Wealth Ultima – A New Age ULIP

 By Somali K Chakrabarti

In life, as in chess, forethought wins. ~ Charles Buxton

The birth of a healthy daughter was a happy occasion for Rakesh Prasad and his wife Ravina.  Along with the couple, their respective parents were also ecstatic with joy at the arrival of the little one. By the time the child was barely 3 days old, the grandparents were already talking about what the little girl would be when she grows up. Rakesh’s parents wanted their granddaughter to be a doctor, Ravina’s father wanted her to be a lawyer, while her mother wanted the child to be a fashion designer.

Rakesh was getting a little weary of all these discussions. Several thoughts began to play in his mind. In a time span of 20 years, his daughter will be ready for college. They would need to plan adequately for her future. He shared his thoughts with his wife, who was already thinking of putting aside some money into fixed deposits. Rakesh was more inclined towards mutual funds. Like any other well-settled young man, he wanted to gain from the uptrend in the market. Though he was financially savvy, the couple had a busy life, which left them very little time or interest to manage their investments.

At 32 years of age, Rakesh was working as a mid-level manager in one of the Indian companies. His wife was a teacher in school. The family’s income was sufficient to support their lifestyle. Nonetheless, he would need to plan ahead to provide for their child’s future aspirations, while also planning for any contingency. The question that arose before them was what would be an appropriate solution to address their financial needs in the long future, say after 20 – 25 years.

With a steady income in hand, Rakesh can afford to invest regularly, and though he wants his money to grow, but he does not have the time to track or move his investments on a regular basis. He plans to stay invested for a long term (say 20 years or more). Keeping in view, his needs and his long term investment, Rakesh deliberated over some plans and finally decided to go for Edelweiss Tokio Life – Wealth Ultima.

Let’s look briefly at the product, and then understand his reasons for selecting the plan over other instruments.

Edelweiss Tokio Life – Wealth Ultima

Edelweiss Tokio Life – Wealth Ultima is a New-age ULIP designed to help people accumulate, preserve and utilise their wealth as per their needs. It is a systematic ULIP plan that enables people to protect themselves against the uncertainties of life and create long-term wealth.

In the case of unfortunate demise of the Policyholder, the beneficiary receives a lump sum amount. On survival of life insured, fund value is payable at the end of policy term. The policyholder can receive the maturity proceeds in a lump sum or in instalments. Please note that the investment return is linked to market performance.

Why should I invest in a ULIP?

Investment discipline

A Systematic Monthly Investment plan not only safeguards from erratic market movements but also induces investment discipline. Though Mutual funds also offer Systematic Investment Plan (SIP) that require you to habitually invest at regular intervals, but if you do not pay there are no penalties involved. Rakesh knew that in order to avoid the policy from getting lapsed, he would have to pay the premium by the due date.

Flexibility with Systematic transfer and systematic withdrawal option

By transferring the money from equity to debt, Wealth Ultima allows for preserving the gains. Rakesh could also opt for systematic withdrawal that would allow him to receive a certain amount each month to take care of regular expenses at a later stage.    

Tax savings on returns

Though the Unit Linked Insurance Product has a lock-in period of 5 years in which he would not be able to withdraw, the final amount at maturity is tax-free, which would be a big saving for him as well as for the nominee. On the other hand, for Long term/ short term capital gain taxes are applicable for mutual funds.

Cost and transparency

The cost in Wealth Ultima is lesser than most other leading investment avenues. For a policy term of 20 years, the total cost (including mortality charges and service tax) works out to be 1.07%, assuming an annual premium is Rs 1L for a person aged 35 years.  

Besides, the plan has Loyalty, Booster and Guaranteed additions, which reward the insurer for continuously paying premiums, staying invested, enhance the fund value and reduce the total cost.

All the charges, options and benefits are clearly mentioned on the site https://www.edelweisstokio.in/product/planned-future/wealth-ultima.

 

Higher Returns in the Long Term

In the long term (around 20 years or more), ULIPs have the potential to outdo Mutual funds in terms of return. So, for a person like Rakesh, with a long-term horizon, ULIP may be more suited as compared to mutual funds.

Life is like a game of chess. To win you have to make a move. Knowing which move to make comes with insight and knowledge. ~ Allan Rufus

 

This post is written in collaboration with Edelweiss Tokio Life and Blogmint.


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11 thoughts on “Wealth Ultima – A New Age ULIP

  • April 25, 2017 at 3:59 pm
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    Investing is always a gamble, and so it is wise not to put all of your eggs in one basket. Agree with you on long term financial planning and goals. The earlier we start planning, the more confident we can become with our money and so the more confident we can lead our lives. I like the notion of regularly looking at your investments – the market out there always changes, so does trends, and if we keep up with what’s happening we can avoid potential pitfalls in this arena. I have yet to start investing but it is something I will be looking at in the next few years 🙂

    Reply
    • April 25, 2017 at 9:36 pm
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      Thanks Mabel. I fully agree that we should keep looking at our investments regularly, something that I did not do earlier. Now I do, since portfolio can be seen online, which makes it much easier to track the investments. I wish you the best for begining to invest. 👍👍

      Reply
  • April 25, 2017 at 9:04 pm
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    Its wise to look well into these investment insurance plans.. But its something often taken out here in the UK as a means to save and at the same time be given insurance in case something happens in the future.. Looking at the small print is always good too..
    I took out one when our children were very young and paid into it for 25 years until it matured.. however it was only on the event of death would it pay out.. So all the money I had paid into it I did not get returned.. But it was a security blanket for me and my children if anything happened to either of us at the time..

    So one that pays a lump sum at the end is advisable.

    Wonderful to see a post from you Somali.. Sending my Love and Blessings xx Sue 🙂

    Reply
    • April 25, 2017 at 9:45 pm
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      Thank you very much, Sue. You have highlighted a valid point about insurance and investment. Looking at the fine print is very important. Sometimes it is better to keep insurance separate from investment. But if one starts early (as you did), has a long term horizon, and the plan offers insurance security as well as a lump sum at the end for a reasonable amount of premium, then it could worth considering. Love and Regards, Somali 😊😊

      Reply
      • April 25, 2017 at 9:52 pm
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        indeed it is well worth considering if those terms and conditions suit 🙂 My Pleasure Somali.. <3

        Reply
  • April 27, 2017 at 10:22 am
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    Very informative. Giving a real life situation helps.

    Reply
  • May 7, 2017 at 7:41 am
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    What a versatile writer you are, Somali! Life is like a game of chess; the best strategists win. Planning ahead is always a great move. Check mate! 😊

    Reply

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