Mumbai: SBI Life Insurance Co Ltd., a joint venture between State Bank of India and Cardif SA of France, has introduced its first unit-linked insurance scheme. Called 'Horizon' this ULIP has an automatic asset allocation under which, funds are automatically reallocated on a regular basis at no extra cost. Therefore the policyholder does not need to actively monitor investments or make changes in the portfolio.
Under 'Horizon', the customer can opt for a plan, regular premium amount, frequency of premium payment and the term of the policy. Based on this, the company determines the allocation of the customer's premium into different funds automatically. The automatic assignment of the premiums seeks to maximise returns and reduces risk in the long run. The main advantage of regular premium payments is the 'rupee cost averaging'. Regular premium investments assure lower acquisition costs. Speaking on the occasion of the launch, S Krishnamurthy, MD and CEO, SBI Life Insurance said, "ULIPs being the flavor of the market, we are proud to bring our first market linked product with an innovative feature of automatic asset allocation. Horizon provides life cover with market related returns and automatically manages the investment portfolio of the policyholder without any extra cost." He further added, "Usually investors react impulsively to the volatile movements of the market and switch in between the schemes. ULIPs are designed for long term investment and one should watch the performance over a period of time. Experts at SBI Life Insurance will analyse the market movements for the customer to bring him the optimum market rate of returns at the maturity of the policy term." Horizon is available in two options - 'dynamic plan' and 'growth plan':
In the former, a higher proportion of the money is invested in equities during the initial term of the policy. Towards maturity, the equity to debt ratio is automatically changed ensuring safer returns. The maximum and minimum percentage of investment in equity and debt depends on the term to maturity. It is an ideal investment for terms over 15 years. In the growth plan, the investments are more balanced as the premiums are put in less risky options. It offers good returns towards the maturity of the policy. The investment in equity decreases more rapidly as the premiums collected are automatically put into less riskier assets. It is an ideal investment for term between 10 to 15 years. Horizon will invest in equities, bonds and money markets. The premium payments can be made monthly, quarterly, half-yearly or yearly. At maturity, the policyholder receives the policy investment value (PIV). The policy provides an increasing 'death benefit' where the nominee receives the PIV and the Sum Assured. The plan comes with additional tax benefits and 15 days free look period and is available through both bancassurance, which it pioneered in the country and agency channels. Benefits of Horizon - Life cover with higher market rate of returns
- Automatic Asset Allocation with no extra cost
- Premiums will be progressively rebalanced into safer funds towards maturity
- Regular premium payment mode, for rupee-cost averaging
- At maturity, the policyholder receives the policy investment value (PIV)
- On death, the nominee receives PIV plus sum assured
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