The Hindu Business Line : Kotak Platinum advantage

With a steady pressure on mutual fund expenses, ULIPs, which have traditionally had relatively high charges deducted towards sales expenses and commission, have been moving towards lower initial expenses and exit loads, on early withdrawals by investors.

Kotak Life Insurance recently launched one such product, Kotak Platinum Advantage. It features capital protection, embedded investment advice, life cover and market-linked growth options — all rolled into one product.

Salient features

Safety and returns: Depending on your risk profile, you may decide to deposit your premium in two types of accounts, Shield Account or the Dynamic Account. The Shield Account offers a guaranteed amount on maturity, while the Dynamic Account allows you access to more aggressive investment options.

Policyholders may even have a combination of both the accounts, giving you the comfort of guarantee as well as aggressive market exposure. This allows policyholders dual benefits of security and returns. Investments under Shield Account are protected from any erosion on maturity, even in case of high equity exposure; policyholders are assured of protection of the funds with a guaranteed maturity value.

A point to be noted here is that the policyholder is required to maintain systematic investment in order to enjoy the benefit of maturity guarantee. If the premiums are discontinued, or partial withdrawal is made from the Shield Account, the guaranteed maturity value will cease to apply.

Investment portfolio: A range of fund options is available based on one’s investment goals and appetite for risk. The aggressive growth fund has high equity exposure, while the gilt funds (Guaranteed and Dynamic) invest primarily in Government securities. Switching is allowed any number of times. However, the switch should be within Shield and Dynamic Account and not between the funds allowed.

Withdrawal: There is a facility of partial withdrawal or full surrender after completion of three policy years. Minimum amount of such a partial withdrawal is Rs 10,000. A minimum Rs 10,000 is required to be maintained in the account after partial withdrawal. Policyholders can access the top-up premium accounts without any charges. Top-up premia should complete a lock-in-period of three years from the date of investment. However, this is not applicable for the last three years of the policy.

A key point to remember here is that in case of partial withdrawals from Shield Account, maturity guarantee will cease to apply. The withdrawals are allowed only after the insured attains the age of 18.

Maturity Benefit: If the policyholder has paid all the premia within the days of grace and made no partial withdrawals from the Shield Account, the maturity benefit would be the aggregate of guaranteed maturity value or value of units in the Shield Account, whichever is higher, or Value of units in the Dynamic Account.

Death benefit: The beneficiary would receive an amount equal to life cover sum assured plus value of units in the Dynamic Account and value of units in the top-up accounts, if any. The death benefit is different if the life insured is that of a minor and if death occurs within five years from the commencement before the said minor turns 18. It would be the higher of the premium paid or value of the units at the date of intimation of death to company. To cover life, a minimum of insurance cover will be greater (0.5 multiplied by policy term and annual premium or five times annual premium). The mortality charges to provide this cover remain constant during the policy term.

Note: In the regular ULIP, either sum assured or unit value, whichever is higher, is paid. In Kotak Platinum Advantage, in the event of death of the policyholder during the policy term, sum assured as well as value of the units is paid to the beneficiary.

Eligibility: There is no minimum age at entry and maximum is 65 years. Policy term options are between 10 and 30 years. Minimum premium is Rs 50,000 and in the case of limited premium payment it is Rs 1,00,000.

Premium Allocation Charge: The first year allocation charge is 9 per cent of premium in the Shield and Dynamic Account. From the second year onwards, till fifth year, the allocation charge is 2 per cent. From the sixth year onwards there is no allocation charge.

Partial withdrawal or full surrender charge: After the first three years, there will be a partial withdrawal charge (expressed as a percentage of amounts withdrawn) and surrender charge (expressed as a percentage of fund value). From Shield or Dynamic Account, the charge will be 5 per cent for the fourth and fifth policy year, 2.5 per cent from sixth year to ninth year and 1 per cent from the tenth year onwards.

(This column is intended to acquaint investors with features of new insurance products and is not a recommendation to invest. Investors are advised to compare each product with similar ones already available before making a decision.)

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