“Exide Life Wealth Elite” - A Unit linked Insurance Plan that recognizes the importance of your life goals and helps you fulfil them.

I  would like to take this opportunity to give a brief about Exide Life Insurance...

Exide Life Insurance Company Limited, (Formerly known as ING Vysya Life Insurance Co. Ltd) is a 16 Year old established and profitable life insurance company, head quartered in Bengaluru. The company is 100% owned by Exide Industries Limited. The company serves over 15 lakh customers and manages assets of over INR 11000 Crores. During the financial year 2016-17, the company achieved Total Premium Income of over INR 2,400 crores and delivered INR 112 crores in Profits (PBT). 

To speak about this unique product “Exide Life Wealth Elite” is a market linked insurance plan designed for a special exclusive High Networth Individual customers.

Benefits which this plan offers

·         Choice of 7 fund options including the new Exide Life Mid Cap Fund

·         Comprehensive Life Cover of up to 20 times the Annualized premium.

·         Automatic Asset Rebalancing Strategy - this strategy reduces your equity proportion as your policy nears maturity to ensure that any downside in equity market later in the policy term has minimal impact on your maturity amount.

·         Partial Withdrawal Benefit - this policy allows unlimited number of partial withdrawals from your fund at any point of time after completion of 5 Policy Years for any interim financial goals or emergencies.

·         Option to surrender the policy any time after completion of 5 years.

·         Tax benefits on all withdrawals/ surrenders/ maturity/ claims u/s sec 10.10.D would be 100% tax free.

·         Unlimited free switches are allowed during the policy term between the choice of 7 fund options

·         No Premium Allocation charges in first year for premiums of above 5 Lacs

·         SYSTEMATIC TYRANSFER PLAN

Out of the above mentioned policy features, following two are the most unique features that works in favor of the investor.

1)      Systematic Transfer Plan

2)      Policy Costs/Charges

1)  Systematic Transfer Plan : One may be aware of ‘Systematic Investment Plan’(SIP) concept  in Mutual Funds investment. SIP concept is so much popular because of its very nature of Systematic investments. The purpose of choosing SIP mode instead of One time investment option, is to average out units over the period of time. That means, it is not good practice to push the money at one shot into equities since equity market is so fluctuating & market may fall very next day of investment made resulting even loss of capital invested too. So among MFs, SIP mode is recommended. So that instead of investing at one shot, the same will be splited among number of months & invested the fixed amount monthly on regular basis systematically irrespective of equity market fluctuations. So that our investment meets almost all market trends since investment is regular, resulting an investor ends up buying more number of units when market is down & at the same time more value is reflected for the allotted units when market is up , working in favor of investor in all the market conditions. These further results in accumulating more number of units at the end of the year comparatively to one time investment done by others.  This is called ‘Units Average Costing’. The equity market witnessed bullish(rise) only over the period of time irrespective any amount of fluctuations in the past.

There is one more mode of investment called “ Systematic Transfer Plan”(STP) which is unique & works better than ‘Systematic Investmetn Plan’(SIP).  We can find this STP mode in “Exide Life Wealth Elite” . In STP mode an investor can expect more ‘Units Average Costing’ than SIP mode & can expect more returns & safety of capital invested than SIP mode of investment.

STP strategy ensures equity exposure in a more systematic manner. Under this strategy the allocated premium is invested in ‘Exide Life Preserver Fund’ which is a Debt/liquid orientated fund starting immediately & there after every month, pre-defined proportion of units is transferred from the ‘Exide Life Preserver Fund’ into equity oriented scheme like  ‘Exide Life Prime Equity Fund/Exide Life Mid Cap Fund’ etc. You should understand that, Debt oriented funds like, Preserver Fund are not risky in nature for the capital parked in it. Instead, the debt/liquid oriented funds are delivering average returns of above 8 to 8.5%  YoY.

So, under STP mode,  firstly the investors money is parked in the safer fund like ‘Exide Preserver Fund’ which also earns average returns of above 8 to 8.5% . By doing this it is ensured that there is no market risks, even if equity market falls soon after investing the money with Exide scheme. Later, a , pre-defined proportion of units is transferred from the ‘Exide Life Preserver Fund’ into equity oriented scheme like  ‘Exide Life Prime Equity Fund/Exide Life Mid Cap Fund’ etc in a systematic manner. This second step ensures, allotment of more number of equity units comparatively to both One shot investment & SIP mode too via ‘Units Average Costing’. Because, Investment of fixed amount  is made into equities in a systematic manner for a long term meeting all most all market fluctuations. This ensures allotments of more units when market is down & reflection of more value when market is up finally leading to more ‘Units Average Costing’ under STP mode than SIP mode. Because, under this strategy investor will earn from both Debt/liquid(preserver fund) & Equity( Exide Life Prime Equity Fund/Exide Life Mid Cap Fund’ etc) schemes.

2)      Policy Costs/Charges:  ‘Exide Life Wealth Elite’ Scheme works good in terms of costs for those who plans to invest Rs 5 lacs annually .  There is no premium allocation charge in the first year for the customer who invest Rs 5 lacs. The charges are reasonable with Exide Life Wealth Elite compared to other life Insurance products available in the market. Interestingly, the charges look lesser than even Mutual Fund schemes available in the market. Following are the charges of Exide Life Wealth Elite:

a)      Premium Alocation Charge – 0% in the year One  &  1% from 2^nd year on words on the premium that you pay every year. (please note that this premium allocation charge from 2^nd year onwards is on the premium you pay every year & interestingly not on the total Fund value of that policy year. It makes lot of difference if any charge is imposed on total fund value).

b)      Policy Admin Charge : The maximum policy admin charge is capped at Rs 500 per month(maxium charge annually is Rs 6000). This charged will not be levied, from 6^th policy year onwards. (please note that this policy Admin charge from 2^nd year onwards is on the premium you pay every year & interestingly not on the total Fund value of that policy year. It makes lot of difference if any charge is imposed on total fund value).

c)       Mortality Charge : Depends on Customer age. But meager one. Will be known on generating Benefit Illustrations.

d)      Fund Management Charges: This is the important & expensive charge levied by the Fund Manager. The regulator in India has capped FMC at 1.35% across all the market linked markets in India. Accordingly, all most all the investment products fixed FMC of 1.35%. But, Exide Life Wealth Elite charges 1.25% FMC on all its prime Fund options like, Growth Fund, Balanced Funds. For preserver & Secure fund options, the FMC will be 1%.  The FMC rate of 1.25% makes the actual difference with other schemes available in the market who actually charges 1.35%. FMC charge of 1.25% is the most reasonable in the market.

FMC is the only charge which is charged on the total Fund value. All other above mentioned charges are charged on the premium that is paid in that respective year. When all the above mentioned total charges including FMC is averaged out, the Year on Year average charges will be arriving at 2.5%, which is almost equal to a charges of ‘Equity Oriented Mutual fund schemes. In a Mutual Fund scheme, NAV(net asset value) of a unit is arrived after deducting all the scheme related charges like FMC, Allocation charge etc. Charges in Mutual Fund scheme is tilted with NAV & arrived at unit price. The average charge deducted with MF scheme will be almost 2.5%. Interestingly, customer will not be able to view the charges levied in a Mutual Fund Scheme. In the statement he/she can be able to view only number of units allotted & final unit price arrived.

                

More importantly, with the same amount of charges, customer can choose ‘Life Cover’ upto 20 times of annualized premium in  Exide Life Wealth Elite, unlike Mutual Fund scheme( Mutual Fund Scheme gives no life cover). For instance, if a customer pays Rs 5 lac premium with ‘Exide Life wealth Elite’ he can choose minimum 10 times life cover (i.e, 50 lac life cover) & maximum 20 times (1 Cr life cover).

Also, from regulatory point of view, Exide Life Wealth Elite works in favor of investor, since ULIP guidelines made mandatory of delivering minimum Annualized Returns (IRR) of 7.5% unlike Mutual Fund schemes.

Working of the plan- Choose an Annual Regular Premium for this Policy. Choose a Policy Term which is minimum 10 years or later. Choose a Life Cover which is 10 – 20 times of the Annual Premium. Choose investment strategy in the choice of 7 funds.

In case you have any further query, please feel free to get in touch in the under mentioned number.

Mr Ravi Kumar. Financial Consultant (Code: 60272381), Exide Life Insurance Co Ltd. Branch- B 21, # 28, 6th floor, Centenary building, M.G Road, Bangalore-560 001.

Cell:     +919844519872, +919980927393
Email:  ravi.sampige@gmail.com

              qropstoindia@gmail.com