IDBI Federal life insurance has launched a new insurance plan to create wealth – Wealthsurance Suvidha Growth Insurance Plan. Let us check out the features and benefits of this plan. Thereafter, we’ll analyze whether one should invest in this plan or not.

Plan Overview



IDBI Federal Wealthsurance® Suvidha Growth Insurance Plan (UIN: 135L033V01) is a simple unit linked plan that helps you take your first step towards wealth creation and that too, with ease. What’s more, the life cover with this plan provides financial protection to your loved ones.

All ages are as per last birthday

Features

    • weight: bold;”>Systematic Allocator to help you build wealth with ease

You have two options of managing funds in Wealthsurance Suvidha. You can either manage the funds yourself or opt for Systematic Allocator. If you opt for Systematic Allocator, you will enjoy a balance between growth and safety. In the early policy years, your investment will have a higher exposure to equity. This will help your investments have the potential to earn you higher returns. As the policy approaches maturity, your investment will be automatically rebalanced to reduce the exposure to equity. This ensures that your investment is protected from the ups and downs of the equity markets. For more details on Systematic Allocator, please refer to the product brochure.

    • Option to choose how long you want to stay invested

With Wealthsurance® Suvidha, you can choose the policy term (PT) which is the duration for which you want to stay invested. In addition, you can also choose how long you want to pay your premiums by choosing the premium payment term (PPT) most suited to your needs. Please refer to the product brochure for combinations of PT and PPT available.

    • Guaranteed loyalty additions to boost your wealth*

At the end of the 10th policy year and every 5 years thereafter, you get guaranteed loyalty additions to boost your wealth.

    • Future premiums waived off in case of an unfortunate event
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In case of an unfortunate event of you not being around, all future premiums of the policy will be waived off.

    • Financial protection against uncertainty

In case of an unfortunate death during the policy term, your nominee gets the death benefit which is the sum assured or the fund value at that time, whichever is higher. At any time during the policy term, the death benefit will be more than 105% of all premiums paid.

    • Partial withdrawals for emergency fund requirements

In case of a financial emergency, you can make partial withdrawals from your funds any time after the 5th policy year. For more information on partial withdrawals, please refer to the product brochure.

    • Two tax benefits

The premiums you pay under Wealthsurance® Suvidha are eligible for tax benefit under Sec 80C of the Income Tax Act, 1961. The maturity benefit and death benefit are also tax free under Sec 10(10D).

    • Flexibility to switch funds and investment options

You can switch your investment option between Systematic Allocator and managing your funds by yourself. Also, if you are managing your funds yourself, you can also switch from one fund to the other.

    • Option to surrender

Wealthsurance® Suvidha also provides the feature of surrendering the policy free of charge after the 5th policy year. A surrender amount equal to the fund value as on date will be paid out. Discontinuance charge will be applicable for policies surrendered within the first 5 years of the term.

    • Exclusive funds for loved ones

By endorsing your Wealthsurance® Suvidha policy under the Married Women’s Property Act, 1874, you can create an exclusive fund for your loved ones which is legally protected from creditors and claimants.

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You can make you own Wealthsurance® Suvidha plan by the following 4 simply steps:

    1. Choose your premium amount: You can select any amount, from as low as Rs.15,000 to Rs.25,000 as your annual premium.
    2. Choose how you would like to manage your investments : You can benefit by opting for the Systematic Allocator or you can choose to manage your investments by yourself. Please refer to the graph below for working of Systematic Allocator.
    3. Choose your policy term (PT): Choose the duration for which you would like to stay invested in the plan as per the available options.
    4. Choose your premium payment term (PPT): Choose the duration for which you would like to pay premiums. There are 6 combinations of PPT and PT available in this plan as below.

How does this plan works

Limited Pay Regular Pay
PT PPT PT PPT
15 10 10 10
20 10 15 15
20 15 20 20

 

How does Systematic Allocator work?

Systematic Allocator helps you achieve a balance between growth and safety on your investments. As your policy comes closer to maturity, Systematic Allocator automatically rebalances your investment to reduce the level of your investment risk. At the commencement of your policy, a significant portion of your funds is invested in the Equity Growth Fund (high risk fund) in order to increase the probability of higher returns. When your policy approaches maturity, Systematic Allocator gradually reduces the exposure to Equity Growth Fund and shifts funds to Income Fund (low risk fund). This helps reduce your investment risk related to equities. The graph below represents the change in proportion of investment in Equity Growth Fund and Income Fund with respect to the residual time to maturity. Please refer product brochure for complete details regarding Systematic Allocator.

You may download the official brochure of this plan from here.

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Comment from Admin

The above mentioned ULIP plan seems to be a simple plan offering all kinds of features like fund switching, partial withdrawal of money, surrender of policy etc. But this is not the criteria to select any ULIP. We MUST calculate the exact charges we’ve to pay if we invest in this plan.

The plan charges 1.35% as fund management charges throughout the term.

Policy admin charges are 0.5% pm for first 5 years and 0.25% pm thereafter.

Premium allocation charges are 3% for the first year and NIL thereafter.

Well, in the first show, the plan seems to charge must lower charges even when compared with mutual funds. But wait a minute!

Policy administration charges have been mentioned as “pm” in the brochure i.e. per month. To calculate for 1 year, it comes out to be 0.5% x 12 = 6%. That becomes HUGE charges.

Add mortality charges also in the list.

Alternate

It’s better to invest in equity mutual funds + Gold mutual fund to create wealth in long term. You can also add PPF in your portfolio. To cover risk, one can opt for online term insurance plan. Such combinations of product is must better than above ULIP plan.

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Admin May 8, 2014

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