ULIP Review: Edelweiss Tokio Wealth PlusEdelweiss Tokio Wealth Plus is a relatively low-cost ULIP provided by Edelweiss Tokio Life Insurance. It has a term of 10-20 years and a premium payment term of minimum five years. It has no premium allocation charge or policy administration charge and allows free switches between ULIP funds (which are also free of tax). These ULIP funds have also performed well, as the figures below show. However, ULIPs also carry a ‘mortality charge’ that is levied on the insurance component of the ULIP. This makes them unsuitable to those who have purely investment needs.

Maturity Benefit

The ULIP value is calculated by multiplying NAV with a number of units held. You can get the maturity value as a lump sum or over a period of 1-5 years. The phased withdrawal is done by keeping the balance money invested in ULIP funds making it similar to a mutual fund systematic withdrawal plan (SWP).

Death Benefit

Highest of ULIP value, sum assured or 105% of all premiums paid. Sum assured is 10 times annual premium.

Charges

Premium Allocation Charge None
Policy Administration Charge None
Fund Management Charge 1.25%-1.35%
Discontinuance Charge None after the fifth year. But you must either surrender the policy, make it paid up (with reduced benefits) or revive the policy
Mortality Charge As per complex formula given
Switching Charge None
Premium Redirection Charge None
Partial Withdrawal Charge None, however only allowed after 5th year and fund value cannot fall below 105% of all premiums paid

Strategies:

Life Stage and Duration Based: This strategy allocates money between equity and debt taking into account your age and the remaining policy term.

Self-Managed: You can allocate your money between the funds listed below in any proportion.

As you can see, all of the ULIP funds have beaten their benchmarks and performed well. The data for the midcap fund, however, is only for one year.

Fund Benchmark Fund 5 yr CAGR % Benchmark Return %
Equity Large Cap Fund Nifty 50 16.6 12.6
Equity Top 250 Fund Nifty 200 19.7 14.4
Equity Mid-cap Fund Nifty Freefloat Midcap 100 14.14* 12.2
Managed Fund 30% Nifty 50 and 70% Crisil Composite Bond Index 12.4 9.5
Bond Fund Crisil Short Term Bond Fund Index 8.9 8.3

*One year returns. Source: Funds Factsheet as of 30th April 2018

You also get ‘extra’ allocations of 1% of your annual premiums for the first five years of the policy. Thereafter you get extra allocations of 3% from year 6 to 10, 5% from year 11 to 15 and 7% from year 16 to 20

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.