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ULIP Review: Birla Sun Life Platinum Premier

 

Birla Sun Life Platinum Premier is an investment product rather than insurance. Though it offers guaranteed give benefits the guaranteed, only the highest first three NAV premiums 550

 


   LAUNCHED in December 2009, Birla Sun Life Platinum Premier Plan provides guaranteed highest net asset value (NAV) on the premium invested. The policy offers two investment strategies, such as guaranteed fund option and self-managed option. However, there is not much difference between both these strategies. This is because, in the guaranteed option, the fund assures guaranteed NAV only on the premium paid in the first three years. Thus, after the third year under both the strategies, funds are self-managed. Investors who are more conservative in their approach may find the guaranteed strategy more suitable though it has higher fund management fees. Irrespective of strategies chosen, the plan offers 10 investment options having various asset allocation compositions that cater to all segments of investors. For instance, investors with high risk return appetite can choose from magnifier, maximiser, multiplier and super 20 fund while those looking for conservative returns can go for some balanced or debt-oriented fund.

COST STRUCTURE:

The gross cost structure is on a higher side compared to other similar products in the market. The premium allocation charge in total is 55% of the premium; policy administration charges are fixed at 720 except for the first three years. But if one sees the net cost that is calculated after factoring for the loyalty units and maturity benefit the product stands quite at par with its competitors. The fund management charge is higher especially for the guaranteed fund option.

BENEFITS:

The policy offers flexibility in terms of funds. The policy gives guaranteed benefits, but the catch here is that only the first three premiums are invested in the guaranteed platinum premier fund and earn guaranteed highest NAV, while the rest seven premiums are invested in the 10 fund options available. This policy also offers maturity benefit worth 50% of the annual premium. Also it gives an option to stop premium payment after the third policy year. In this case your whole investment earns highest guaranteed NAV. This is a regular pattern of investment followed in this type of plan.

PERFORMANCE:

The plan offers a platinum premier fund in which the first three premiums are invested. The highest NAV is calculated on a daily basis for seven years three months. It's a closed-ended and after every three months, the company closes the existing fund and releases a similar new fund. Since it's a guaranteed fund, it is managed in a conservative manner. The returns are not as high as that of an equity-oriented fund. But for a risk-averse investor, it's a good choice since the fund does not carry high risk and at the same time gives guaranteed highest NAV at maturity. The fund has not done so well since its inception but in the past one year, its performance has been phenomenal with 34% return. Being a mid-cap, it can deliver high returns but at a high risk and one should be cautious while investing in it. For investors looking to get advantage of the large cap can opt for super 20 since this fund invests only in long-term bluechip funds.

PORTFOLIO REVIEW:

Birla Sun Life has an equity-oriented basket of funds, which suggests high risk with high returns. The company has high mid-cap equity exposure, the equity fund comprises about 15% funds parked in mid-cap stocks. The company has comparatively low exposure in banking and oil and gas sectors. At the same time the exposure in capital goods and IT sectors is considerably high. The fund manager is quite bullish on sectors such as capital goods, pharma, auto and cement while metal and FMCG are a few sectors where the company has reduced its exposure. The fund manager is also positive on companies such as Bharti Airtel in the telecom sector. While the fund manager has affirmed occasional churning of the portfolio, it is restricted to only 25% of the stock comprising of mid-cap stocks.

DEATH/MATURITY BENEFITS:

In case of death, higher of the fund value or sum assured will be received whereas upon maturity, the policyholder receives the amount accumulated in the fund. Accumulated amount will include guaranteed amount from the platinum premier fund on the first three premium invested and the rest available in the funds. The platinum premier fund guarantees at least a minimum of 10 per unit in the fund.

OUR VIEW:

Birla Sun Life Platinum Premier Plan is mainly an investment product rather than insurance. It is a short-term product with flexibility of paying only three premiums. Cost structure is decent when compared to similar products. Guaranteed NAV is an attractive concept but it is mainly for investors who are risk averse. In this plan, guaranteed NAV is only earned in the first three premiums. The good thing about the product is the varied basket of funds available for investment. Conservative investors can opt for either three premium payments with guaranteed returns or the guaranteed investment option. However those expecting higher returns on their investment can opt for self-managed fund and opt for both equity and balanced funds in right proportions.

 

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