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  • Ulips With The Lowest Charges

    Life Insurance
    • Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
    • Claim up to Rs. 1,50,000 deduction under section 80C**
    • Choose between annual and monthly premium payment options

    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.

    Reformation of ULIP plans:

    A series of changes have been made in the features and costs of ULIPs as follows:

    • In the year 2010, the IRDAI capped the ULIP charges, which brought down the costs of ULIPs significantly.
    • The compulsory five-year lock-in period was enforced in the same year. This ensures that individuals stay invested for a longer period and enjoy good market-linked returns.
    • In 2015, online-only ULIPs were introduced which made purchasing ULIPs convenient and easy. ULIPs can now be bought with just a few clicks in the comfort of our homes.
    • Around the same time, most insurance companies removed premium allocation charges for ULIPs.
    • Along with premium allocation charges, some companies removed policy administration charges as well.
    • Introduction of new features such as Return of Mortality Charges, additional allocation by the insurer, and loyalty additions further improved the ULIPs.

    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.

    1. Max Life Online ULIP Savings Plan

    2. 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:

      • 60 years for Variant 1
      • 54 years for Variant 2

      Maximum age at maturity:

      • 70 years for Variant 1
      • 64 years for Variant 2

      Plan details:

      Minimum premium:

      • Rs.3,000 for the monthly mode
      • Rs.9,000 for the quarterly mode
      • Rs.18,000 for the semi-annual mode
      • Rs.36,000 for the annual mode

      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:

      • A choice of 5 fund types is offered to policyholders – Secure Fund, Balanced Fund, Growth Fund, Growth Super Fund, and High Growth Fund.
      • Policyholders have the freedom to switch between funds.
      • Individuals who wish to redirect future premiums to a different fund may do so.
      • Partial withdrawals from the policy are permitted.
      • A surrender benefit is payable if the policy is surrendered after completion of 5 years. If the policy is surrendered before completion of the first 5 years, the fund value is transferred to the Discontinuation Policy Fund and is paid to the policyholder after completion of the fifth year.

      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
    3. HDFC Life Click 2 Invest

    4. 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:

      • Rs.1,000 for the monthly mode
      • Rs.3,000 for the quarterly mode
      • Rs.6,000 for the half-yearly mode
      • Rs.12,000 for the yearly mode
      • Rs.24,000 for single pay

      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:

      • A choice of 8 fund types is offered to the policyholder – Conservative Fund, Bond Fund, Income Fund, Balanced Fund, Opportunities Fund, Blue Chip Fund, Diversified Equity Fund, and Equity Plus Fund.
      • Switches between the eight fund types mentioned above are permitted.
      • Future premiums can be redirected to other fund types.
      • Policyholders can make partial withdrawals from the policy when in need.
      • If the policy is surrendered before completion of the lock-in period i.e. before completion of the first 5 years, the fund value is transferred to the Discontinued Policy Fund and the surrender benefit is paid after completion of the lock-in period. If the policy is surrendered after completion of the lock-in period, the surrender benefit equal to the fund value is provided to the policyholder immediately.

      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
    5. Aegon Life iMaximize

    6. 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:

      • 7 years for Benefit Option 1
      • 18 years for Benefit Option 2

      Maximum age at entry:

      • 55 years for Benefit Option 1
      • 50 years for Benefit Option 2

      Maximum age at maturity:

      • 70 years for Benefit Option 1
      • 65 years for Benefit Option 2

      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:

      • A choice of 6 fund types – Debt Fund, Secure Fund, Stable Fund, Opportunity Fund, Accelerator Fund, and Blue Chip Equity Fund.
      • Policyholders are permitted to switch between funds.
      • A premium redirection option that allows individuals to redirect future premiums is available.
      • Partial withdrawals can be made.
      • The special Top-up feature allows policyholders to enhance their premium amounts.

      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
    7. SBI Life eWealth

    8. 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:

      • Rs.10,000 for the yearly mode
      • Rs.1,000 for the monthly mode

      Maximum premium:

      • Rs.1 lakh for the yearly mode
      • Rs.10,000 for the monthly mode

      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:

      • A choice of 4 fund types is provided – Discontinued Policy Fund, Money Market Fund, Bond Fund, and Equity Fund.
      • Partial withdrawals from the policy are permitted.

      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
      Max Life Online ULIP Savings Plan (Claim settlement ratio: 97.81%)
      • The total expense is at 1.35%.
      • Offers two variants to choose from based on requirements.
      • The minimum premium is Rs.36,000.
      HDFC Life Click 2 Invest (Claim settlement ratio: 97.62%)
      • Only fund management and mortality charges need to be paid.
      • The minimum premium is Rs.1,000 per month and Rs.12,000 p.a.
      • No additional benefits such as fund boosters or Return of Mortality charges are provided.
      Aegon Life iMaximize (Claim settlement ratio: 97.11%)
      • Offers 2 death benefit options.
      • Comes with a top-up premium feature.
      • Policy administration charges equal to Rs.100 every month.
      SBI Life eWealth (Claim settlement ratio: 96.69%)
      • One of the cheapest and simplest ULIPs.
      • The minimum premium is Rs.10,000 p.a.
      • Switching between funds is not allowed.

      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.