Aegon Religare Invest Maximiser Plan is a basic plan with low flexibility especially in terms of policy tenure and fund options
AEGON Religare Invest Maximiser Plan is a plain vanilla product launched in August 2009. It's a Type I plan that offers the higher of the sum assured and fund value on maturity. This product offers four investment options (funds). One can choose from equity, debt or balanced portfolio.
COST STRUCTURE:
The product has nominal premium allocation charges. Additional premium paid towards investment purposes only (top ups) are charged 1% as allocation charge. With an initial outgo of Rs 480 per annum, its policy administration charges seem to be low. But, with the continuous inflation of 5% p.a., this increases to Rs 1,500 by the end of the policy term (that is fixed at 25 years in this policy.) Considering these charges, if the fund were to generate returns of 6% and 10% , the net yield in the hands of investors would be around 4.4% and 8.4% respectively per annum. This is fairly higher than 3.8% and 7.7% annualised net return offered by its peer products.
BENEFITS:
As an incentive to policyholders, the policy gives loyalty units at 1.5% of the fund value to its policyholders, allotted every third year starting from the tenth policy year. Apart from that, it allows policyholders to take the maturity proceeds in installments over a chosen period (not exceeding five years). The policy also offers riders of accidental death and disability benefit on payment of additional charges.
PERFORMANCE:
Aegon Religare Invest Maximiser is only a year old but the funds have been running for two years now. Except for the debt fund, none of the funds have performed well. The balanced fund, which has 65% of equity, has grossly under performed the Crisil Balanced Fund Index, its benchmark. In the past two years, the net asset value (NAV) of Aegon Religare Enhanced Equity Fund has grown at compounded annual rate of 13.8%, which is fairly lower than the 16-23% returns provided by similar funds of peers. On the contrary, the debt fund has done better than most of the other debt investment options.
PORTFOLIO REVIEW:
Aegon Religare Life Insurance follows a defensive fund management strategy. The company has high exposure to cyclical sectors like financial services. It is optimistic about FMCG and financial sectors. In contrast, it is quite pessimistic about metal, telecom, utilities and oil and gas sectors and has reduced the exposure in the same. It also has low exposure in healthcare. Real estate and media, the sectors that are underperforming, are absent from Invest Maximiser's portfolio.
DEATH/MATURITY BENEFITS:
Upon maturity, the policyholder receives the amount accumulated in the fund, whereas in case of death, higher of the fund value and sum assured will be received. For instance, say, a 35-year-old healthy male invests Rs 50,000 per annum in Enhanced Equity Fund for a period of 25 years. The total sum assured receivable, in case of any eventuality, would be not more than Rs 2.5 lakh. By the end of 25 years, assuming the rate of return of 6% and 10%, the fund value shall be Rs 22,04,284 and Rs 40,20,404 respectively, receivable at the maturity along with the maturity bonus. However, in case of death of the policyholder, say in the sixth policy year, the nominee shall receive higher of the sum assured of Rs 2.5 lakh and the accumulated fund value.
OUR VIEW:
This is a simple Type I product, having fairly low cost structure but sum assured is limited to five times the annual premium. Not only are the investment options limited to four, the portfolio returns of the scheme also lag the returns of other similar funds. Another point to note is that even though the yields are better for the Invest Maximiser Plan, this is mainly due to a much longer fixed policy tenure of 25 years. Further, the policy doesn't have any premium holiday option either. An alternative to the product would be to take a term policy and invest the rest in high performing mutual funds. In case one needs tax exemption, one can opt for equity linked savings scheme (ELSS).
