[sbinews] SBI Life's Unit linked plan (Economic Times)

  • From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Mon, 10 Jan 2005 08:48:01 +0530

Insurance: playing for keeps
(Economic Times)
Sign into earnIndiatimes points
Unit-linked insurance plans have been a favourite with investors for
sometime now. The only problem with this class of product is that the
investor has to decide the asset allocation that best suits his needs in
terms of risk-reward ratio and also change the asset allocation depending on
his view on the equity and debt markets.

Retail investors are not very market savvy and may not be able to switch
between funds at the right time. SBI Life seems to have understood this need
of the investor for hassle-free investing and introduced its first
unit-linked plan with automatic asset allocation.

The plan is called Horizon and will automatically reallocate funds on a
regular basis at no extra cost. The customer will just have to choose his
plan, regular premium amount, frequency of premium payment and the term.
After this, the company will allocate the premium amount in different asset
classes depending on the market view.

The two plans on offer are dynamic and growth. Under the dynamic plan, a
higher proportion of the money is invested in equities during the initial
years. Therefore, this plan will offer higher returns over longer terms. As
the plan reaches maturity, the fund will automatically rebalance the assets
towards safer avenues such as debt and cash. Thus, in the initial years, the
portfolio will be overweight in equities and in the latter years, it will be
overweight in debt. This makes this fund suitable for terms over 15 years as
it offers higher returns over long terms.

The growth plan, on the other hand, has a more balanced approach and
therefore, offers moderate returns. The premiums paid are put into less
risky options, which offer good returns towards maturity. The investment in
equity decreases more rapidly and therefore, this plan is suitable for terms
between 10 to 15 years.

Horizon will invest in three funds: Equity, bond and money market. At
maturity, the policyholder will get the 'policy investment value' (PIV). PIV
is the total value of the units that the policyholder holds in all the asset
classes. In case of death of the policyholder, the nominee will receive the
PIV plus the sum assured.

After the first year, if the policyholder is unable to pay the regular
premium, the life cover will continue and the mortality charges will be
recovered from the policy investment value on a monthly basis. After three
years the policyholder has the flexibility to withdraw a portion of the PIV.
The first two withdrawals in a policy year are free of cost.

The policyholder can use the top-up facility to invest any surplus. However,
this will not impact the life cover. The top-up amount is limited to the
annualised regular premium for tax benefits.

The minimum age at entry is 14 years while maximum age is 60 years. The
maximum cover age is 70. The minimum term can be for 10 years and the
maximum term can be for 40 years. The life cover amount is calculated at 10
times the annualised premium.

The minimum life cover can be Rs 1,20,000 and the maximum can be Rs 10 lakh.
The minimum annual premium is therefore Rs 12,000 and the maximum yearly
premium is Rs 1 lakh. The premium can be paid either monthly, quarterly,
half yearly or yearly.

There is a tax rebate under Section 88 of the I-T act and the maturity and
death benefits are tax free under Section 10 (10) D.

This message is intended only for the use of the Addressee and may contain 
information that is PRIVILEGED and CONFIDENTIAL. If you are not the intended 
recipient, please erase all copies of the message and its attachments.  Any 
unauthorized access, usage, reproduction, disclosure of the contents of the 
mail and its attachments, without the explicit permission of the Bank is 
prohibited and State Bank Of India (SBI) or any of its officials, including the 
sender of this mail, would not in any way be liable for the same. SBI accepts 
no liability for any damage caused by this e-mail.
Email From ""Rajendra S. Pai" <rs.pai@xxxxxxxxx>" was security checked by 3.93  
version of CxProtect(tm)
On: sify_mta at: 09:54:42, 10-Jan-2005 Monday
Mailing list (sbinews@xxxxxxxxxxxxx) related information:

News/articles about SBI and Banking related matters published  in the print 
media, Internet etc will be circulated through this Mailing List. 

The messages in this list will help in improving awareness of SBI and its 
activities vis-a-vis the happenings in the Banking industry. This should be of 
help to all staff members of SBI, particularly those who are preparing for 
promotional written tests/interviews/group discussions. Subscription to this 
Mailing List is simple and FREE. Please check the procedure below. Please share 
this information with other colleagues/branches that could be interested in 
subscribing to this Mailing List. 

The messages circulated here should not be deemed to have the official 
endorsement of the SBI or any of its employees. The correct factual position 
may be ascertained from official sources. 

To join this mailing list, just send an email to sbinews-request@xxxxxxxxxxxxx 
with the word 'subscribe' without the quotes in the subject of the email 

To leave this mailing list, just send an email to sbinews-request@xxxxxxxxxxxxx 
with the word  'unsubscribe' without the quotes in the subject of the email 

Archives (old messages) are available for viewing at:
Click on the month-year at the lower left corner to view messages posted during 
that month. 

This is an announcements/newsletter type mailing list i.e. only the Moderator/s 
can post messages to the list. 

This mailing list is maintained and moderated by Sri. R.S.Pai, currently 
working as Chief Manager(IT-Internet Banking), SBI, Corporate Centre, Mumbai. 
Visit http://rspai.tripod.com for some useful Banking, Reference and Utilities 

Other related posts:

  • » [sbinews] SBI Life's Unit linked plan (Economic Times)