as your Maturity Benefit. You have an option to collect your Maturity Benefit in lump sum or in instalments by choosing the Settlement Option.
3) Death Benefit: In case of unfortunate demise of Life Insured while the Policy is In-Force, the Death Benefit payable to the nominee will be highest of a) Fund Value b) Sum Assured (minus withdrawals if any) c) 105% of premiums paid
4) Rising Star Benefit: Benefits as per the Rising Star option
5) Tax Benefits: Premiums payable under this plan is eligible for income tax benefits u/s 80C.
CLICK2INVEST HDFC Life Insurance
Amongst the first movers in the online-zero premium allocation charges space, HDFC Life launched Click2Invest in 2014. For this ULIP, the policyholder only has to pay fund management and mortality charges. While many insurers pitch ULIPs only for high net worth individuals, this product comes with a minimum premium of Rs 12,000 per annum or Rs 1,000 per month, making it affordable for all, especially in the context of asset management companies promoting the idea of small, yet regular, investments through SIPs in mutual funds.
However, unlike its newer competitors, it does not offer any additional benefits like return of mortality charges or fund boosters.
Thus By looking at the above details you can easily, make up your mind where to invest your valuable money as With their present structure, ULIPs could be good investments, provided you are willing to take a long term call.
Negative points of HDFC Click2-Invest Plan
1) Surrendering policy before 5 years: Like any other ULIP plan, even this policy can be surrendered only after 5 years of taking the policy. However, if you want to surrender this policy before 5 years, you can do that and fund value would be transferred to the discontinued fund portfolio and 4% annual returns would be paid till the completion of 5 years.
2) Fund Management charges: This ULIP plan charges 1.35% fund management charges. Comparing to mutual fund schemes which charge 1% to 2.5% as fund management charges is comparable. However, one should think that mutual fund schemes need more professionals to manage funds as they are intended to provide good returns. ULIP’s can provide returns of 4% to 6% returns, hence paying such fees could be still higher.
3) Don’t consider for risk cover: If you want to buy this plan for risk coverage, then you need to pay hefty premiums. E.g. for Rs 20L risk coverage, one can buy term insurance plan where premiums come at Rs 4,000 (approx) per annum. However, for this ULIP plan, you need to pay Rs 2 Lakhs (per annum) as this is risk cover + investment product.
4) No tax benefit for 55 years and above: This plan provides tax benefits for specific fund options. Any individual who wants to buy this ULIP plan after 55 years, would not get tax benefit as you can opt in specific fund options and not in all options.