You Can Have Your Cake and Eat it Too!

Black Calculator Near Ballpoint Pen on White Printed Paper

Imagine that you are at a buffet lunch and there is a restriction imposed on you. According to this restriction, you can either have soup or starters or the main course or the dessert. Wouldn’t this be a damper and spoil your mood? But you seem to be fine with such a scenario while planning your finances. Investing in Mutual Funds would offer wealth creation over the long term but it does not offer protection, and traditional life insurance plans inhibit wealth creation at the cost of offering protection.

What if there is a product that offers an opportunity to create substantial wealth, adequately protects your dependents as well as helps you save tax?

Edelweiss Tokio Life Wealth Plus manages to do all of this.

Overview

It helps you save money as there is no premium allocation and policy administration charges. Extra allocations of 1% are added with every premium in the first 5 policy years, and premium boosters are also added at the end of every year, starting at 3% for the 6th to 10th policy year. It further increases to 5% from the 11th to 15th policy year, and 7% from the 16th to the 20th policy year, which marks the conclusion of the premium paying term.

For example, if the annual premium is Rs 1 lakh:

  • For the first 5 years, Rs 1000 is added every year as extra allocation
  • From 6th year to 10th year, Rs 3000 is added every year as a premium booster
  • From 11th to 15th year, Rs 5000 is added every year as a premium booster
  • From 16th year to 20th year, Rs 7000 is added every year as a premium booster

The total comes to 5(Rs1000) + 5(Rs 3000) + 5(Rs 5000) +5(Rs 7000) = 5000+15000+25000+35000 = Rs 80,000

This means that the additional allocation is 80% of one year’s premium over the 20 year premium paying term. This investment would fetch you a return of 41,41,053 INR. Whereas in Mutual Funds, the same fund would grow to 39,39,813 INR. Also, investing in mutual funds won’t provide life insurance benefit at any point in time. You can switch you funds between equity & debt and can time the market as well, With all these benefits, Wealth Plus stands to be a hero in investment category.

Benefits for Your Rising Star

The financial well-being of one’s child is a parent’s topmost concern. The biggest nightmare for a parent of a young child is what would happen to the latter in case of the former’s premature demise. Wealth Plus consists of a Rising Star Benefit which would make sure that the child’s financial future is not compromised. The following occurs in the event of a parent’s death –

  • The lumpsum amount, which depends on the age of the policyholder, is payable immediately
  • The fund value is credited with the sum of all future premiums
  • All the future premiums are waived off
  • Whenever it is due, additional allocation will be added to the fund value
  • On maturity, the maturity benefit becomes payable

Investment Strategy

This product offers two types of investment strategies for you to create wealth:

  • Life stage and duration based – Under this strategy, the fund value is distributed across two funds – Equity Large Cap Fund (which is riskier) and Bond Fund (which is risk averse). This strategy is on auto pilot as intervention by policyholder is next to nil. Depending on the age of the policyholder and how close he/she is to the end of the policy term, money is moved from a riskier fund to a safer fund in a progressive manner.
  • Self-managed – This strategy enables a policyholder to choose the fund in which she wishes to invest the premium. The policyholder can also switch the premium between funds as well as redirect future premiums to a newly chosen fund. This is suitable for an individual who is well versed in how markets perform and tracks the market performance regularly. There are 5 fund options being offered under this plan which are: Equity Large Cap Fund, Equity top 250 Fund, Equity Mid Cap Fund, Managed Fund, and Bond Fund.

With so many benefits being offered, this product defines convention and ensures that one can not only have one’s cake but also eat it!

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