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Edelweiss Tokio Life Wealth Plus is a unit linked insurance plan (ULIP) offering policy holders a life cover and a return on investment through equity and fixed income instruments. The plan does not offer any liquidity during the first five years.
On maturity, the plan will give the fund value. On the death of the insured during the policy term, the fund value or 105 per cent of total premiums paid or sum assured, whichever is higher, will be paid.
What’s on offer?
Edelweiss Tokio Life Wealth Plus offers two investment strategies; 1) Life stage and duration-based strategy and 2) Self-managed strategy.
The life stage and duration-based strategy is a pre-defined formula-driven investment solution suitable for novice investors.
Based on the age, risk profile and tenure, the investible premium is allocated into two funds — equity large-cap fund and bond fund. For instance, for a 40-year-old policy holder with 20 years policy term, this strategy allocates 85 per cent to equity large-cap fund and the rest to bond fund.
Under the ‘self-managed strategy’, the policy holder is allowed to invest in any of the five funds in the proportion he/she desires. The fund options are: Equity large-cap, equity Top 250, equity mid-Cap, bond and managed fund (up to 40 per cent in equity and the rest in debt). All the funds have outperformed their respective benchmarks and respective ULIP categories in the various time-frames.
They have also delivered almost similar returns to that of the respective MF categories. The plan allows unlimited switches among funds free of cost. An attractive feature of the plan is that it provides additional allocation every year starting from the first policy year till the end of the premium paying term.
Though it is similar to loyalty additions of other insurers, the quantum of allocation in this plan is higher; one per cent of the annualised premium every year for the first five years. From the sixth policy year, the additions are called ‘premium booster’.
The premium booster for the corresponding 6-10, 11-15 and 16-20 policy years are three, five and seven per cent respectively. Hence, the additional allocations to the policy with 20-year tenure is equivalent to 80 per cent of the one-year premium.
Lower charges
Edelweiss Tokio Life Wealth Plus is cheaper than standard ULIPs. The premium allocation charges, policy administration charges, switching charges, premium redirection charges and partial withdrawal charges are nil. The fund management charge is 1.35 per cent for equity large-cap, equity midcap, equity top 250 and managed fund. This is lower as compared to the average expense ratio of the direct plans of the equity diversified MF category, which was 1.45 per cent (as on December 2017). Another highlight of the plan is, the insurer stops charging mortality charges when the fund value exceeds the sum assured (given it is a type-I ULIP).
Our take
Investors with an appetite for risk and having long-term financial goals can consider Edelweiss Tokio Life Wealth Plus and choose equity fund options. But, note that you may have to check if the insurance cover the plan provides is adequate. Else, take a separate term insurance policy.
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