Financial Daily from THE HINDU group of publications
Sunday, Dec 26, 2004
Financial Daily from THE HINDU group of publications Sunday, Dec 26, 2004 |
|
|
|
|
|
Investment World
-
Life Insurance Money & Banking - Life Insurance Columns - Insurance Corner ING Vysya Life's Future Perfect Sowmya Sundar
`Future Perfect' is an insurance-cum-savings plan with all the regular features of a unit-linked plan, such as flexible life cover, top up contributions, choice of investment funds and switch benefits.
An expensive policy
The charges for ING Vysya's plan are higher than those of other unit-linked plans in the market. The fund management expenses are comparable, but the premium allocation charge is far higher than at least a few comparable products. Most companies charge a regular allocation rate of 1-2 per cent of the regular premiums and 15-20 per cent of the first-year premium. But ING Vysya's allocation rate is much higher at 45 per cent of the first-year premium, 7.5 per cent in year two and 4 per cent thereafter. Therefore, on an average, if you are looking at a 20-year premium contribution period, your average allocation charge would be 6.23 per cent of the total premiums contributed. In addition to the allocation rate, you also bear other charges, such as administration charges, fixed and variable policy charges, and switch and surrender charges as and when applicable. The policy is structured such that it is not suitable for small investors. A minimum annual contribution of Rs 15,000 is required. Higher the premium contribution, lower the charges.
Long-term lock-in
Most linked policies also give you the flexibility to withdraw from your investment account at any time after a certain period, say, three to five years, subject to a minimum balance in your investment account. INGs `Future Perfect' works like a whole life policy that matures at age 80. You get the maturity benefit, that is, the amount accumulated in your investment account at age 80. You start getting survival benefits after 60, starting with an initial rate of 5 per cent of the balance in the investment account. Each policy year, the survival benefit rate increases by half a percentage point. ING has introduced the concept of partial and total surrender, which involves a charge if you want to withdraw before maturity. You can surrender partially only twice, between the 6th policy year and the due date of the first survival benefit. The partial surrender is restricted to a maximum of 25 per cent of the balance in the investment account subject to a minimum balance of Rs 25,000 in the account. Thus, once you have taken the plan, you are locked in and have little leeway to switch to another insurance provider if you are not satisfied with the investment performance.
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|