Aegon Life iInvest Insurance Plan
Aegon Life iInvest Insurance Plan Review
Aegon Life iInvest Insurance Plan is a Unit Linked Insurance Plan which boasts of no premium allocation charges. Thus, the plan invests the entire premium paid and provides attractive market-linked returns along with insurance protection.
Key Features
This is an online Unit Linked Plan which provides market related returns and insurance protection.
There are two investment portfolio strategies to choose from – Self-managed portfolio strategy and Lifestyle Portfolio Strategy.
While the Self-Managed strategy involves the policyholder to make his own fund choices, the Lifestyle strategy allocates the premium in specified funds in a specified proportion. Later on, the Lifestyle strategy auto-allocates the premiums in different funds in a pre-determined proportion which changes every year.
The plan also promises Loyalty Units which enhance the Fund Value.
Being a unit linked plan, the policyholder can enjoy a host of flexible features like partial withdrawals, switching, top-up facility, settlement option, etc.
Additional premiums by way of top-up premiums are allowed anytime except in the last 5 policy years. The minimum amount of top-up is Rs.5000 and the top-ups increase the fund value and also the Sum Assured. The top-up premiums paid also have a lock-in period of 5 years.
There are two types of switching which are allowed under the plan. One is switching between the portfolio strategies chosen. The policyholder can switch from the Lifestyle Portfolio Strategy to the Self-Managed Portfolio Strategy anytime during the plan tenure free of cost. However, a free switching from the Self-Managed Portfolio Strategy to the Lifestyle Portfolio Strategy can be done once in any policy year except in the last 12 years.
The other type of switching facility allowed is switching between the available funds under the Self-Managed Portfolio Strategy. Four free switches are allowed every policy year exceeding which a charge would be levied. The charge would be 0.1% of the amount switched subject to a maximum of Rs.200.
There are no riders under this plan.
Partial withdrawals are allowed in the plan after a completion of 5 policy years. The maximum amount of partial withdrawal allowed would be 20% of the Fund Value as at the beginning of that policy year. Four Partial withdrawals are free in a year exceeding which a charge of Rs.200 per withdrawals would be levied. Partial withdrawals are allowed only if the life assured is aged 18 years and above. The balance in the Fund Value after any partial withdrawal should not fall below 2 times the annual premium.
Benefits
On maturity, the Fund Value and any Top-up premium Fund Value available on the maturity date would be paid to the policyholder. The policyholder can also choose to receive the maturity benefit in installments over a period of 5 years after the completion of the plan tenure. This benefit can be availed through the Settlement Option feature available under the plan.
If the insured dies when the plan is in-force, the death benefit paid would be higher of the following:
- Total Sum Assured on Death
- Total Fund Value
- 105% of all premiums paid until death.
The Total Sum Assured on Death = Base Sum Assured on death + Top-up Sum Assured, if any
Total Fund Value = Base Fund Value + Top-up Fund Value, if any.
The Sum Assured used for calculating the death benefit would be reduced by the amount of partial withdrawals made in the two years preceding the year of death if the insured is aged below 60 years. If the insured’s age was 60 years and above at the time of death, all partial withdrawals made after attaining 58 years of age would be deducted from the Sum Assured while calculating the death benefit.
- For plan tenures of 15, 20 or 25 years, if the due premiums have been paid, Loyalty Units are added to the Fund Value in the last 5 years. The units are expressed as a percentage of the average Base Fund Value in the last 48 months and the units are segregated to the funds in their existing proportion. The rate of such additions is as follows:
| Premium Paying Term (PPT) | Loyalty Unit Addition |
| 5 or 7 years | 1.70% |
| 10 years or equal to plan tenure | 1.80% |
Being a ULIP plan, bonus is not declared.
Loan is not available under the plan.
Premiums paid under the plan would be exempt from tax under Section 80C up to a limit of Rs.1.5 lakhs. The death benefit or the maturity benefit received would also be tax exempt under Section 10(10D) of the Income Tax Act.
Being a ULIP plan, there are certain charges applicable. The charges include the following:
- Premium Allocation Charge – There are no premium allocation charges under the plan. Even the top-up premiums do not attract any allocation charge.
- Policy Administration Charge – A monthly charge of 0.2% of the annual premium is deducted in the first policy year as the Policy Administration charge. The minimum and the maximum amount of the charge in the first year should be Rs.80 and Rs.200 per month respectively. The amount would then increase @5% per annum on a compounding basis from the 2nd year onwards subject to a maximum of Rs.500 per month.
- Fund management Charge – These charges depend on the type of fund selected and are charged on a daily basis. The applicable charges are:
| Fund Type | Charge |
| Bluechip Equity Fund | 1.35% per annum |
| Accelerator Fund | 1.35% per annum |
| Stable Fund | 1.35% per annum |
| Secure Fund | 1.00% per annum |
| Debt Fund | 1.10% per annum |
| Discontinuance Policy Fund | 0.50% per annum |
- Miscellaneous Charges – A maximum charge of Rs.500 could be levied as miscellaneous charge for any service offered.
- Discontinuance Charge – Applicable for policies in which premiums are discontinued. The charges are:
| Year of Discontinuance | Annual Premiums up to Rs.25,000 | Annual Premiums above Rs.25,000 |
| 1 | Lower of 20% of annual premium or Fund Value up to a maximum of Rs.3000 | Lower of 6% of annual premium or Fund Value up to a maximum of Rs.6000 |
| 2 | Lower of 15% of annual premium or Fund Value up to a maximum of Rs.2000 | Lower of 4% of annual premium or Fund Value up to a maximum of Rs.5000 |
| 3 | Lower of 10% of annual premium or Fund Value up to a maximum of Rs.1500 | Lower of 3% of annual premium or Fund Value up to a maximum of Rs.4000 |
| 4 | Lower of 5% of annual premium or Fund Value up to a maximum of Rs.1000 | Lower of 2% of annual premium or Fund Value up to a maximum of Rs.2000 |
| 5 year onwards | Nil | Nil |
- Mortality charge – This charge is deducted on the first day of each month based on the Sum at Risk and the policyholder’s age
This facility allows the policyholder to redirect his future premiums to other funds than he originally selected. The facility is only available under the Self-Managed Portfolio Strategy under the plan. Two such redirections are allowed free in one policy year exceeding which a charge of Rs.100 would be levied on every re-direction.
A period of 30 days is allowed after the due date for paying the premium in case of annual mode of premium payment. This extra period is called the Grace Period which reduces to 15 days if the premium is paid in monthly mode.
A cooling off period or a free look period of 30 days is granted to the policyholder after the policy issuance to review the policy terms and conditions. If found unsatisfactory, the plan can be cancelled within this period and the premium paid would be refunded after deducting the relevant mortality charge, service tax, cess and stamp duty paidThe other type of switching facility allowed is switching between the available funds under the Self-Managed Portfolio Strategy. Four free switches are allowed every policy year exceeding which a charge would be levied. The charge would be 0.1% of the amount switched subject to a maximum of Rs.200.
How it works
- The policyholder decides on the amount of premium he wants to pay,theplan tenure, premium paying tenure, Sum Assured and the investment strategy.
- After deduction of the applicable charges except the allocation charge, the premium is invested as per the chosen strategy.
- Under the Self-Managed Portfolio Strategy, the policyholder can choose to invest his premiums in any of the available 5 funds as per his investment objective. The funds include the following:
- Bluechip Equity Fund
- Accelerator Fund
- Stable Fund
- Secure Fund
- Debt Fund
- Under the Lifestyle Portfolio Strategy, there is a predefined investment strategy which provides a correct balance of equity and debt funds. The net premium is first invested in the Blue Chip Equity Fund from where it is first reallocated to the Debt Fund and later on in a mix of Debt Fund and Secure Fund as the plan approaches maturity. The rationale of this strategy is to minimize equity exposure as the plan nears maturity to safeguard the returns earned from any market volatility in later years.
- If the policyholder dies during the tenure of the plan the death benefit is paid.
- If the plan attains maturity, the maturity benefit is paid.
Plan Details
Let's Understand The Plan With An Example:
Mr. Kumar (Age 30 years) opts for Aegon Life iInvest Insurance Plan.
His plan details are:
• Annual Premium: Rs.50,000
• Sum Assured on death: Rs.5,00,000
• Policy Term: 20 years
• Premium payment Term: 20 years
• Portfolio Strategy opted: Lifestyle Portfolio Strategy
Illustration
The following chart represents the growth of premiums paid under the plan for different tenures. The premium paying term is assumed to be for the entire tenure and the charges are ignored. The growth rate is assumed to be 4% and 8% as dictated by IRDA regulations.
The associated table is as follows:
| Premiums | Term 10 years | Term 15 years | Term 20 years | Term 25 years | ||||
| Growth @ 4% | Growth @ 8% | Growth @ 4% | Growth @ 8% | Growth @ 4% | Growth @ 8% | Growth @ 4% | Growth @ 8% | |
| Rs.1 lakh | 148,024 | 215,892 | 180,094 | 317,216 | 219,112 | 466,095 | 266,583 | 684,847 |
| Rs.2.5 lakhs | 370,061 | 539,731 | 450,235 | 793,042 | 547,780 | 1,165,239 | 666,459 | 1,712,118 |
Non-Payment of Premium in Aegon Life iInvest Insurance Plan
If the policyholder does not pay the due premiums under the plan the policy would lapse. A lapsed policy can be revived, surrendered or made paid-up. Paid-up would only be applicable if at least 5 years’ premiums have been paid. If premiums for the first 5 years have not been paid, the policyholder would have to surrender the plan or revive it.
Surrendering the policy
- Within the first 5 policy years
The policy has a 5 year lock-in period. If the policy is surrendered within the first 5 years, the funds in the Fund Value would be transferred to the Discontinuance Policy Fund after deducting the Discontinuation charges. The fund would earn a minimum interest of 4% in the Discontinuance Policy Fund. The money would remain in the Discontinuance Policy Fund till the completion of 5 years and the Fund Management charges would be deducted as and when applicable. If the policyholder dies during this period, the Fund Value as on the date of death would be paid. Otherwise, after the completion of the lock-in period of 5 years, the available Fund Value would be paid
- After 5 years
If the plan is surrendered any time after the completion of 5 years, the available Fund Value would be paid without deduction of any charges.
Making the policy Paid-up
If the first 5 years’ premiums have been paid, the Paid-up option is available with the policyholder. Under the paid-up option, the Sum Assured under the plan would be reduced and called the Paid-up Sum Assured which would be calculated as follows:
Paid-up Sum Assured = Sum Assured on death * (total number of premiums paid/total number of premiums payable)
The policy would continue as a paid-up policy which will also attract the relevant charges. If the Fund Value falls below the amount of one annual premium, the policy would be terminated and the remaining Fund Value would be paid.
Revival
Revival is allowed within 2 years from the date of the first unpaid premium. The policyholder would be required to pay the outstanding premium and any interest charged by the insurer to revive his policy.
Foreclosure
The policy would be foreclosed by the company if the balance in the Fund Value falls below one annual premium or if the Fund Value balance is not sufficient to deduct the applicable charges. On foreclosure, the remaining Fund Value would be paid to the policyholder.
Eligibility
The plan can be bought only by Resident Indians. The other eligibility criteria of the plan includes:
| Minimum | Maximum | |
| Entry age (Last Birthday) | 7 years | 55 years |
| Maturity Age (Last Birthday) | NA | 70 years |
| Plan tenure | 10, 15, 20 or 25 years | |
| Premium payable | PPT 5 years – Rs.48,000 PPT 7 years – Rs.36,000 PPT 10 years or equal to plan tenure – Rs.24,000 |
No limit |
| Premium Paying Term | 5, 7, 10 years or equal to plan tenure | |
| Sum Assured on Death | Entry age less than 45 years – higher of 10 times the annual premium or 0.5*term*annual premium Entry age 45 years and above – higher of 10 times the annual premium or 0.25*term*annual premium |
10 times the single premium |
| Top-up Sum Assured | 1.25 times the top-up premium | 10 times the top-up premium |
| Premium payment mode | Monthly or yearly | |
Exclusions
- Suicide: If the policyholder commits suicide anytime during the plan tenure, the available Fund Value would be paid to the nominee.
