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Nath Balakrishnan

IF the popularity of unit-linked insurance plans over the past year is any indication, it follows that such a product should be an integral part of any company's bouquet of offerings. AMP Sanmar joined the list of insurers with such an offering with the launch of Kanaka Shree a few days ago. We will at some of the key features:

Plan features

Unit-linked plans have been positioned on the dual planks of flexibility and convenience.

The choice to decide the extent to which policyholders want life cover and the freedom to increase or decrease it at a subsequent date; the choice to pick which investment fund to park monies in depending on one's risk appetite; the ability to switch between one investment fund to another; the benefit of liquidity, as policyholders can effect partial withdrawals in times of need; and the advantage of bringing in top up amounts as and when one is comfortable on the liquidity front are some factors that led to investors lapping up this class of insurance products. Kanaka Shree, too, offers these features.

Kanaka Shree offers investors four options to park their funds in. They are the Capital Secure Fund, the Balanced Fund, the Growth Fund and the Equity.

In terms of the risk profile, the Capital Secure Fund carries the least risk; the Equity Fund could be the choice of those investors with a high-risk appetite.

One can choose to invest across funds. In such a case, the maximum amount that can be invested in the Capital Secure Fund is 20 per cent.

The product also throws in one free switch between funds in each year; subsequent switches attract a charge. Also, unused free switches cannot be carried forward into the subsequent year.

Payouts

Survival benefits: The entire value of the units credited to one's investment account will be paid.

This amount will be a function of the investment performance of the various funds in which the funds are parked.

Death benefit: The beneficiary will receive either the value of the units or the sum assured, whichever is higher. Do note that charges towards mortality risk will be deducted from the premium payments, depending on the extent of cover chosen.

Charges

They are the most critical component of a unit-linked plan. Charges levied include an allocation fee, a monthly administration charge, a charge of insurance cover, investment charges depending on the fund that one chooses to invest in, a flat levy for partial withdrawals and a charge if one opts for more than one switch a year. It is imperative to familiarise oneself with these charges to avoid any shocks later.

(Readers are requested to compare products featured under this column with similar ones offered by other players.)

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