ING Market Shield offers the benefit of guarantee on death, surrender and partial withdrawal. This sets the product apart from other schemes that offer guarantee only on maturity
GUARANTEED NAV plans have become quite popular among insurers. After the introduction of the new pricing norms by insurance regulators Irda, most life insurance companies have guaranteed NAV scheme in their product basket. Launched in December 2010, ING Market Shield is a type I unit-linked insurance plan that guarantees highest net asset value. This plan offers a minimum guarantee of 80% of the highest NAV. The striking difference of this scheme over other similar plans is that it offers guarantee all the time, including surrender or demise. ING Life offers one investment option to investors under the scheme, the guaranteed NAV funds
COST STRUCTURE:
ING Market Shield's cost structure seems a little more expensive compared to its peers in the category. The policy administration charges are quite high. Any additional premium paid towards investment purposes only (top-ups) are charged at 2% as allocation charge. The fund management charge, which is also high, includes guarantee charges of 0.5% making the total charge at 1.6%. The mortality charge is only 8% higher than LIC rates, which are relatively low.
Considering these charges, if the fund were to generate returns at 6% and 10% as mandated by the Insurance Regulatory and Development Authority (Irda), the net yield in the hands of investors after factoring the above costs would be 3.43% and 7.35% (approx.),
BENEFIT:
Most of the guaranteed plans available in the market offer guarantee only on maturity, however, ING Market Shield offers guarantee all the time, including surrender or demise. Also, ING Market Shield invests in the equity market increasing the possibility of maximising the returns. This is unlike most of the other guaranteed NAV plans as they only invest in debt instrument. However, due to this, Market Shield offers 80% of the guarantee rather than 100%. So, if the net asset value of the plan increases from 10 to 20, the guaranteed NAV will only be 16. The scheme allows for longer policy tenure between 15 and 20 years, giving option to investor to stay invested for long.
PERFORMANCE & PORTFOLIO:
ING Market Shield offers guaranteed NAV fund. This fund has over 8 crore of asset under management (AUM). Guaranteed NAV fund can invest in equities to the extent of 60%. However, the current equity exposure is only 51%.
The equity portfolio replicates the movement of the Nifty. The rest 49% is either held as cash or invested in shortterm debts. Guaranteed NAV fund is just a month old. Its NAV fell by 2.4% since its inception but it will be inappropriate to draw conclusions from its performance at a nascent stage.
DEATH/ MATURITY BANEFIT:
Upon maturity, the policyholder receives the amount accumulated in the fund based on higher of the current NAV or guaranteed NAV. In the case of death, higher of the fund value or sum assured will be received. However, even in case of death, the nominee will get the benefit of guarantee.
Suppose, a 35-year-old healthy male invests 50,000 per annum in guaranteed NAV fund of ING Market Shield for a period of 10 years. Assuming sum assured equivalent to 10 times the annual premium, the total sum assured receivable, in case of any eventuality, would be 5 lakh.
Now by the end of 15 years, assuming the rate of return of 6% and 10%, the fund value shall be 7,16,005 and 10,75,086, respectively, receivable on maturity.
