Wednesday, May 3, 2017

Plan your life-goals with the new age ULIP!

Often my friend Sheena is found daydreaming about her stress-free retired life, zooming past the country sides on a road trip with her husband, painting on a Goa beach and having detox SPA at Kerala. All of 35, Sheena is a school teacher and mother of a 5-year-old. One fine day, she called me up and asked me if it’s a feasible life goal she has and if her current investment style will be enough to take care of future needs? Averse from the new age financial instruments, her FD returns promised very low return and her worry of not able to fulfill her dreams weighed her down.
Like her, there are many of us, who undermine the new age financial products. There are many products like mutual funds and ULIPs which offer higher return and over the long term with some planning and discipline, reducing the risk with a disciplined approach. ULIPs offering SWP, a tax-free regular income can be generated for a long term period by selling units, which can work very well as pension or second income.

In this post, I would like to elaborate on one such product with smart features to suit the need of investors and help them realise their goals, and how one can make most out of it.
#ULIP, known to be insurance cum investment product, is actually an investment cum insurance product with some awesome features and thanks to stringent guidelines by IRDA.
And if  you already consider the new age ULIP as a dynamic investment tool with an additional life cover, you are a sorted investor. The main hurdle we find with the investments is choosing vehicles with irrational expectations because of lack of understanding and product and mis-selling. 

One such plan actually broke my misconception about ULIP is Wealth Ultima by Edelweiss Tokio Life Insurance. The ultra-low cost ULIP rewards you for being a disciplined long-term investor.
Edelweiss Tokio Wealth Ultima, a new product on the block comes with some amazing flexible features given the multiple life goals it aims to attain.
Notable Features
  • < >EdelweissTokioLife- Wealth Ultima is bundled with insurance cover with investment options of equity, balanced and bond funds
    Policy Term and Premium Paying Term as per your need:
    • Policy Term ranges from 10 years to ‘till age 100’.
    • Premium Paying Term* ranges from 5 years to ‘till the end of the policy term’
  • Policyholders also have a choice to switch portfolio in funds o his/her own
  • ULIP’s are a good choice as they allow an investor to choose market tools to invest in, and change their choice depending on how the market turns
  • The approximate cost per year based on the tenure chosen
  • Policy term – Minimum 10 years of maximum 100-entry age
  • Entry age – Minimum 0 years to maximum 70 years
  • Policy payment term – Minimum 5 years, maximum 70 –entry age or 100-entry age (depending on the policy chosen)
    The disciplined approach



  • Systematic monthly (Investment) plan – This feature gives the investor the freedom to invest a pre-decided amount monthly in the plan. It helps to address the short-term volatility of the market and rupee cost averaging of the investment
  • Systematic transfer plan – Based on requirement one may choose to protect their investment by systematically transferring the profit amount into less risky bond funds, which can be done with target profit booking/ life stage and remaining duration analysis, one also have a choice to self-manage the portfolio
  • Withdrawal - Retirement planning through SWP – Often we are worried about accumulating wealth, seldom we think on how to manage and withdraw investments in a logical manner. SWP in #Wealth-Ultima gives an opportunity to the investor to choose SWP after 10 years of lock-in period, wherein investor can withdraw the specific number of units according to his choice (Monthly/quarterly/semi-annually/annually) to fund their sabbatical/ retirement or just a second income. This unlike pension products don’t attract tax enjoying the triple tax benefit under section 80c
    Special features of the products
  • Double indemnity benefit under Little Champ benefit – Little champ benefit aiming to protect the future of a child is taken by one parent and can be started at ‘0 years’. In the case of the death of parent, the future premiums are waived but the plan continues for the child. Top-Ups – you may choose to top-up your investment flexibly
  • Reduction / Increase in policy payment term allowed  
  • It pays to stay – “Additions to the fund”
    • Loyalty additions  - Loyalty Additions will be added to the Fund Value at the end of every Policy Year, starting from the end of sixth Policy Year till the end of the Premium Paying Term
    • Booster additions - added to the Fund Value at the end of every fifth Policy Year starting from
    • end of 10th Policy Year till the Maturity Date of the Policy
    • Guaranteed additions - Guaranteed Additions are added to the Fund Value at the end of every Policy Year, starting from the end of sixth Policy Year till the Maturity Date of the policy



      My take – I also introduced this product to Sheena and she found that ULIP is one of the most cost-effective investments cum insurance tool for a long term horizon. The product offers dual benefit of investment and insurance, which makes it a complex in nature. Also, the product demands long-term disciplined approach and commitment. Looking at the above two points, it is prudent to consult a financial advisor and insurance company to make an informed decision. You must ask the advisor about the product features, lock-in period, policy charges and all benefits.
      If the investment is made with thorough understanding, one can enjoy maximum benefit.
      Please visit the website and download the product brochure for better understanding.
      Thanks to Edelweiss Tokio Life Wealth Ultima, it gave Sheena a chance to fulfil her dreams!

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