Skip to main content

ULIP Review: Wealthsurance

 

Though Wealthsurance has a varied investment option that caters to investors with different risk profiles, its expensive cost structure may trim down overall returns

 

WEALTHsurance is a flagship unit-linked insurance plan of IDBI Federal Life Insurance, bundled with both regular Ulip features and investment option. It has 13 investment options, including both guaranteed return funds and nonguaranteed market linked funds that invest in stock, bonds and money market.

COST STRUCTURE:

Compared to most other plans in the Ulip category, Wealthsurance seems to be a little expensive. The premium allocation charge is very high, with trailing allocation charge of 4.9% per annum. The additional premium paid also has 3.3% charges. Policy administration charges are low but when both are combined, the policy appears costly. Overall, the charges for single premium are better compared with that of regular premium. Mortality charge is almost 65% higher than the LIC mortality table, when most other insurance companies have it around 20-30% high.

BENEFITS:

The uniqueness of the plan lies in the varied investment options (funds) to cater to all risk profiles. Investor can switch from one option to another free of cost. Wealthsurance also offers six riders, including health benefit, accidental and disability benefit and premium waiver option. All these features make this policy quite flexible for investors.

PERFORMANCE:

Overall, most of the funds under the plan have given decent returns. Returns of the two guaranteed funds, monthly guarantee interest fund and guarantee return fund, have been 7.95% and 7%, respectively over two years.The policy also has four equity funds that differ from each other. Equity growth fund is best performer by generating 51% absolute returns while Nifty Index fund generated just about 18% returns as against 36% returns by the benchmark Nifty.


   Among the three debt fund options available, liquid and income funds have generated better returns compared to the benchmark. IDBI also offers asset allocation option wherein, depending on the risk profile of individual, the funds are invested in both equity and debt funds. This option gives good return for most conservative investors (those with very low risk appetite) also.


   Lastly, for those investors concerned about safeguarding their capital with little upside returns Wealthsurance has dynamic guaranteed fund that provide guarantee for highest net asset value (NAV).

PORTFOLIO REVIEW:

Wealthsurance offers four different genres of equity funds. However, the portfolio in terms of sector allocation of most of these funds is very similar. Portfolio of pure fund is slightly different since it does not invest in sectors that are considered harmful for the society such as tobacco and alcohol. The scheme has high exposure in infotech, banking and financial services. IDBI is reasonably underweight on the oil and gas sector due to policy uncertainty and high crude prices. The company has cut down exposure in defensive sector like healthcare and FMCG. Some sectors, such as metals seem to be completely written off by the fund manager. The fund manager has affirmed that only 10% of the portfolio is churned annually. This ratio of portfolio churning can be precarious for the funds especially in such volatile market scenario.

DEATH/MATURITY BENEFITS:

Upon maturity, the policyholder receives the amount accumulated in the fund. In case of demise of the policyholder, the nominee receives higher of the sum assured or the fund value, subject to a minimum of 105% of the basic total premium paid towards the policy over the period. For single premium, sum assured is between 1.25 and 5 times of the premium.For instance, say a 35-year-old healthy male invests


   25,000 per annum in equity fund for a period of 20 years. Assuming sum assured equivalent to 10 times the annual premium, the total sum assured, in case of any eventuality, would be 2.5 lakh. By the end of 20 years, assuming the rate of return of 6% and 10%, the fund value shall be 7,62,191 and 12,08,138, respectively. So, the net yield in the hands of investors after factoring the costs would be 3.92% and 7.88% (approx.), respectively per annum

OUR VIEW:

Wealthsurance, though a very comprehensive product, has varied investment option that caters to investors with different risk profiles. The asset allocator option is quite unique to this product. However, its expensive cost structure may trim down the overall returns of the investor in long term.

 

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now