So to maintain the spark in ULIPs, insurance companies are trying to entice buyers by offering guaranteed returns on ULIPs!
How's that possible? Let’s decode.
As of now three insurance companies are offering guaranteed ULIPs.
SBI Life Insurance Smart ULIP
Birla Sun Life Insurance Platinum Plus II
Tata AIG Life Insurance InvestAssure Apex
Unlike non-guaranteed ULIPs, these newly launched plans shield you from the downside of the market by assuring guaranteed returns.
These plans are like investing in fixed income products that offer secured returns.
Workings of the plan: These plans are structured into four phases.
Subscription phase: During this phase, the plan is open for a limited time only. For instance, SBI’s Smart ULIP is open for a period of one year.
Premium paying phase: In this phase, you pay premium only for a fixed term, which is 3 years. However, SBI’s Smart ULIP allows you to choose the premium paying term for 3 or 5 years.
NAV build-up phase: During this phase, the reset dates, set by the companies are exercised. Reset dates are pre-decided dates fixed by insurance companies to record NAVs. Birla Sun Life and Tata AIG record NAV once a month on the reset date decided by them whereas SBI has two reset dates every month to record NAV.
These plans have a fixed term of 10 years.
Accumulation phase: The remaining policy term i.e. the tenure left after all the reset dates have been exercised is the accumulation phase.
What’s unique about guaranteed ULIPs is that they offer the highest Net Asset Value (NAV) recorded over a given a period of time.
Benefits:
Maturity benefits: On maturity, you get the highest of:
a. The fund value as on date of maturity OR
b. The fund value at the rate of 'highest recorded NAV' OR
c. The starting NAV of Rs 10 per unit
The is highest recorded NAV is the higest NAV among all reset dates.
Death benefits: In case of your untimely death, either fund value or sum assured will be paid out to your nominee, depending on whichever is higher.
