IDBI Federal Life Insurance has introduced a new ULIP on 01st Sept.,2010 after the new guidelines from IRDA. Let’s understand that plan.
How does Wealthsurance work?
Wealthsurance gives you (a) Investment Account and (b) Insurance Account.
My Investment Account
The premiums you pay are invested post deduction of a premium allocation charge into the investment options you choose in the proportion that you specify. IDBI Federal InvestmentBasket contains all the investment options we offer. The balance in your Investment Account reflects the wealth built over time from your premium contributions and the returns from the investment options chosen by you.
My Insurance Account
You can also choose any of the insurance benefits we offer under IDBI Federal InsuranceBasket. You pay for only those benefits you choose and the charges are deducted from your Investment Account.
Types of Premiums
Wealthsurance has two types of premiums: (a) Basic Premiums and (b) Top-up Premiums.
(a) Basic Premiums
When you choose your Wealthsurance Plan, you have to indicate the premiums you wish to contribute. These are your Basic Premiums. You can choose either Single Premium or Regular Premium.
Single Premium: If you choose Single Premium, you have to simply make a one-time payment at the time of taking the plan. Minimum amount is Rs 35,000.
Regular Premium: If you choose Regular Premium, you have to indicate (a) Amount, (b) Frequency of Payment and (c) Payment Term. Minimum amount is Rs 20,000 per year, payable in annual installments or Rs 50,000 payable in half-yearly installments (i.e. Rs 50,000 every six months) Minimum premium payment period is 5 years. The premiums payable cannot be altered during the term of the policy.
(b) Top-up Premiums
Over and above the Basic Premiums, you can pay Top-up Premiums. Minimum amount is Rs 5,000 at a time and you can pay whenever you want and any number of times. Top-up premiums are not allowed in the last 5 years prior to the maturity of your plan. Top-ups allow you to contribute additional premiums if and when you want, to grow wealth at your convenience and get tax benefits. Top-up Premiums can be paid only if you have paid all the Basic Regular Premiums due till date. Every Top-up premium will have a lock-in period of 5 years from the date of payment of that top-up premium. Top-up premiums automatically increase sum insured Whenever you pay Top-up premiums, we will automatically increase your sum insured based on your age on the date of the Top-up (a) By 125% of the Top-up premium paid, if you are less than 45 years old, or (b) By 110% of the Top-up premium paid, if you are equal to or greater than 45 years old. Thus you will also get enhanced life insurance cover when you pay Top-up premiums. Increase in sum insured is, however, subject to our underwriting guidelines.
Premium Allocation Charge
Premium Allocation Charge is deducted from the premiums you pay and the balance is invested in investment options of your choice. Premium Allocation Charge as a % of annual premium for Regular premium policies is as follows:
Single Premium Allocation Charge will be as per the following table:
Market Fund Options: For investing in stocks, bonds or money market. These unit linked funds are open-ended funds which invest in equity, debt or money market as per their investment objectives. The Net Asset Value (NAV) of each fund is published on a daily basis. You can invest your premiums into, switch into or switch out of any fund at any time at the NAV. Your gain or loss is the difference between the value at which you invested and the value at which you exited. In Market Fund Options; the NAV depends on the market value of the underlying investments. The expected return and risk vary by the Fund. We offer the following funds:
Asset Allocator Options: When you want us to manage your investment allocation
Life Insurance Benefit: Get benefits on death
We pay benefits under your Wealthsurance Plan in the event of death.
We pay Death Benefit in the event of death of the Insured Person due to any cause, natural or accidental. Death Benefit is the higher of the following two amounts:
(a) Sum Insured or
(b) The Fund Value in your Investment Account.
Upon payment of Death Benefit, your Wealthsurance Plan is terminated.
You can choose your Sum Insured In your Wealthsurance Plan, you can choose the Sum Insured within the minimum and maximum limits specified below.
Minimum Sum Insured
The minimum Sum Insured depends upon your age and whether you have chosen Single or Regular Premium.
If you are less than 45 years old:
• Single Premium: In Single Premium, the minimum Sum insured is 1.25 times the Single Premium Amount.
• Regular Premium: In Regular Premium, the minimum Sum Insured is the higher of (a) 10 times of Annual Regular Premium Amount or (b) 0.5 x Policy Term x Annual Regular Premium Amount.
If you are equal to or greater than 45 years old:
• Single Premium: In Single Premium, the minimum Sum Insured is 1.10 times the Single Premium Amount.
• Regular Premium: In Regular Premium, the minimum Sum Insured is the higher of (a) 7 times of Annual Regular Premium Amount or (b) 0.25 x Policy Term x Annual Regular Premium Amount.
At no time the sum insured shall be less than 105 percent f the total premiums (including top-ups) paid, reduced to the extent of partial withdrawals.
Maximum Sum Insured
There is no maximum limit on Sum Insured. The limit, if any, is determined by underwriting.
Policy Administration Charge
To meet the costs of your Wealthsurance Plan and support the benefits, a policy administration charge is levied. The charge is deducted at the beginning of the policy year by cancellation of units from your Investment Account. Policy administration charge for various premium payment terms is given below and is subject to a maximum of Rs 6,000 per annum.
(a) Single Premiums:
There is no policy administration charge in the first year. Charge for years 2 to 5:
Charge from sixth year onwards till end of policy term:
Policy administration charge for single premium is 0.25% of single premium from 6th year.
There is no policy administration charge during the premium payment term. After the completion of premium payment term the policy administration charge is 1.75% of the initial annual premium per annum.
(c) Top-up Premiums
There is no policy administration charge during the first year. The policy administration charges is 2.2% of the Top -up premium paid deducted at the beginning of the second and third year from the date the Top- up premium is received.