Why should you avoid Aviva Affluence ULIP of HNI?
A few weeks back, Aviva Life insurance, private insurer has launched a Unit Link Insurance Plan for High Net Worth Individuals (HNI’s). There is talk that this scheme offers several good features compared to other ULIP plans. One can pay premiums for specific terms. One can do systematic withdrawal from this plan. Should you opt for Aviva Affluence ULIP Plan for HNI? What are the hidden factors in this insurance plan? Why should you avoid Aviva Affluence ULIP of HNI? In this article, I would review Aviva Affluence ULIP HNI plan and provide my insights to it.
Features of Aviva Affluence ULIP for HNI
This is a Unit Linked Insurance plan.
- The plan offers an option to choose from different premium payment terms as either for a limited period of 5,7,10, or 15 years or for the entire tenure of the policy which is 30 years.
- It allows the investor to invest by opting from the 7 funds and invest in individual fund or to invest in making a combination from the 7 fund options depending upon the investor risk taking desire and capacity.
- It provides option to switch over the equity fund on a weekly or monthly manner without involving any cost.
- Systematic partial withdrawal to handle the planned and unplanned cash needs of the investor. This is allowed 4 times in a policy year.
- Payment of fund value with maturity booster additions of policy term completion.
- The plan privileges, regular interaction with fund manager for better awareness of the financial world to the customer.
- Facilitates premium collection from a location of choice.
- Dedicated customer desk for prioritized and uninterrupted service and query resolution.
- Scheme gifts the investor life protection with inbuilt accidental cover for exigencies.
Who is eligible to take this plan?
This plan targets high net worth individuals, i.e. Individuals having high investible capital and having a desire of wealth multiplication. A high net worth individuals, is one who has a high net worth value and this Aviva Affluence – ULIP plan is launched keeping in view such an audience. How a person is classified to be a high net worth individual depends on how the bank wishes to segment its market as there are distinct classification of high net worth individuals.
What are the plan details?
What is the talk of the town?
It is a good plan as it ensures that the wealth is multiplied manifold, over a certain period of time. It ensures that the investors enjoy the financial freedom today along with a security for the future, so that there is no doubt that the scheme is worth investing in. This plan is being offered to the customers by the best advisors of the Aviva group, with a view of the consumer’s profile it is intended for. It is a good scheme which is not only providing customers wealth multiplication, but also offers exclusive services to meet the various requirements of its discerning consumers.
What are the hidden factors in this ULIP?
I keep posting negative reviews about ULIP’s as they have high charges that gets deducted from your premium before your money is invested in funds. Many of you might be commenting saying that I am too critic about ULIPs. Let us see what are all charges charged by this company.
- Premium allocation charges of 9% in 1st year, 7% in 2nd year, 6% from 3rd to 10th year and 2% from 11th year onwards.
- Means, if you invest Rs 5 Lakhs per annum, your first year investment from company side would be Rs 4.55 Lakhs only (after deducting Rs 45,000 as premium allocation charges). Now on this, you may get 4% or 8% or 12% returns depending on fund performance. Assume your fund has performed well and gave 10% returns, means in summary you are getting 1% returns (10% minus 9% already deducted as charges). What a pathetic plan?
- Fund management fees of 1.35% per annum.
- Policy administration charges – 0.02% in 2nd to 5th year and 0.2% from the 6th year onwards.
- Mortality charges of 0.79% to 1.5% (depending on your age) per annum would be deducted every month from your fund value.
- Fund is locked for 5 years. Means you cannot surrender the policy before that.
What does the management of Aviva life insurance say about this plan?
Trevor bull, MD and CEO, Aviva India said “ our focus is on segments and geographies where we know we can make a difference to the lives of our customers. Aviva affluence is based on that thought, it’s a total customer proposition meant for a select audience that desires to multiply its wealth”.
Should you opt for Aviva Affluence ULIP for HNI?
The policy targets at the high net worth individuals. It is so because the Aviva’s customer research provided an insight that such individuals are looking out for such type of financial investments that would multiply their wealth and along with that, provide customized services to match their needs.
On the other side of the story, what is that it gives to HNI’s? Policy administration charges, fund management fees and other charges come to over 12% per annum. Even if you make robost returns of 12%, you are just paying this back to Aviva life insurance. You are not going to get anything from such plans. Yes, you would get risk coverage, which you can anyway get from a term insurance plan. My advice to HNI’s is to stay away from such ULIP policies.
Poilicy brochure can be downloaded here.
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Why should you avoid Aviva Affluence ULIP of HNI