Birla Sun Life Insurance Single Premium Bond

Sep 10 2008

Birla Sun Life Insurance Single Premium Bond

Posted by Sachin

Tags: Additional Services, Benefits, Freelook Period, Investment Fund Portfolio, NAV, Tax Implications, What are the Charges?, What is the Plan About?, Who is Offering the Plan?

In this policy, the investment risk in investment portfolio is borne by the policyholder.

	Highlights
	Hassle free one time investment.
	No medical requirements.
	Facility of high entry age.
	Choice of tenure- 5 yrs & 10 yrs
	Choice of 3 Investment Fund Options (in the 10 year plan).

Only a decade ago, if you had any surplus Funds you simply went to the nearest bank or post office. Today you are being constantly bombarded with a plethora of investment options with conclusive evidence on the supremacy of each option. These alternatives make the selection even more baffling.Have you often sat to wonder about the optimum investment vehicle, which is safe, earns good returns and does not require constant monitoring? An investment option, which helps you, realise your dreams? Birla Sun Life Insurance is happy to present to you the SinglePremium Bond.’Birla Sun Life Insurance Single Premium Bond’ being a unit-linked plan, offers returns depending on the performance of the capital and financial markets. The principal amount is guaranteed under the plan, which gives you the freedom to take risks without having to worry about the risk of the erosion of the capital. In addition, this plan not only aims at maximizing the investment return on your money but also provides a life cover to provide assistance to your family in the unfortunate event of untimely death. It also comes with a life insurance cover, in case of the sudden death of the policyholder.

Who is Offering the Plan?

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organisation. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future.

The Aditya Birla Group has a turnover of close to Rs. 119000 crores, with a market capitalisation of Rs. 133875 crores (as on 31st March 2008). It has over 100,000 employees across all its units worldwide. It is led by its Chairman – Mr. Kumar Mangalam Birla. Some of its key companies are Hindalco, Grasim and Aditya Birla Nuvo.

Sun Life Financial Inc. and its partners, have operations in key markets worldwide. These include Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Sun Life Financial Inc. has assets under management of over US$404.7 billion (as on 31st March, 2008). It is a leading performer in the life insurance market in Canada.

Birla Sun Life Insurance (BSLI) has been operating for 7 years. It has contributed significantly to the growth and development of the life insurance industry in India. It pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. It was the first player in the industry to sell its policies through the Bancassurance route and through the Internet. It was the first private sector player to introduce a Pure Term plan in the Indian market. BSLI has covered more than 2 million lives since it commenced operations. And its customer base is is spread across more than 1500 towns and cities in India. The company has a capital base of Rs. 1274.5 crores as on 31st March 2008.

What is the Plan About?

‘Birla Sun Life Insurance Single Premium Bond’ is a unit-linked non-participating investment oriented insurance plan wherein you pay a single premium and the policy pays a lump sum at maturity. It is the ideal plan for you if you have received a large amount/bonus or have a surplus and are in search of an avenue to invest your money. This plan is available for two tenures of 5 and 10 years. In the case of the 10-year plan, you have a choice between three Investment Fund Options with different investment patterns – Protector, Builder and Enhancer. This gives you the option to invest your money in a fund based on your risk profile. In the 5 year plan the Investment Fund Option available is only Protector. You can switch between the Investment Fund Options during the term of the policy ensuring that your money works harder and provides you with more efficient returns.

The features of the plan are given in the table below:

Birla Sun Life Insurance Single Premium Bond
Entry Age	13 years for the 5 year term, 8 years for the 10 year term – 70 years
Maximum Maturity Age	75 or 80 years depending on the benefit term chosen
Benefit terms available	5 years and 10 years
Minimum Duration of plan	5 years
Minimum premium amount	Rs. 20,000
Sum Assured	125% of the single premium amount; minimum sum assured will be Rs. 25000

Benefits

a) You get dual benefits:
‘Birla Sun Life Insurance Single Premium Bond’ caters to the twin needs of Life Insurance and Investment. The premium contribution in the plan is guaranteed on maturity.

b) There are no medical requirements:
You don’t require any medical test to buy this plan

c) It’s so convenient:
Simple documention
Simple one time payment saves you the hassle of regular investments.

d)You have the option of 3 Investment Funds (in the 10 year plan):
Three Investment Fund Options are available under the 10 year plan. You can allocate your premiums in varying ratios between these 3 Funds. You also have the choice of switching between the various Funds twice a year free of cost. For the 5 yr plan the Investment Fund available is Protector.

e) Maturity Benefits :
The maturity benefit would depend upon the contribution made, and the term of the policy decided by you. On maturity the higher of the Fund Value or the policy premium will be payable to you.

f) Death Benefit :
In case of the unfortunate death of the life insured, Fund Value or 125% of the single premium (Sum Assured), whichever is higher, is payable to the policyholder’s nominee. Let us take an example:
A male aged 25 years buys this plan for a premium amount of Rs 50,000.The benefit period is 10 years. The death benefit for this plan would be higher of the Fund Value or 125% of 50,000 that is Rs.62, 500.

g) Surrender Benefit :
The policy can be surrendered any time after 3 policy years without any charges. The amount payable will be the Fund Value.

Investment Fund Portfolio

Investment Fund Option	Risk Profile	Asset Allocation *	Min.	Max.
Protector	Low	Debt Instruments, Money Market &Cash	90%	100%
Protector	Low	Equities & Equity Related Securities	0%	10%
Builder	Low	Debt Instruments, Money Market &Cash	80%	90%
Builder	Low	Equities & Equity Related Securities	10%	20%
Enhancer	Medium	Debt Instruments, Money Market &Cash	65%	80%
Enhancer	Medium	Equities & Equity Related Securities	20%	35%

* In each Investment Fund Option, the Money Market & Cash asset allocation will not exceed 40%.

The Funds have a varying amount of debt and equity. You can select the Funds based on your risk preference and switch between the Funds based on market performance . Please note that this is a Unit Linked non-participating plan and the Investment Risk is borne by the policyholder.

Protector: Objective: The objective of the Investment Fund Option is to generate consistent return through active management of fixed income portfolio and focus on creating long-term equity portfolio, which will enhance yield of composite portfolio with minimum risk appetite.

Strategy: To invest in fixed income securities with marginal exposure to equity up to 10% at low level of risk. This product is suitable for those who want to protect their capital and earn steady return on investment through higher exposure to debt securities.

Builder: Objective: This Investment Fund Option helps build your capital and generate better returns at moderate level of risk, over a medium or long-term period through a balance of investment in equity and debt.

Strategy: Generate better returns with moderate level of risk through active management of fixed income portfolio and focus on creating long term equity portfolio which will enhance yield of composite portfolio with low level of risk appetite.

Enhancer: Objective: This Investment Fund Option helps you grow your capital through enhanced returns over a medium to long term period through investments in equity and debt instruments, thereby providing a good balance between risk and return. This Fund is suitable for those who want to earn higher return on investment through balanced exposure to equity and debt securities.

Strategy: To earn capital appreciation by maintaining diversified equity portfolio and seek to earn regular return on fixed income portfolio by active management resulting in wealth creation for policyholders.

What are the Charges?

A Premium Allocation Charge of 2.5% of the single premium will be deducted from the premium you pay.

Mortality Charge: Charges towards mortality will be deducted by cancellation of units on a monthly basis at the prevailing NAV.

The annual Mortality rates per thousand Sum At Risk are as follows:

Age (yrs)	20	30	40	50	60
Female	0.896	1.163	1.657	4.030	10.660
Male	1.016	1.171	2.150	5.532	13.732

These mortality charges will be guaranteed for the contract period

A Policy Administration Charge will be recovered by cancellation of units on a monthly basis at the prevailing NAV. The annual Policy Administration Charge per 1000 of the Life Insurance Coverage Sum Assured is given in the table below:

Policy Administration Charge
	Life Insurance Coverage Sum Assured
	On the first Rs 25,000	On amount in excess of Rs 25,000
All policy years	16.20	4.20

This annual charge cannot not exceed Rs.20 per 1000 of the Life Insurance Coverage Sum Assured.

For your understanding, we provide this example. Suppose you had chosen a Life Insurance Coverage Sum Assured of Rs 1,00,000. In this case the total Policy Administration Charge in Year 1 is 16.20 * 25 + 4.20 * (100-25) =Rs. 720 and the amount Rs. 720/12 = Rs.60 will be collected on every monthly processing date by cancellation of units during the first Policy Year.

Fund Management Charges not exceeding 1.5 percent per annum of the Investment Fund will be charged by adjustment of the daily NAVs. Currently this charge is 1 percent per annum for Protector, Builder and Enhancer Fund Option.

Switching charges
In a year, two switches between Investment Fund Options are free. For every additional switch a charge of Rs. 100 will be levied and this charge will not exceed Rs. 500.

These Policy Charges (except mortality charges and Premium Allocation Charges) are subject to change. A three-month notice will be provided to all Policy Owners prior to the implementation of the new charges. This will be subject to approval of the IRDA.

Additional Services

We provide our customers with a high level of transparency in all our plans to put them in total control. In this plan too, we provide the NAVs of the different Investment Funds on a daily basis in the newspapers and on our website www.birlasunlife.com. We will send you an annual statement giving details on the performance of your Funds. Besides we are just a phone call away and you could call us on our toll free number 1800 22 7000.

NAV

The basis used for calculation of NAV would be the Appropriation Price and Expropriation Price.

The Appropriation Price shall apply in a situation when the company is required to purchase the assets to allocate the units at the valuation date

The Expropriation Price shall apply in a situation when the company is required to sell assets to redeem the units at the valuation date.

The NAV per unit of each Investment Fund will be calculated as per the prevailing IRDA guidelines mentioned below
When Appropriation Price is applied: The NAV shall be computed as:
(Market Value of Investments held by the fund + The Expenses incurred in Purchase of the Assets + Value of Any Current Assets + Any Accrued Income Net of Fund Management Charges – Value of any Current Liabilities – provisions, if any)

Divided by the number of units existing at valuation date (before any new units are allocated)

When Expropriation Price is applied: The NAV shall be computed as:
(Market Value of Investments held by the fund – The Expenses incurred in Sale of the Assets + Value of Any Current Assets + Any Accrued Income Net of Fund Management Charges – Value of any Current Liabilities – provisions, if any)

Divided by the number of units existing at valuation date (before any new units are allocated).

	Freelook Period
	You will have the right to return your policy to us within 15 days from the date of receipt of the policy. We will pay the Fund Value plus all charges levied till date (excluding the Fund Management Charge) once we receive your written notice of cancellation (along with reasons thereof) together with the original policy documents.

Tax Implications

As per our understanding of current tax laws, benefits under section 80C on the premium paid will be available upto 20% of the Sum Assured in the year of premium payment. Please consult your tax advisor for specific suitability.

The tax benefits on your Policy would be as per the prevailing provisions of the Income tax Act,1961. If required by the Act, we will withhold taxes from the Benefits payable under this Policy. We also reserve the right to recover from you levies such as Service Tax levied by the authorities on insurance transactions.

	Service Tax and other levies
	Service Tax and other levies, as applicable, will be levied as per the extant tax laws.

Suicide

If the life insured dies by suicide within one year of the issue of the policy, we will not pay the Life insurance cover. In such a case, we will refund the higher of the premiums paid towards the policy since the issue date or the Fund Value.

Section 41 of the Insurance Act

No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectuses or tables of the insurer

Section 45 of the Insurance Act

No Policy of Life Insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no Policy of Life Insurance effected after the coming into force of this Act shall, after the expiry of two years from the date on which it was effected be called in question by an Insurer on the ground that statement made in the proposal or in any report of a medical officer, or referee, or friend of the Life Insured, or in any other document leading to the issue of the Policy, was inaccurate or false, unless the Insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the Life Insured and that the Life Insured knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.

Provided that nothing in this section shall prevent the Insurer from calling for proof of age at any time if he is entitled to do so, and no Policy shall be deemed to be called in question merely because the terms of the Policy are adjusted on subsequent proof that the age of the Life insured was incorrectly stated in the application

Risk Factors/Disclaimers

	This is a non-participating unit-linked Plan.
	This policy is underwritten by Birla Sun Life Insurance Company Limited (BSLI).
	The above mentioned charges are applicable to the base coverage only. Birla Sun Life Insurance, Single Premium Bond, Protector, Builder and Enhancer, are only the names of the company, policy and the Funds respectively and do not in any way indicate the quality of the policy, Funds or their future prospects or returns.
	The charges mentioned above are applicable to all the three Investment Fund Options offered at present.
	All the policy charges can be modified by the company subject to the approval of the IRDA.
	The company reserves the right to introduce new Funds with different charges subject to approval of the IRDA.
	The value of the Investment Fund reflects the value of the underlying investment.
	These investments are subject to market risks and change in fundamentals such as tax rates etc effecting the investment portfolio.
	The premium paid in Unit Linked Life Insurance policies are subject to investment risk associated with capital markets and the NAV of the units may go up or down based on the performance of Investment Fund Options and factors influencing the capital market and the insured is responsible for his/her decisions.
	There is no guarantee or assurance of returns from the Funds other than the guarantee of premium contribution.
	BSLI reserves the right to recover levies such as the Service Tax levied by the authorities on insurance transactions.
	If there are any additional levies, they too will be recovered from you.
	This brochure contains the salient features of the plan.
	For further details, please refer to the policy contract.
	Insurance is the subject matter of the solicitation
	For more details and clarifications call your Birla Sun Life Insurance Advisor or visit our website and see how we can help make your dreams come true.