Since IRDA started a mission to protect consumer interest, Insurance companies adjusted to the new normal and are now getting a step ahead to service their policyholders in lower cost and efficient claim management. Also, the disruptive technological space has helped them to lower their overall costs. However, it is truly the customer obsession approach, which has enabled Edelweiss Tokio Life to come up with a unique ULIP product, whose cost claims turns out to be lower than direct mutual funds (equity), if one chooses the 20-year pay term for 20-year policy at below 1.5%.
While this looks too good to be true, the Edelweiss team calls it #Unyakeenable. In this post, I intend to write all the nuances you must know about the plan, and the best option available in the plan.
Edelweiss Tokio Wealth Plus – This is an insurance-cum-investment plan which invests the premium. The feature of the policy is they invest 100% of the premium into the investment and charges less than 2% over a 20 year period for the fund management fee and mortality charges. The aim of this insurance plan is to give superior investment return while covering ten times the annual premium as the sum insured.
The cost and the investment returns are comparable to direct Mutual Funds returns.
Features of the Wealth Plus
· Entry age – 1 year onwards
· Policy term – 10 year to 20 years
· Payment term – 5 – 20 years
· Payment frequency – monthly, semi-annually, half-yearly, and annually
· Minimum premium – 48,000 a year for a minimum of 10-year payment term
60,000 Rs. A year for more than 10 years term
· Investment options – Investors have an option to choose one of the following investment strategies based on your profile and risk appetite:
– Life stage and duration based strategy – Company manages the asset allocation based on the policyholders’ age and remaining years to policy maturity
– Self-Managed Strategy – For a savvy investor, money will be allocated to your choice of fund(s)
The funds the plan invests in are highly rated (4 STAR and 5 STAR) by the international rating agency Morning Star.
Highlights of the plan
· 80% of the annual premium is reinvested by the insurer in what can be termed as loyalty program by the common man. Every year, for the first 5 years, the insurer adds 1% of the premium to the investment. From the 6th year to 10th year, the company adds 3% each at the end of the year. 11th to 15th year, 5% of the premium is added, and 15th to 20th year, 7% of the annual premium will be added
· Top- up facility available, minimum amount Rs. 5000
Point to Note – This feature is applicable depending on the payment tenure decided by the policy holder. Higher payment term one choose, higher return one get
Rising Star Benefit
The best part of the plan is their Rising Star Benefit. While it is a long-term commitment, one may choose it for protecting their child’s future. In this option, both the parent (policy holder) and child are insured.
Who Should Buy this Product?
It is important to know what are you buying and why. This is a great investment product if you have a long-term commitment and minimum Rs. 48,000 a year. This plan is a great buy for goals like child education or marriage plan or retirement. To make maximum of this insurance plan, start early and choose the 20 years premium term and 20 years policy term.
What is in it for the Insurer?
One should ask this question to oneself when any investment offers return higher than usual industry standards. In the current scenario, ULIP charges 3-5% on the investment yearly to manage various expenses like management fees, brokers/agents, marketing channel, and even customer acquisition activity, paperwork, etc. To minimize the cost, Edelweiss has come up with a win-win situation; they are rewarding the customer for continuing investment for 20 years, by incentivizing them with extra units every year – 1% for the first 5 years, 3% from the 6th to 10th year, 5% from 11th to 15th year, and 7% from 16th to 20th year. This means, the longer you invest, the higher the percentage loyalty addition you get.
Through this plan, the insurer is able to give the best in class return as they reduce customer acquisition cost. It is only available online on Policybazaar and Edelweiss Tokio website.
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