Birla Sun Life Platinum Premier Plan

This Platinum Premier series of ULIPs by Birla has been popular, so much so that several other Insurance Companies have introduced similar schemes. Being popular is very different from being a good investment for the customer however! On this score, we believe the product performs poorly, as do almost all other ULIPs in the market.

As usual, ads and agents highlight only ‘Benefits’. However, costs are fairly high – there is 10% Premium Allocation Charge, PLUS a ~5% Policy Administration Charge. This wipes out a good chunk of returns. Most of these charges go to pay attractive commissions to Banks and agents, who then push the product enthusiastically. The life insurance cover of 5 times annual premium is a joke – it will keep you grossly underinsured anyway.

The biggest attraction is supposedly the NAV guarantee of its ‘Platinum Premier’ plan, wherein you get the highest NAV of 7 years guaranteed, after 10 years. However, there are several issues with this – let’s look at it closely. This feature is not available on the equity scheme, but only on the Platinum Premier scheme. The portfolio of this scheme is not disclosed, but we can be confident that it will look more and more like debt as the years progress. So what you get is higher NAV, but this NAV doesn’t rise with the stock market. Roughly, this is something like a fixed deposit promising you that your corpus builds every single – of course it does, as interest gets added to it! This is the biggest confusion this product (intentionally?) introduces – if you have the equity scheme, you have no guarantee. If you go for the guarantee, it is the ‘NAV’ that is guaranteed, not the highest point in the stock market. And no one tells you how this NAV will behave!

Secondly, and more crucially, if you invest in any equity product (mutual fund or index) for 10 years without withdrawing the money, you will anyway make great returns. There is not a single 10-year period in the past when equities have given net negative returns! Thus, if you genuinely want to invest long term, just put it in an index fund for 10 years. You are guaranteed a great positive return, without these charges and this complication of ‘highest NAV’.

We would advise you: think long term no doubt. But go for a simple long term index fund, rather than this ULIP. Indeed, the same advice applies to all other 7-year NAV plans of this nature.

 

Product features:

 

Parameter

Value

Fintotal Comment

Entry age

8 to 70 years

 

Policy and premium paying term

10 years

 

Premium Allocation Charge

10% of first year premium, 5% of every premium thereafter

This is fairly high, and is likely to erase a good chunk of your returns

Policy Administration Charge

4.8% in each of first three years; about 2.88% each year thereafter

This is extremely high, and is likely to wipe out a good chunk of your returns

Fund Management Charge

1%-1.5% depending on which scheme you choose

This is in line with common practices

Surrender value

Full fund value in case of surrender after 5 years. 60% - 90% in case of withdrawal before 5 years

 

Death Benefit

Higher of fund value and sum assured (less withdrawals if any)

 

 

Illustration:

 

Parameter

Value

Fintotal Comment

Entry age

8 to 70 years

 

Policy and premium paying term

10 years

 

Premium Allocation Charge

10% of first year premium, 5% of every premium thereafter

This is fairly high, and is likely to erase a good chunk of your returns

Policy Administration Charge

4.8% in each of first three years; about 2.88% each year thereafter

This is extremely high, and is likely to wipe out a good chunk of your returns

Fund Management Charge

1%-1.5% depending on which scheme you choose

This is in line with common practices

Surrender value

Full fund value in case of surrender after 5 years. 60% - 90% in case of withdrawal before 5 years

 

Death Benefit

Higher of fund value and sum assured (less withdrawals if any)

 

 

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