The Hindu Business Line : TATA AIG Invest Assure Gold

TATA AIG Life Insurance has recently launched Whole Life Unit Linked Insurance Plan Invest Assure Gold. A look at the salient features of the product.

Insurance cover: The initial sum assured is a multiple of the regular premium payable. Individuals have the option to select the sum assured depending on age at entry.

It is five times the annual regular premium or annual regular premium divided by two and multiplied by 70, minus age at entry.

To illustrate, if the age at entry is 35 and annual premium chosen is Rs 1 lakh, the minimum sum assured is Rs 17.5 lakh.

Flexible investments option: Policyholders have the option of choosing any or all of the five funds based on the preferred asset allocation.

The Whole Life options are Mid Cap Equity Fund, Income Fund, Short-Term Fixed Income Fund, Aggressive Growth Fund and Stable Growth Fund.

Switching: Policyholders have the option to switch between funds four times a year without paying a fee, with Rs 250 charged for subsequent switches. The company may revise the charge but it shall not exceed Rs 500.

Riders: The insurer is offering two riders — Accidental death benefit and Accidental Death and Dismemberment Rider (Accidental riders are only issued for ages 18 and above). In children’s policy, there is a pay or benefit rider (only for juveniles policy).

In the event of the policyholder’s death or total and permanent disability before reaching age of 60 years (before the child reaches age of 21) all premia for the basic policy and this rider are waived.

Critical illness rider: If the policyholder is diagnosed with critical illness or needs surgery, this benefit provides them with a lumpsum amount.

Premium and policy charges: The net regular premia after deduction of charges are invested in funds as per the policyholder’s choice. The charge deducted from the regular premium varies with the policy year.

For the first year, it will be 22 per cent of the premium and for the years 2-10 it would be 4 per cent. From the 11th policy year, it will be nil.

Policy administration charge: A monthly policy administration charge, currently Rs 38, is automatically deducted from the regular premium. This charge may be increased up to a maximum of 5 per cent per annum.

Premium: The minimum regular premium is Rs 50,000 per annum. The minimum top-up premium is Rs 25,000.

The minimum premium paying term is five years, while the protection is provided till 100 years. Minimum eligibility age is 30 days and maximum is 70 years.

Maturity benefit: The maturity benefit you receive at the end of the policy term is balance of your total fund value, which is sum of the regular premium fund value and top-up fund value. The maturity benefit is payable on attainment o f 100 years.

Fund management charge: The insurer charges a fee based on the investment option between 0.65 per cent and 1.2 per cent. The company has the option to revise the charge but it shall not exceed 1.75 per cent per annum of the fund value.

Note: Policyholders opting for the Mid Cap fund have to monitor the fund performance closely as maturity approaches. Mid-cap stocks are more vulnerable to market volatility.

Hence, it is better for risk-averse investors to move funds into the stable growth fund as maturity approaches to protect the accumulated value.

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