U L I PU L I P

INTRODUCTION

INSURANCE

LIFE INSURANCE NON-LIFE INSURANCE

TRADITIONAL ULIP

MAIN DIFFERENCE BETWEEN TRADITIONAL AND ULIP PLANS:

1. RISK ON INVESTMENT

2. PREMIUM AMT

ULIP CAME INTO PLAY IN 1960 AND IS POPULAR IN MANY COUNTRIES IN THE WORLD TODAY.

IN 1971 THE UNIT TRUST OF INDIA OFFERED THE UNIT LINKED INSURANCE PLAN. OUT OF INSURANCE PREMIUM A SMALL PART OF CONTRIBUTION WAS UTILIZED FOR PROVIDING LIFE COVER AND BALANCE INVESTED IN UNITS.

UNIT LINKED GUIDELINES NOTIFIED BY IRDA ON 21ST DECEMBER, 2005 IN INDIA. THE MAIN INTENT OF THE GUIDELINES WAS TO ENSURE THAT THEY LEAD TO GREATER TRANSPARENCY AND UNDERSTANDING OF THESE PRODUCTS AMONG THE INSURED, ESPECIALLY SINCE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDER.

HISTORY

LET US FIRST TRY AND UNDERSTAND WHAT A ULIP IS

ULIP: IT IS A MARKET LINKED INVESTMENT WHERE THE PREMIUM PAID IS INVESTED IN FUNDS

DIFFERENT OPTIONS ARE AVAILABLE, LIKE 100% EQUITY, BALANCED, DEBT, LIQUID ETC AND ACCORDING TO THE FUND SELECTED, THE RISKS AND RETURNS VARY.

THE COSTS ARE UPFRONT AND ARE TRANSPARENT, THE INVESTMENT MADE IS KNOWN TO THE INVESTOR (AS HE IS THE ONE WHO DECIDES WHERE HIS MONEY SHOULD BE INVESTED).

THERE IS A GREATER FLEXIBILITY IN TERMS OF PREMIUM PAYMENTS WHICH MEANS A PREMIUM HOLIDAY IS POSSIBLE.

YOU CAN ALSO INVEST SURPLUS MONEY BY WAY OF TOP UPS WHICH WILL INCREASE YOUR INVESTMENT IN THE FUND AND THEREBY PROVIDE A PUSH TO RETURNS AS WELL.

THE HIGHER OF THE SUM ASSURED OR FUND VALUE IS PAID AT THE MATURITY OR INCASE OF DEATH.

FEATURES OF ULIP

MAIN FEATURESLIFE PROTECTION DISABILITYCRITICAL ILLNESSSURGERIESDEATH DUE TO ACCIDENT

ADDITIONAL FEATURESINVESTMENT AND SAVINGSCAPITAL GAINS MORTALITY CHARGES FLEXIBILITY ADJUSTABLE LIFE COVER INVESTMENT OPTIONS TRANSPARENCY OPTIONS TO TAKE ADDITIONAL COVER AGAINST LIQUIDITY TAX PLANNING

U L I P

WHAT IS A UNIT FUND?

THE ALLOCATED (INVESTED) PORTIONS OF THE PREMIUMS AFTER DEDUCTING FOR ALL THE CHARGES AND PREMIUM FOR RISK COVER UNDER ALL POLICIES IN A PARTICULAR FUND AS CHOSEN BY THE POLICY HOLDERS ARE POOLED TOGETHER TO FORM A UNIT FUND.

WHAT IS A UNIT?

IT IS A COMPONENT OF THE FUND IN A UNIT LINKED POLICY.

THE COMMON TYPES OF FUNDS AVAILABLE ALONG WITH AN INDICATION OF THEIR RISK CHARACTERISTICS

GENERAL DESCRIPTION NATURE OF INVESTMENTS RISK CATEGORY

EQUITY FUNDS PRIMARILY INVESTED IN COMPANY STOCKS WITH THE GENERAL AIM OFCAPITAL APPRECIATION

MEDIUM TOHIGH

INCOME, FIXED INTERESTAND BOND FUNDS

INVESTED IN CORPORATE BONDS,GOVT SECURITIES AND OTHER FIXED INCOME INSTRUMENTS

MEDIUM

CASH FUNDS SOMETIMES KNOWN ASMONEY MARKET FUNDS —INVESTED IN CASH, BANKDEPOSITS AND MONEYMARKET INSTRUMENTS

LOW

BALANCED FUNDS COMBINING EQUITY INVESTMENT WITH FIXED INTEREST INSTRUMENTS

MEDIUM

U L I PU L I P

THERE ARE SEVERAL OPTIONS WITHIN A ULIP. YOU CAN SELECT THE OPTION THAT BEST FITS IN WITH YOUR RISK PROFILE AND HELPS YOU ACHIEVE YOUR INVESTMENT OBJECTIVE.

IF YOU ARE AN AGGRESSIVE INVESTOR YOU CAN GO FOR A ULIP WITH THE MAXIMUM EQUITY ALLOCATION - THIS VARIES FROM INSURER TO INSURER BUT IS USUALLY IN THE RANGE OF 70 PER CENT-100 PER CENT OF ASSETS.

IF YOU ARE A CONSERVATIVE INVESTOR THEN YOU CAN OPT FOR A ULIP OPTION THAT HAS A SMALLER EQUITY ALLOCATION OF ABOUT 20 PER CENT.

UNIT LINK INSURANCE PLANS

Investment Risk Asset Allocation * Min. Max.Fund Profile

OptionAssure Very Low Debt Instruments, Money Market & Cash 100% 100%

Equities & Equity Related Securities 0% 0%Protector Low Debt Instruments, Money Market & Cash 90% 100%

Equities & Equity Related Securities 0% 10%Builder Low Debt Instruments, Money Market & Cash 80% 90%

Equities & Equity Related Securities 10% 20%Enhancer Medium Debt Instruments, Money Market & Cash 65% 80%

Equities & Equity Related Securities 20% 35%Creator Medium Debt Instruments, Money Market & Cash 50% 70%

Equities & Equity Related Securities 30% 50%Magnifier High Debt Instruments, Money Market & Cash 10% 50%

Equities & Equity Related Securities 50% 90%Maximiser High Debt Instruments, Money Market & Cash 0% 20%

Equities & Equity Related Securities 80% 100%

THE INVESTMENT IS DENOTED AS UNITS AND IS REPRESENTED BY THE VALUE THAT IT HAS ATTAINED AT THAT POINT OF TIME .THIS IS KNOWN AS NET ASSET VALUE (NAV).

FOR EXAMPLE : AN INVESTOR HAD INVESTED RS.10,000/- IN A UNIT LINKED PLAN AND THE NAV AT THE TIME OF INVESTMENT WAS RS.10/- THEN THE NUMBER OF UNITS HELD BY THE INVESTOR WILL BE

= 10,000/10

=1000 UNITS

NAV (NET ASSET VALUE)

THE BASIS USED FOR CALCULATION OF NAV WOULD BE THE APPROPRIATION PRICE AND EXPROPRIATION PRICE.

THE APPROPRIATION PRICE SHALL APPLY IN A SITUATION WHEN THE COMPANY IS REQUIRED TO PURCHASE THE ASSETS TO ALLOCATE THE UNITS AT THE VALUATION DATE

THE EXPROPRIATION PRICE SHALL APPLY IN A SITUATION WHEN THE COMPANY IS REQUIRED TO SELL ASSETS TO REDEEM THE UNITS AT THE VALUATION DATE.

NAV (NET ASSET VALUE)

THE NAV PER UNIT OF EACH INVESTMENT FUND WILL BE CALCULATED AS PER THE PREVAILING IRDA GUIDELINES MENTIONED BELOW

WHEN APPROPRIATION PRICE IS APPLIED: THE NAV SHALL BE COMPUTED AS:

(MARKET VALUE OF INVESTMENTS HELD BY THE FUND +

THE EXPENSES INCURRED IN PURCHASE OF THE ASSETS +

VALUE OF ANY CURRENT ASSETS +

ANY ACCRUED INCOME NET OF FUND MANAGEMENT CHARGES ( - )

VALUE OF ANY CURRENT LIABILITIES ( - )

PROVISIONS, IF ANY)

DIVIDED BY THE NUMBER OF UNITS EXISTING AT VALUATION DATE

(BEFORE ANY NEW UNITS ARE ALLOCATED)

WHEN EXPROPRIATION PRICE IS APPLIED: THE NAV SHALL BE COMPUTED AS:

(MARKET VALUE OF INVESTMENTS HELD BY THE FUND ( - )

THE EXPENSES INCURRED IN SALE OF THE ASSETS +

VALUE OF ANY CURRENT ASSETS +

ANY ACCRUED INCOME NET OF FUND MANAGEMENT CHARGES ( - )

VALUE OF ANY CURRENT LIABILITIES ( - )

PROVISIONS, IF ANY)

DIVIDED BY THE NUMBER OF UNITS EXISTING AT VALUATION DATE

(BEFORE ANY NEW UNITS ARE ALLOCATED)

U L I P

BIRLA SUN LIFE INSURANCE GOLD-PLUS II

In this policy the investment risk in investment portfolio is borne by the policyholder.

   

Highlights

Seven Fund Options including a 100% equity option - Maximiser: A wide range of investment funds to choose from depending on your risk appetite. Also, a golden opportunity to higher your return on investments by investing in 100% equity option - Maximiser.

Manage your investment fund portfolio: Free unlimited switches and premium redirection - The plan allows you to monitor your investment fund performance and change its portfolio according to your preferences at different stages through free unlimited switches and premium redirection.

Short pay option-3 pay: Convenient short pay option that allows you to pay your premiums for 3 years only thus avoiding the hassle of paying regular premiums.

Premium Flexibility: The plan offers the flexibility to reduce your premiums from the 2nd year depending upon your financial situation.

Liquidity: The plan offers good liquidity through Partial withdrawals and Surrender. After three years there is no penalty on surrender of policy. Free unlimited partial withdrawals after 3 policy years allowed subject to a minimum withdrawal amount of Rs. 5000.

Investment Risk Asset Allocation * Min. Max.Fund Profile

OptionAssure Very Low Debt Instruments, Money Market & Cash 100% 100%

Equities & Equity Related Securities 0% 0%Protector Low Debt Instruments, Money Market & Cash 90% 100%

Equities & Equity Related Securities 0% 10%Builder Low Debt Instruments, Money Market & Cash 80% 90%

Equities & Equity Related Securities 10% 20%Enhancer Medium Debt Instruments, Money Market & Cash 65% 80%

Equities & Equity Related Securities 20% 35%Creator Medium Debt Instruments, Money Market & Cash 50% 70%

Equities & Equity Related Securities 30% 50%Magnifier High Debt Instruments, Money Market & Cash 10% 50%

Equities & Equity Related Securities 50% 90%Maximiser High Debt Instruments, Money Market & Cash 0% 20%

Equities & Equity Related Securities 80% 100%

BIRLA SUN LIFE INSURANCE GOLD-PLUS II

Partial WithdrawalsYou are allowed to make unlimited partial withdrawals after 3 policy years, free of cost. The minimum withdrawal amount is INR 5,000. The maximum partial withdrawal you can make is the excess, if any, of the fund value over the higher of:

INR 30,000; or

Top-up premiums paid by you during the three years preceding the partial withdrawal date.

Policy SurrenderThe policy can be surrendered any time during the tenure of the policy subject to a surrender charge. The surrender charges will be zero from the 4th policy year. In case of surrender in the first 3 policy years the benefits will be paid out only after the 3rd policy year. The surrender value as of the date of your surrender remains constant till paid to you.Policy LoansWe do not offer this facility on this plan.

BIRLA SUN LIFE INSURANCE GOLD-PLUS II

ARE INVESTMENT RETURNS GUARANTEED IN A ULIP?

INVESTMENT RETURNS FROM ULIP MAY NOT BE GUARANTEED.”

IN UNIT LINKED PRODUCTS, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICY HOLDER”.

DEPENDING UPON THE PERFORMANCE OF THE UNIT LINKED FUND(S) CHOSEN; THE POLICY HOLDER MAY ACHIEVE GAINS OR LOSSES.

IT SHOULD ALSO BE NOTED THAT THE PAST RETURNS OF A FUND ARE NOT NECESSARILY INDICATIVE OF THE FUTURE PERFORMANCE OF THE FUND.

BENEFITSBENEFITS

Free insurance cover: the insurance cover is free; the policy even provides better returns

Best solution for children’s education/ future needs: ULIPs not only help save money systematically for a particular goal, but also helps protect that goal

The Mortality charges are lower than traditional policies

PARTICULARS MUTUAL FUND UNIT LINKED INSURANCEContribution Purely Voluntary. You need not follow

any discipline in investing. Generally people do not invest regularly – they invest when the market is high and want to disinvest when the market is low.

Compulsory Savings. You save regularly and invest through the highs and lows in the market.

Switches You can switch anytime from one scheme to another. These switches are subject to capital gains tax.

You can switch anytime from one scheme to another. These switches are tax free.

Flexibility SIP Cannot be altered Premium can be alteredPortfolio Disclosure Mandatory Not mandatorySurrender of Policy You can surrender anytime You can surrender the policy

after 3 years without any surrender charge.

Life Insurance Cover

There is no life insurance cover. You have life cover up to 5 times / 10 times / 20 times the committed contribution (subject to age constraints).

Tax Benefits Section 80C Tax saving Bonds Section 80C Tax Free

Investment in other funds are taxable.Advise Advisable to make investments for short

term

Advisable to make investments for long term 10 yrs and above

MUTUAL FUNDS V/S ULIP