ING Prime Life
ING Vysya’s plan works more as an investment vehicle than a life cover. its features encourage wealth creation over a long period
ING Prime Life from INC Vysya is a un1tinked insurance plan (Ulip) that aims to provide a savings vehicle to licyholders rather than
protecti gainst death. This plan provides the prospect of long-term investment along with liquidity. Three features make this combination possible: increase in life cover each yeai the option to extend the term on maturity, and return of a multiple of the first year’s premium allocation charge (PAC) to the fund on maturity.,. COVERAGE. The plan has two term options of 15 and 20 year9. The life cover has to be five times the annual premium, which has to be at least Rs 12,000. From the second year, the cover increases every year by 5 per cent of the initial sum assured. This benefit is withheld if any premiums are due. The effect of these hikes can be seen from this example: the cover increases from Rs 10 lakh to Rs 17 lakh and 19.5 lakh at maturity if the term is 15 and 20 years, respectively. One can continue the plan for another 10 years without paying further prpmiums.Even during an extedd term, the nominee gets the higher the sum assured of the fund value if the policyholder dies during the term of the plan. This makes INC Prime Life a Type (Jlip. Type II Ulips give both the sum assured and fund value the nominee if the policyholder dies during the term of the plan. Net of charges, the premium may be invested in any of the five fund options, four of which are equity funds with varying mandates. On maturity, the fund value is paid back to the policyholder along with 1.25 times the PAC of the first year if the term is 15 years and twice the PAC of the first year if the term is 20 years. This payback also happens in case the policyholder dies during an extended term. The plan comes with two riders: accident and disability benefit.
Keys to make a Sound Investment Strategy
EARLY EXIT. Five partial withdrawals of up to 10 per cent of the fund value are allowed during the policy terra any time after five years. During an extended term, the policyholder has to compulsorily receive 10 per cent of the fund value on every policy anniversary. While the provision for partial withdrawals ensures liquidity during the initial term of the plan, the feature of compulsory payments by the insurer introduces liquidity even during the extended term. The sum assured available at maturity does not change during an extended term. Full exit is free after 10 years. To claim the payback of the initial PAC and to extend the term, one needs to pay premiums for at least 10 years. The plan can be continued without payment of premiums thereafter. COSTS. The front-ended PAC is 30 per cent of the premium in the first year, 5 per cent from the second till the fifth year. and 1 per cent thereafter. The monthly policy administration charge is Rs 1,250 in the first month. It is then fixed at Rs 50 per month for the first policy year and hiked by 5 per cent each successive year. A partial withdrawal attracts a charge of 1 per cent of the amount withdrawn. This feature is not commonly found in Ulips.
PERFORMANCE. The corpus of the plan’s Equity Fund was Rs 571.1 crore on 31 March 2009. About 91 per cent of this was invested in 11 sectors. Financial services, consumer products, software and auto accounted for about 52 per cent of the equity investments. Though Equity Fund fell with the markets, the decline is less than that of its benchmark. Equity should get a higher allocation than any other asset class if one is investing for the long term. The investor’s risk profile should also play a role in the allocation of investments.
SUMMARY. The cover in INC Prime Life cannot be more than five times the premium. So ensure that you have other plans if this plan is not able to give you the required cover. One advantage of the plan is that it can be used to fulfil one’s need for an investment avenue along with insurance over a long time- frame. This is made possible by the provisions of term extension and premium top-ups that can be paid not only during the first term of 15 or 20 years, but also during the extended term of 10 years. INC Prime Life is better among the products in its class in terms of costs.
The plan prompts the investor to go for a long term. Just five partial withdrawals can be made over the term of the plan. This facility is available only after five years and comes with a fee. These features are designed to discourage withdrawals so that the corpus can grow.
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Yes, This plan provides the prospect of long-term investment along with liquidity.ULIPs Plan serve the purpose of providing life insurance combined with savings at market-linked returns.