Aegon Life iMaximizer ULIP comes with zero Allocation Charges – Should you opt?
When stock markets are crashing, investors are looking for safer investment options. ULIP’s are one of the investment options where investors were resisting to invest due to higher premium allocation charge and high agents commission. However, I the last few years many insurance companies have come up with low allocation charges in ULIPs. One of them is from Aegon Life ULIP Plan. Aegon Life iMaximizer ULIP comes with zero allocation charges. It has some exciting features. What are ULIPs? What are the Features of Aegon Life iMaximizer Plan? How are the funds under Aegon Life iMaximizer ULIP Plan are performing in the last 3-5 years? Should you opt for Aegon Life iMaximizer ULIP Plan?
Also Read: Top and Best Health Insurance Plans in India
What are ULIPs?
Unit Linked Insurance Plan (ULIPs) is basically insurance plans that serve dual purpose – life insurance as well as investment. Being a hybrid product, a portion of the insurance premium, you pay as the policy holder, goes towards life insurance while the other portion is invested in capital and money markets. However, investors have been cheated by insurance companies prior to 2009 with high premium allocation charges and high agent commissions. I have been saying that if you are holding any such ULIPs that is eating away your premium and they are investing a small portion as an investment, you should get rid of such ULIPs. I was advising investors that one can look for low charged plans if at all you are opting for such ULIPs.
Introduction to Aegon Life iMaximizer ULIP
The Aegon Life iMaximizer is an online ULIP plan that provides the dual benefit of wealth maximization and insurance cover under a single plan. The policy has many unique features and benefits. One of the biggest features is zero allocation charges which means that the amount you pay is fully invested in the fund of your choice. It becomes more useful as it comes with a partial withdrawal feature. Here, you can avail a withdrawal even before the policy is matured.
Features of Aegon Life iMaximizer Plan
1) It is a Unit Linked Plan with limited pay and the regular pay option of premium payment.
2) There is no premium allocation charge under the plan.
3) Even top-up premiums too do not attract allocation charges.
4) There are 3 types of funds available for investment – Blue chip fund, debt fund and secure fund.
5) On the death of the insured, there are two benefit plans available. The nominee can choose any one of them. Under Option 2, Death Benefit, Additional Savings benefit and Income Benefit is also payable.
Benefits of Aegon Life iMaximizer Plan
The key benefits of the policy are:
1) Maturity Benefits: If the insured has paid the premium regularly and survived the term of policy, he will receive the total fund value on maturity.
2) Death Benefits: In case of death of the policyholder, there are two options available to the nominee.
Benefit Option 1 – Higher of the a) Sum Assured (SA) including top-up SA excludes any partial withdrawals made in the last 2 years or b) Fund value, including the top-up fund value or 105% of premiums paid is payable to the nominee.
Benefit Option 2 – Higher of the SA including the top-up SA 105% of all premiums paid is payable immediately on death. All future premiums are waived off and paid for by the company under the Additional Saving Benefit, an amount equal to annual premium is paid every year till the end of the term under the Income Benefit and on maturity, total fund value including the top-up Fund value which was automatically allocated to the Secure fund on death is paid.
3) Redemption of units post lock-in period: Once the lock-in period is over, you can redeem some of your units at that day’s value, that’s too tax-free.
4) Switch between Funds: You can switch from debt to equity fund or vice-versa, or some combination depending on your goal change or risk-tolerance during the policy period.
5) Income Tax Benefits: The premium paid is eligible for benefit under sec. 80C of the Income Tax Act, 1961 and on claims under sec. 10(10).
What is eligibility details / specification?
The following are the eligibility criteria of the policy:
1) The minimum entry age of the policy is 7 years and maximum is 55 years.
2) The maturity age of the policy is 70 years.
3) One can take the policy for 15, 20 or 25 years.
4) One can pay premium either yearly or monthly.
5) The minimum Premium Payment Term (PPT) is 5 years and maximum is 25 years.
6) The minimum premium range starts from Rs 24,000 and there is no upper limit to it.
Aegon Life iMaximizer ULIP Plan explained with an illustration
Assume Mr. Mahesh, 30 years a salaried person with his wife (homemaker) and have a 3 months son has taken this ULIP Plan. Here is how the plan goes.
What is the grace period?
The policy has the provision of providing a grace period in the case of failure of premium payment, i.e. 15 days for monthly mode and 30 days for other modes.
What are the various charges in this ULIP Plan?
Let us see various allocation charges.
1) There are no premium allocation charges in this plan.
2) There are policy administration charges of Rs 100 per month.
3) Fund Management charges (which are generally charged in any mutual fund scheme) are 1% of secure fund, 1.35% of stable fund, 1.35% of accelerator fund and 0.5% of discontinued fund.
4) Mortality charge pays for the Life Coverage provided according to the Sum At Risk. This is based on the mortality rates, which are specified for all ages and amounts of cover being provided.
What are various inclusions in Aegon Life iMaximizer Plan?
1) Partial withdrawals up to 4 times are allowed every year with a maximum of 20% of fund value.
2) Free switching between the funds is allowed up to 4 times in a year.
3) Future premiums can be redirected to a new fund through the premium redirection option of which 2 are free.
4) Top-ups are allowed for increasing the fund value with a minimum of Rs 5,000.
5) The corresponding top-up SA will be 10 * top-up premium if age is up to 35 years, 1.25 * top-up premium if the age is up to 44 years and 1.10 * top-up premium if age is 45 years or more.
What if the policy is terminated before the end of maturity period?
If the policy is terminated before the completion of 5 years, the fund value net of discontinuation charge will be credited to the Discontinuance policy fund where it will earn a minimum of 4% per annum growth. After five years are completed, the fund value as per that account on that date is paid to the policyholder. If surrendered after completing 5 years of policy, the entire fund value on that date is transferred to the policyholder without deducting any charges.
If you are not satisfied with the terms and conditions of the policy, you have an option of cancelling the policy within 30 days of receiving the documents of the policy, provided that there is no claim.
How are the funds under Aegon Life iMaximizer ULIP Plan are performing in the last 5 years?
Let us check how the performance of these funds under imaximizer plan
1) Aegeon Life Blue Chip Fund – This fund gave 25% absolute returns in the last 3 years / 7.7% annualized returns in the last 3 years.
2) Aegeon Life Accelerator Fund – This fund gave 78% absolute returns in the last 5 years / 12% annualized returns in the last 5 years.
3) Aegeon Life Secure Fund – This fund gave 37% absolute returns in the last 5 years / 6.5% annualized returns in the last 5 years.
Should you opt for Aegon Life iMaximizer ULIP Plan?
Aegon life is a much reputed brand in the insurance sector. It comes up with some excellent plans with exceptional features. Aegon Life iMaximizer ULIP Plan is one such policy that aims investment along with insurance cover. If you are a low risk taker and do not trust in mutual fund schemes for investment, you can consider such ULIP plans that come with low charges.
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Aegon Life iMaximizer ULIP comes with zero Allocation Charges – Should you opt