Last week, Edelweiss Tokio has launched single pay assurance plan where an insurer can pay single premium and get life coverage of 10 times of the premium paid. Is it a good insurance plan? How this insurance plan is, compared to LIC Jeevan Sugam which came two months back?
Features of Edelweiss Tokio Single pay assurance plan
Edelweiss Tokio is a joint venture between Edelweiss Financial Services and Tokio Marine Inc, Japan. Edelweiss launched this single premium insurance plan with an objective to provide insurance coverage and long term benefits.
- Age of entry is 8 years to 50 years
- Maximum maturity age (last birthday) is 60 years
- Term of policy: 10 years
- Premium payment: Single pay
- Subsequent premium payments: Nil
- Minimum premium: Rs 40,000
- Maximum premium: No limit, subject to underwriting
- Minimum sum assured: Rs 400,000 (10x of single premium paid)
- Maximum sum assured: No limit, subject to underwriting
What are the premiums to be paid?
They are categorized into 5 different bands
- Band-1 : Rs 40,000 to Rs 99,999
- Band-2 : Rs 100,000 to Rs 249,999
- Band-3 : Rs 250,000 to Rs 999,999
- Band-4 : Rs 10,00,000 to Rs 24,99,999
- Band-5 : Rs 25,00,000 and above
Benefits of Edelweiss Tokio Single pay assurance plan
a) Death Benefit: Sum assured equal to 10 times of single premium paid
b) Maturity benefit: This is payable at the end of the policy term i.e. end of 10 years policy term. Guaranteed benefit depending on age, gender and premium band
What are the maturity benefits in Edelweiss Tokio Single pay assurance plan
The maturity benefit is paid based on age and band. Please see the below table which indicates the maturity amount based on the single premium paid (Rs 1,000 is taken as sample premium for illustration purpose)
Age Maturity (Yrs) Band-1 Band-2 Band-3 Band-4 Band-5
30 1,782 1,801 1,865 1,904 1,924
35 1,728 1,747 1,818 1,863 1,884
40 1,625 1,645 1,730 1,784 1,808
45 1,438 1,458 1,571 1,644 1,672
50 1,119 1,141 1,304 1,411 1,449
- The annualized returns would work out between 5.4% (Band-1) to 6.15% (Band-5) at 30 years age maturity (a 20 year individual taking insurance which gets matured at 30 years of age)
- The annualized returns would work out between 4.5% (Band-1) to 5.5% (Band-5) at 40 years age maturity (a 30 year individual taking insurance which gets matured at 40 years of age)
- The annualized returns would work out between 1% (Band-1) to 3.4% (Band-5) at 50 years age maturity (a 40 year individual taking insurance which gets matured at 50 years of age)
c) Surrender benefits
If you surrender the insurance plan, you would get below benefits
Year Surrender Benefits
- 50% of Maturity benefit or 80% of premium – Whichever is higher
- 54% of Maturity benefit or 80% of premium – Whichever is higher
- 59% of Maturity benefit or 90% of premium – Whichever is higher
- 63% of Maturity benefit or 90% of premium – Whichever is higher
- 68% of Maturity benefit or 90% of premium – Whichever is higher
- 74% of Maturity benefit or 90% of premium – Whichever is higher
- 80% of Maturity benefit or 90% of premium – Whichever is higher
- 86% of Maturity benefit or 90% of premium – Whichever is higher
- 93% of Maturity benefit or 90% of premium – Whichever is higher
You can take loan upto 90% of the surrender value of the policy. Interest would be charged on outstanding at SBI base rate +1.75%
Are there any riders?
- Accident and permanent disability rider
- Accidental death benefit rider
- Term rider
- Critical illness rider
The above riders sum assured cannot exceed the base sum assured. Also the premium charged for above riders would not exceed 30% of base premium.
LIC Jeevan Sugam Vs Edelweiss Tokio Single pay assurance plan
Thought both these insurance plans have similar features about policy term and risk coverage, below are the major differences between these two.
LIC Jeevan Sugam offers higher returns compared to Edelweiss single pay assurance plan. For a 30 year insurance person, LIC Jeevan returns worked out around 5.98% compared to Edelweiss returns of 5.4% to 6.4%. If you are investing the amounts which would fall under Band-1 or Band-2 or Band-3, LIC Jeevan Sugam would be the best plan.
Similarly for a 40 year insured person, the returns in LIC Jeevan Sugam are higher compared to Edelweiss assurance plan.
Conclusion: As I always say, insurance is a need and not investment. If you are looking purely from investment perspective among insurance products, there are better insurance plans like LIC Jeevan Sugam. If you are at 40 years of age and the maturity would be at 50 years of your age and if you pay single premium of Rs 40,000, you would get 1% return which I feel not worth considering this product.
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Should you buy Edelweiss Tokio Single Pay Assurance plan
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