NEW TRADITIONAL PRODUCT ANALYSIS


In the month of April -13 Insurance Regulatory and Development Authority had issued circular regarding changes in Traditional Products of Life Insurance Industry. After major changes in UlLIP products Authority has going to do major changes in designing of traditional product. No doubt the action of Authority has itself confirmed that traditional product will be much customer friendly and will be able to give more advantages to the customer. Only one drawback of this regulation is that the commission of insurance advisors will be less as they are now getting.

Authority has setup the deadline for Insurance Companies to withdraw all existing traditional product and launch new traditional product before 1st October 2013. After submission Insurance Companies and Life Council request regarding the extension of deadline, Authority has extended the deadline 31st December2013. Many insurance Companies already filled traditional product under new regulation with authority and authority very quickly is giving their approval. After receiving approval from Authority some insurance companies are launching traditional product under new guidelines.    

To creating awareness between general people, we are committed to bring critical analysis of new traditional product on this blog WWW.LCIWORLD.BLOGSPOT.COM. TO maintain this sprit and educate to general people about life insurance products, we are today analysing AVIVA WEALTH BUILDER PLAN and giving our opinion about this product to all of you.  

“ALL ABOUT Aviva wealth BUILDER PLAN”

Aviva wealth BUILDER: Aviva Life Insurance has launched Non-linked Non Participating traditional Insurance plan that doubles your premium at maturity along with risk coverage during policy term. The brief details of the Plan are as under:-

Entry Age
5 years to 50 years
Policy term and Premium paying term
Policy Term
Premium Payment term
13
Single Premium
15
5
17
10
Maturity Age
Policy Term
Minimum Maturity Age
Maximum
Maturity Age
13
18
63
15
20
65
17
22
67
Minimum premium
Regular Premium Rs. 50000 per year
Single Premium Rs. 150000/-
Maximum premium
 Rs. 1 Crore
Sum Assured
Premium Paying
Term
Sum Assured
Single
2 times of single premium
5 Years
10 times of the yearly prem.
10 Years
20 times of the yearly prem.
Maximum/Minimum Sum Assured
Policy Term
Minimum
Sum Assured
Maximum
Sum Assured
13
Rs.3 Lacs
Rs. 2 Crores
15
Rs.5 Lacs
Rs. 10 Crores
17
Rs.10 Lacs
Rs. 20 Crores
Premium payment mode
Single or Yearly

If at least two years’ regular premiums have not been paid – Policy Shall lapse Policy holder can re-instate the policy within two years from first unpaid due premium. If policy not re-instated after two years 30% of premium paid excluding extra premium will be paid to policy holder.

If at least two years regular premiums have been paid – and policy holder not submit premium policy shall be paid-up and policy holder will be eligible for paid-up sum assured benefits.

Surrender: A single premium policy can be surrender any time during policy term and a regular premium policy can be surrender after two years of premium paid.

Loan: Not available

Free look period: if a Customer not satisfied with the term and conditions of policy he can submit the request for policy cancelation within 15 days from receipting of the policy bond.

Service tax: Service tax will be charged to the Customer which is over and above of premium.

Benefits:
Maturity Benefits: Double of the all premium paid during policy term.
Death Benefits: Sum Assured paid to the Nominee.

Example for Maturity Benefits:-  

Ques -1. Name – Anubhav Mishra, Age -05, Policy Term 13, Premium paying term – Single Premium -1.5 lacs.

Ans -1. Sum Assured – 3 Lacs. , Maturity age -18 years, Maturity Amount – 3 lacs
Return - 5%

Ques -2. Name – Rahul Mishra, Age -05, Policy Term 15, Premium paying term – 5, yearly Premium -0.5 lacs

Ans -2. Sum Assured – 5 Lacs. , Maturity age -20 years, Maturity Amount – 5 lacs
Return - 5%

Ques -3. Name – VIvek Mishra, Age -05, Policy Term 17, Premium paying term – 10, yearly Premium -0.5 lacs

Ans -3. Sum Assured – 10 Lacs. , Maturity age -22 years, Maturity Amount – 10 lacs
Return - 6%


Our Recommendation :- After going through critical analysis it’s found that the policy is attractive but not very attractive you need to pay premium less than policy term and you will be able to get double of the your premium in all mode (Single/Regular). The return at entry age at minimum premium based is 5%. But return is slightly better in 10 year premium paying term that is 6%. The return calculated without including service tax in premium. If we calculate adding with service tax return will be less. Many other companies are still not launched their new traditional product, if you want to invest in traditional policies you need to wait till 31st December thereafter you have option to choose better policies.

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