By Apoorva Mandhani
Unit Linked Insurance Plans (ULIPs), which combine financial planning with wealth accumulation, had begun their journey with being tainted as costly bundled products. While they have undergone a makeover since then, it has often been argued that ULIPs are not ideal investment products due to various charges levied on them. This scenario is, however, set to change.
Edelweiss Tokio Life, with its new unyakeenable Wealth Plus Plan, has eliminated most charges that make a ULIP tedious. For instance, it levies zero policy allocation and administration charge, while allocating 100 percent of the premium. Switching charges, premium redirection charges, and partial withdrawal charges have also been eliminated. Besides, every year, additional allocations are added to the fund during the premium paying term. These allocations start at 1 percent and increase every 5 years to 3 percent, 5 percent and 7 percent.
Rising Star Benefit
“You child will keep building castles in the air; you better start buying bricks for the castle today,” a wise mother was once quoted as saying. She was, without a doubt, aware of the importance of giving wings to her child’s dreams. The rising star benefit, which can be opted for in the Wealth Plus plan, understands and seeks to cater to this commitment. This benefit can be opted for by a parent, grandparent, a guardian or anybody else who has an insurable interest in the child. Thereafter, in case of unfortunate demise of the policyholder, it will ensure payment of a lumpsum amount to the child, irrespective of the fact that he/she may have turned major. Besides, an amount equal to the sum of all the future Modal Premiums, if any, shall also be credited to the Fund Value. Allowing such benefits, Edelweiss Tokio Life, with its motto “insurance se badhkar hai aapki zaroorat”, seems to have assumed the role of a fairy godmother, willing to wave its wand at anybody who cares about their children.
Investment Strategies
While caring for those who are important to you, Edelweiss Tokio Life’s Wealth Plus Plan also provides you with investment options, enabling you to tailor the plan according to your needs. It provides two options – life stage and duration based strategy, and self-managed strategy. The first option ensures that your money is moved from equity oriented fund (Equity Large Cap Fund) to debt oriented fund (Bond Fund) as your age increases and the remaining policy term decreases. The option acknowledges the fact that your risk appetite depends on your age as well as the investment duration, and prescribes a set formula for a smoother transition.
The second strategy provides you with the freedom to invest your money in your choice of fund(s) in any proportion, depending on your financial priorities and investment outlook. You can switch monies amongst these funds as well, using the switch option. While it allows unlimited switches between funds, the minimum amount per switch is set at Rs. 5,000. The policy also permits unlimited opt-in and opt-out between these two strategies. In other words, if you have chosen the Life Stage and Duration based Strategy, you may choose the Self-Managed Strategy by opting out of the other one at any point in time during the Policy Term.
A Game Changer
Insurance still remains the most ignored part of investment planning, with life insurance penetration standing at 2.7 percent, as per a report released for Financial Year 2015-16 by the Insurance Regulatory and Development Authority of India (IRDAI). This is despite the fact that financial planning sans insurance is futile. Now, while several kinds of insurances can be bought, ULIPs have, until now, been a favourite only for aggressive investors. In such a scenario, Edelweiss Tokio Life’s Wealth Plus Plan, with its flexibility and innovation, could be a game-changer. The new generation ULIP is the only reason for that. Wealth Plus not only provides free switches, it also contributes to your premium. The expenses to manage this fund is even cheaper than mutual funds.
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