The Hindu Business Line : Birla Sun Life SimplyLife

NEW product launches from private insurance players may no longer be a flurry as was the case a couple of years ago, but they have not completely died down either. This week, we look at the features of SimplyLife, Birla Sun Life's new plan on the block.

Plan details

SimplyLife is a limited-duration policy, with the plan maturing in 10 years from the date of its commencement. The face amount under the policy is capped at five times the annual premium payment.

Premium payments, after the deduction of charges under various heads, are invested in a balanced fund. The maximum exposure the fund can take to equities is limited to 25 per cent; the rest of the premiums would be invested across government securities, corporate bonds and money market instruments in varying proportion.

Death and maturity payout

On the plan's maturity, the policyholder would receive a sum that is the higher of the value of the invested units or the cumulative premiums paid.

In the event of the policyholder's meeting with an unfortunate development, the beneficiary would receive the value of the units in the fund, plus a percentage of the assured sum, which varies according to the policy year in which death occurs. The structure of this payout is: On death in the first, second, third and fourth policy year, the beneficiary would receive 10 per cent, 25 per cent, 45 per cent and 75 per cent of the assured sum respectively. From the fifth policy year onwards, the payout would be the entire sum assured, apart from the unit value of the fund.

As is the norm with such unit-linked plans, the value of the units that the policyholder/beneficiary receives on maturity/death is a function of investment performance and there are no guarantees attached to it.

Surrender value

The policy can be surrendered at any time during its duration; the value payable is a function of the year in which the policy is surrendered. The charges are 15 per cent of annualised premium in the first policy year; they gradually diminish thereafter. No charges are levied on policy surrenders from year seven onwards.

Charges

Unit-linked plans impose charges under various heads and SimplyLife is no exception. For starters, there is a premium allocation charge (the percentage of premiums that is used to buy units), which is pegged at 75 per cent in the first year and 97.8 per cent thereafter. Apart from this, other charges include those for mortality, which depends on entry age; a fund administration charge; a policy administration fee; and a sum assured-related charge in the first five policy years.

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