Edelweiss Tokio Life Wealth Plus Plan – Zero ULIP Charges – Should you opt?
ULIPs that came till 2009 are still showing horror movies to many insured individuals. Many of us stay away from Unit Linked Insurance Plan (ULIPs) due to high allocation charges and policy administration charges. Few weeks back, Edelweiss Tokio Life has launched Edelweiss Tokio Life Wealth Plus Plan which comes with zero ULIP Charges. On top of this, insurance company would add a fixed % age of amount to your fund value. Since it has several unique features, this ULIP is attracting investors now. What are the features of Edelweiss Tokio Life Wealth Plus ULIP Plan? Does the Edelweiss Tokio Life Wealth Plus really comes with zero allocation charges? What are the amounts that this insurance company would add to the ULIP Plan every year? Should you really opt for Edelweiss Tokio Life Wealth Plus ULIP?
Key Features of Edelweiss Tokio Life Wealth Plus ULIP
This is a unit linked insurance plan (ULIP) that helps to create wealth along with providing financial support to the family – this can a one-line definition for this policy. Here are the key features of this ULIP Plan:
1) This insurance Plan comes with zero allocation and policy administration charges.
2) Insurance company would add certain amount every year based on the policy tenure. E.g. 1% would be added for 1-5 years, 3% would be added for 6-10 years etc.,
3) There are 2 investment strategies i.e. one managed by Edelweiss and other one is self managed. Depending on your convenience you can choose the strategy.
4) You can switch between company managed investment strategy to self managed and vice versa for unlimited times.You can also switch between the funds unlimited times.
5) Rising Star optional benefit for securing your child future even in your absence.
Detailed Features of Edelweiss Tokio Life Wealth Plus ULIP
1) Policy Term: The minimum policy term is 10 years and maximum is 20 years.
2) Allocation and administration charges – The entire money is invested as per the investment strategy of investor. No extra charges for fund allocation or administration are levied throughout the policy term.
3) Additional allocations by Insurance Company: During the term of payment of premium, additional allocations is added to the fund for every premium paid. These allocations start at 1% and 5 yearly to 3%, 5% and 7% respectively, thus augmenting wealth accumulation.
4) Partial withdrawal: Partial withdrawal of money is facilitated in case of emergency after the end of 5 policy years.
5) Endless switching between investment strategies: As the investment strategy of insured changes, they can switch from one strategy to another unlimited times.
6) Endless switching between funds: As investment strategy changes, one need to switch from one fund to another. This policy provides endless switches between funds without any charges.
7) Frequency to premium payment: The premium can be paid monthly, quarterly, half-yearly or annually.
8) Tax benefit: The amount paid as premium is eligible to be claimed for deduction u/s 80C, 80CCC upto a limit of Rs. 1,50,000. The deduction is allowed only for the premium that is not exceeding 10% of the actual sum assured.
9) Top-up premium – One can invest their extra fund over and above the premium subject to certain conditions.
10) Rising Star benefit – with the attachment of this benefit, the child’s financial needs of the future are taken care of even in the absence of policyholder. It is an optional benefit. The policyholder can be a parent, grandparent, or guardian who has insurable interest in the insured child. If this benefit is chosen, an extra benefit will be applicable on the life of the policyholder.
11) Investment strategy – There is two investment strategies to be chosen from based on your goals and risk appetite- life-stage and duration-based strategy and self-managed strategy.
Who is eligible to take Edelweiss Tokio Life Wealth Plus Plan?
There are certain eligibility criteria in this policy. The minimum age to enter the policy is 1 year and maximum age is 55 years. The minimum maturity age is 18 years and maximum is 70 years. The minimum premium paying term is 5 years and maximum is equal to policy term.
What are the amounts which insurance company would add to your fund value?
In addition, insurance company also provides additional allocation every year starting from 1st year of the policy till the end of premium paying term. For availing the benefit of extra allocation, all the premiums have to be paid before the end of grace period.
Policy year % of annualized premium
What are various allocation charges in Edelweiss Tokio Life Wealth Plus ULIP?
Wealth plus ensures that 100% of premium paid by policyholder is invested in the fund of your choice and investment strategy. However below are the details of various charges.
1) Mortality charges which would depend based on your age, health and risk profile towards insurance coverage provided to you.
2) Like every ULIP or mutual fund, there would be fund management charges which is fixed at 1.35% per annum.
3) Switching Charges – Nil
4) Premium allocation charges – Nil
5) Premium redirection charges – Nil
6) Partial withdrawal charges – Nil
7) Policy Adminstration charges – Nil
8) Policy discontinuation charges – If discontinued before 5 years, as indicated in the chart. Beyond 5 years it is NIL.
What are the investment strategies in Edelweiss Tokio Life Wealth Plus Plan?
There are two investment strategies in this ULIP Plan.
1) Life Stage and Duration Based Strategy
As the time passed and age of insured increases; it would decrease the policy term. So, this strategy ensures that the money moves from riskier fund to safer funds automatically. Under this strategy, the fund value is distributed between two funds, Equity Large Cap fund and Bonus fund.
2) Self-Managed strategy
Under this strategy, the policyholder can invest the premium in any of the available funds as per his choice based on the risk appetite. One can switch the invested amount in available funds through switching option without any additional charges.
What are various Benefits under Edelweiss Tokio Life Wealth ULIP Plan?
1) Additional Allocation Benefits: This plan aims to invest 100% of your premiums in the fund. Over and above, one would get additional allocation as indicated above
2) Maturity Benefit: At the end of the Policy Term, on survival you will receive the Fund Value as your Maturity Benefit. You have an option to collect your Maturity Benefit in lumpsum or in instalments by choosing the Settlement Option.
3) Death Benefit: In case of unfortunate demise of Life Insured while the Policy is In-Force, the Death Benefit payable to the nominee will be highest of a) Fund Value b) Sum Assured (minus withdrawals if any) c) 105% of premiums paid
4) Rising Star Benefit: Benefits as per the Rising Star option
5) Tax Benefits: Premiums payable under this plan is eligible for income tax benefits u/s 80C.
Edelweiss Tokio Life Wealth Plus Plan explained with an example
Mr.Raghava Rao aged 30 years has taken this ULIP plan for 20 years policy term and 20 years premium payment term and sum insured is for Rs 20 Lakhs. Premium works out to be Rs 2 Lakh per annum.
1) Mr.Raghava Rao would pay yearly premium of Rs 2 Lakhs for 20 years.
2) Insurance company would add additional allocation amount of Rs 2,000 per annum (Rs 2 Lakhs x 1%) from 1st year to 5th year.
3) Insurance company would add Premium Booster amount of Rs 6,000 pear year (Rs 2 Lakhs x 3%) from 6th year to 10th year.
4) Insurance company would add Premium Booster amount of Rs 10,000 pear year (Rs 2 Lakhs x 5%) from 11th year to 15th year.
5) Insurance company would add Premium Booster amount of Rs 14,000 per year (Rs 2 Lakhs x 7%) from 15th year to 20th year.
Mr.Raghava Rao would get the maturity amount of Rs 82.5 Lakhs at approx. 8% investment return.
If Mr.Raghava Rao would die before the maturity, they would get highest of (a) sum assured of Rs 20 Lakhs or (2) fund value.
What is Rising Star Benefit in Edelweiss Tokio Life Wealth Plus Plan?
Insured can also opt for this optional rising star benefit. Following are the benefits under this plan in case Insured dies before the maturity.
1) A lumpsum amount will be paid immediately.
2) An amount equal to the sum of all the future Modal Premiums (if any) shall be credited to the Fund Value.
3) The future Extra Allocation and Premium Booster as and when due would be added to the Fund Value like a premium paying policy where the future premiums are paid on the respective due dates
4) All future premiums will be waived off.
5) Maturity Benefit becomes payable on maturity.
Can you surrender this policy before maturity?
At any stage during the policy term, one can opt for surrendering the policy by giving a written request to Edelweiss Tokio Life. If the surrender request is made before the completion of first 5 years of policy, the fund value after deducting discontinuance charge shall be credited to the account.
If the surrender request is made after the completion of first 5 policy years, the fund value will be credited to your account without any deduction and the policy will terminate.
Currently below are the charges for discontinuation of the policy.
1st year – Lowest of 6% of annualized premium or fund value and maximum is Rs 6,000.
2nd year – Lowest of 4% of annualized premium or fund value and maximum is Rs 5,000.
3rd year – Lowest of 3% of annualized premium or fund value and maximum is Rs 4,000
4th year – Lowest of 2% of annualized premium or fund value and maximum is Rs 2,000
5th year onwards – Nil
Edelweiss Tokio Life Wealth Plus Plan – Zero Charges – Should you opt?
Earlier, we have seen many victims of ULIPs who paid high premiums, however their fund value is still lower than what they invested. This was due to high allocation charges in ULIPs. Edelweiss Tokio Life Wealthplus plan comes with zero ULIP charges. On top of this they would add predefined %age to your fund value. If you surrender your ULIP after 5 years, there would be zero discontinuation charges. The insurance company has won the Outlook Money Award 2016 as Best life Insurer. ULIPs with zero allocation charges are definitely a positive move in insurance industry. If you don’t want to invest in equity or mutual funds, you can invest in such zero charges ULIP Plan. Alternatively, you can consider taking a term insurance plan and invest your savings in top performing mutual funds that can grow your money in long term.
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Edelweiss Tokio Life Wealth Plus Plan – Zero Charges – Should you opt