For a little extra something in life

Future Generali Big Dreams Plan scores on the cost front but pales in fund performance

Future Generali Big Dreams Plan is a recently-launched online ULIP, which scores over other online ULIPs on low cost and extra allocations by the insurer.

Options

This ULIP offers three options — wealth creation, retire smart and dream protect. Wealth creation and retire smart are plain vanilla ULIPs under which, on policy maturity, you will receive the fund value. On death of the insured during the policy term, the fund value or 105 per cent of the total premiums paid or sum assured, whichever is higher, will be paid.

Under dream protect, you will receive the fund value on maturity. On death of the insured, the sum assured or 105 per cent of the total premiums paid, whichever is higher, will be paid. In addition, 1) the policy shall continue till maturity; 2) the insurance company will pay the future premiums, which will be invested in the fund options; 3) also, the insurer will pay the nominee a monthly income equal to 8.33 per cent of the annualised premium every month till the end of the policy term; 4) lastly, the insurer will pay the fund value at the end of the policy term.

Fund options

This ULIP offers six fund options. They are future income (100 per cent in debt papers); future balance (30-60 per cent in equity and the rest in debt); future maximize (50-90 per cent in equity and the rest in debt); future apex (50-100 in equity and the rest in debt); future opportunity (80-100 in Nifty stocks and the rest in debt) and future midcap fund (80-100 in equity of which up to 50 per cent in midcap).

Our take

Data from Capitaline shows that the performance of the equity funds — future opportunity and maximize funds delivered relatively average returns compared to equity funds offered by other insurers. For instance, in the last five years, opportunity and maximize funds delivered annualised returns of 10.6 and 10.4 respectively, while the average of ULIP large-cap funds during the period was 13.7 per cent. Performance of the income fund has been relatively decent — it delivered 9 per cent annualised return in the last five years, which is above the ULIP income fund average of 8 per cent. Future midcap is the new fund.

Future Generali Big Dreams Plan offers 1-7 per cent as extra allocation based on the annualised premium (for ₹60,000 and above) and the policy year (like 1 per cent in one-five years, 3 per cent in six-eight years). This boosts the fund value. Other ULIPs in the market such as Bajaj Allianz Life goal assure and Edelweiss Tokio Life Wealth Plus too offer similar benefits.

On the charges front, Future Generali Big Dreams plan scores over peers. The premium allocation, policy administration, switching, premium redirection and partial withdrawal charges are nil under this ULIP. The fund management charge of 1.35 per cent is lower than the average expense ratio of the direct equity diversified mutual funds, which was 1.4 per cent (as on December 2018). It is a type I ULIP, as the mortality charge, which is calculated on the sum at risk, is higher in dream protect than in the other options.

The net yield under the plan for a gross return of 8 per cent, assuming a term of 10 years and an annual premium of ₹1 lakh, works out to 6.9 per cent. This is higher than that of most other online ULIPs.

In ULIPs, fund performance and loyalty additions from the insurer play a significant role in achieving the desired maturity value. Future Generali Big Dreams ULIP scores on providing extra allocations while it pales in the performance of equity funds.

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