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Post introduction of the LTCG tax in the Union Budget 2018, ULIPs have gained considerable popularity. Since individuals who have invested in mutual funds are required to pay a 10% LTCG tax in case their annual earnings exceed Rs.1 lakh, people are now slightly more inclined towards ULIPs. Life insurance companies, after the suggestion of the IRDAI, eliminated the few shortcomings of ULIPs to enhance the existing plans.
A series of changes have been made in the features and costs of ULIPs as follows:
While the above-mentioned changes have refined the features of ULIPs, a few of the previous limitations have remained. ULIPs are not as flexible as mutual funds in terms of the flexibility offered. Also, it is easier to exit mutual funds than ULIPs.
However, the new and reformed ULIPs offered by companies such as Max Life Insurance, HDFC Standard Life Insurance, Aegon Life Insurance, and SBI Life Insurance offer an array of benefits and come with minimal charges.
Here is a detailed description of each of the top reformed ULIPs of 2018.
Max Life Online Savings Plan is an online non-participating ULIP that helps individuals manage expenses at key milestones of one’s life. The plan offers two variants – 1) Wealth Solution 2) Child Solution. While the first variant helps create wealth over the years, the second variant helps secure one’s child’s future.
Eligibility:
Minimum age at entry: 18 years
Maximum age at entry:
Maximum age at maturity:
Plan details:
Minimum premium:
Maximum premium: No limit
Minimum sum assured: Rs.3.6 lakh
Maximum sum assured: No limit
Death Benefit:
If a policyholder who had opted for Variant 1 passes away during the term of the policy, the beneficiary will be provided with the highest of – the sum assured, 105% of the cumulative premiums, or the total fund value. The policy will terminate once the payment is made.
If a policyholder who had opted for Variant 2 faces death during the term of the policy, the higher of – the sum assured or 105% of the total premium paid is paid to the beneficiary. Further, the family will receive a regular income until the end of the policy and all future premiums will be funded by the insurer. On maturity, the fund value is provided to the beneficiary.
Maturity Benefit:
On reaching the date of maturity, the policyholder will receive a maturity benefit equal to the fund value. The fund value is calculated by multiplying the NAV of the funds with the sum of the number of units.
Other benefits:
Charges:
The various charges applicable to the policy are as follows:
Premium allocation charge | Nil |
Policy administration charge | Nil |
Fund management charge | 0.5%-1.25% of fund value |
Switch charge | Nil |
Premium redirection charge | Nil |
Partial withdrawal charge | Nil |
Miscellaneous charges | Nil |
HDFC Life Click 2 Invest is an online ULIP that promises good market-linked returns, helps stay invested for a long period of time, and allows optimum financial growth.
Eligibility:
Minimum age at entry: 30 days
Maximum age at entry: 65 years
Minimum age at maturity: 18 years
Maximum age at maturity: 75 years
Plan details:
Minimum premium:
Maximum premium: No limit
Sum assured: Depends on the premium payment mode and premium amount
Death Benefit:
If the life assured expires during the term of the policy, the death benefit payable will be equal to the highest amount – the sum assured, fund value, or 105% of the total premium paid. Once the death benefit is paid, the policy will be terminated.
Maturity Benefit:
On maturity of the policy, the policyholder will be provided with the maturity benefit which is equal to the fund value of the policy. The fund value is calculated by multiplying the prevailing unit price with the balance units. The risk cover will cease after the maturity benefit is paid.
Other benefits:
Charges:
The various charges applicable to the policy are as follows:
Premium allocation charge | Nil |
Fund management charge | 1.35% of fund value |
Switch charge | After 4 switches: Rs.250 per request/ Rs.25 per request if done through the web portal |
Premium redirection charge | After 4 premium redirections: Rs.250 per request/ Rs.25 per request if done through the web portal |
Partial withdrawal charge | After 4 partial withdrawals: Rs.250 per request/ Rs.25 per request if done through the web portal |
iMaximize offered by Aegon Life Insurance is an online ULIP that offers high market returns along with life cover. It is a simple plan and is beneficial for first-time investors. The plan offers two variants that differ in the death benefit payable.
Eligibility:
Minimum age at entry:
Maximum age at entry:
Maximum age at maturity:
Plan details:
Premium payable: Depends on the variant, premium payment term and the age at entry
Sum assured: Depends on the annual premium, policy term and age at entry.
Death Benefit:
If the life assured individual had chosen Benefit Option 1 and he/she expired during the policy term, a death benefit which is the highest amount of – the sum assured, 105% of the total premium paid of the fund value is payable to the beneficiary immediately.
In case the policyholder had opted for Benefit Option 2, the death benefit payable will be higher of the sum assured or 105% of the total premium paid. Further, all future premiums will be funded by the company and regular payouts are made to the beneficiary. At the end of the policy term i.e., on the date of maturity, the fund value is paid as the maturity benefit.
Maturity Benefit:
On reaching the maturity date, the policyholder will receive the fund value as the maturity benefit.
Other benefits:
Charges:
The various charges applicable to the policy are as follows:
Premium allocation charge | Nil |
Policy administration charge | Rs.100 per month at the beginning of every policy month |
Fund management charge | 0.50% - 1.35% of the fund value |
Switch charge | After 4 switches: 0.1% of amount switched per switch |
Premium redirection charge | After 2 premium redirections: Rs.100 per premium redirection |
Partial withdrawal charge | After 4 partial withdrawals: Rs.200 per withdrawal |
SBI Life eWealth is an online, simple and affordable ULIP that provides financial security to family members and ensures policyholders receive high market-linked returns.
Eligibility:
Minimum age at entry: 18 years
Maximum age at entry: 50 years
Maximum age at maturity: 60 years
Plan details:
Minimum premium:
Maximum premium:
Sum assured: 10 times the annualised premium
Death Benefit:
Upon the death of the life assured, the higher amount of 105% of the total premium amount, fund value, or sum assured is payable to the beneficiary of the policy.
Maturity Benefit:
On survival till the end of the policy term, the fund value is paid to the policyholder as the maturity benefit. The individual can also choose to receive the benefit in instalments under the Settlement option offered. He/she can also choose if the instalments should be paid on a monthly, quarterly, half-yearly or yearly basis.
Other benefits:
Charges:
The various charges applicable to the policy are as follows:
Premium allocation charge | Nil |
Policy administration charge | Rs.45 per month |
Fund management charge | 0.50% - 1.35% of fund value |
Partial withdrawal charge | After 1 partial withdrawal: Rs.100 per withdrawal |
Medical expenses on policy revival | Maximum Rs.3,000 |
Note - This is not an exhaustive list.
The pros and cons of each of the ULIPs in terms of the features, terms and premium amounts payable are given below:
Insurer | Pros | Cons |
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Max Life Online ULIP Savings Plan (Claim settlement ratio: 97.81%) |
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HDFC Life Click 2 Invest (Claim settlement ratio: 97.62%) |
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Aegon Life iMaximize (Claim settlement ratio: 97.11%) |
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SBI Life eWealth (Claim settlement ratio: 96.69%) |
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Before buying a ULIP, it is essential to do a thorough research to ensure that the features of the plan are best-suited. It is advisable to choose the fund types and the fund allocation based on one’s risk appetite.
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