High-end product with competitive charges

Max New York has launched a unit-linked insurance plan called ‘Fast track’. Pegged on the promise it will help customers accumulate more wealth in a shorter duration, the premium amount begins at Rs 1 lakh. The maximum policy term is 20 years. But, the customer has the option to choose a shorter duration of 10 years.

The product targets people in the age group of 35-45. In addition, customers up to 60 years are allowed entry with the maximum coverage till 70. The product offers personal accident and dread disease riders.

Fast Track offers a sum assured of 1.25 -20 times the annual premium. The payment options are single, five or 10 premiums. There are seven investment funds offered by the company. All these will follow a systematic transfer plan, which will release the consumer’s investment in 12 equal installments. Using the partial withdrawal feature, customers can withdraw from the fund value once the policy completes five years.

However, in terms of product differentiator, none of the above is a novel feature. Almost all the current unit linked plans offer such benefits to their customers.

Since Fast track has a higher premium requirement, they will be given features like discounts at specific outlets and a dedicated customer executive servicing their needs. ICICI Prudential (Lifetime Premier) and Kotak (Ace investment), also have similar products, though the premium is lower at Rs 50,000. They, however, do not offer single pay options. Fast Track offers both the sum assured and the fund value on death similar to other type II plans.

On the basis of an illustrative 10 per cent investment return, a 35-year old man with a 20 year policy term and a 10 year payment term, will earn a fund value of Rs 32,69,540. A similar plan, ICICI Pru Life stage Wealth II, will see it at Rs 33, 59, 189. That from Star Union Dhan Suraksha Premium 3 would see it rise to Rs 34,02,986. So, Fast Track’s fund value is slightly lower than other plans on offer.

In terms of fund management fee, Fast Track charges 1.25 per cent for equity funds. While ICICI Life Stage Wealth II charges 1.35 per cent, Star Union Dhan Suraksha has a lower fee of one per cent. However, customers should remember that insurance and investments should NOT be clubbed. Investment in mutual funds or stocks and insurance through term plans will be much more beneficial.