Birla Sun Life Insurance (BSLI) Foresight Plan
A plan that helps you benefit from market fluctuations by investing your money when markets are low and locking in your highest gains with life cover
How BSLI Foresight Plan works:
We shall focus on the 5-Pay & Guaranteed Option Product (5-Pay allows you Tax Benefit u/s 80C & 10(10D))
1. Choose your Basic Premium
For 5-Pay option, you pay the premium annually for 5 years. The minimum Basic Premium payable is Rs.1,00,000 annually.
For Single-Pay option, you pay the premium only once. The minimum Basic Premium payable is Rs.2,00,000.
2. Choose your Life Cover
You can choose your Basic Sum Assured (BSA) i.e. Life Cover, as given below.
Less than 45 yrs of age – min 10 x Basic Premium, Max 300% of BSA
45 yrs of age or more – min 7 x Basic Premium, Max 300% of BSA
5-Pay Otion – you can choose 100,150,200,250 or 300% of BSa
Single Pay Option
Less than 45 yrs of age – Min 1.25 x Basic Premium, Max 5 x Basic Premium
45 yrs of age or more – Min 1.10 x Basic Premium, Max 5 x Basic Premium
3. Choose the Investment Option between Guaranteed Option and Self-Managed Option.
In this option your money is invested in the new generation Foresight 5P Fund (Segregated Fund Identification Number: ULIF02510/02/11BSLFSIT5P1109). You receive a Guaranteed Minimum Maturity Benefit by optimising both your entry and gains from the capital markets.
How does the Guaranteed Option work?
To understand how the Guaranteed Option works, it is important to understand a few key terms:
1. Net Invested Premium (NIP)
2. NIP Value
3. NIP Guaranteed Value
4. Guaranteed Minimum Maturity Benefit (GMMB)
Each of these is explained below.
1. Net Invested Premium (NIP)
Net Invested Premium is the money that is invested in the investment option chosen by you.
From the premium paid by you, deductions are:
• Premium allocation charge; and
• Mortality charge for the BSA chosen by you
The residual amount is the NIP.
2. NIP Value
BSLI tracks each NIP in your policy separately and each NIP has its own value (NIP value). NIP value for any given day is calculated as:
NIP Value = NIP X current unit price
unit price when NIP was paid to purchase units in Foresight fund
For example, a NIP of Rs.1,00,000 is invested using a unit price of Rs.10 to purchase units in the Foresight fund. Now,
• If the current unit price is Rs.12, then NIP Value = 1,00,000 x (12/10) = Rs.1,20,000
Your Fund Value is the sum of all NIP Values as on date. If you are in the fourth policy year and have paid all four premiums on time, then your Fund Value is the sum of all four NIP Values associated with each of your premiums.
3. NIP Guaranteed Value
NIP Guaranteed Value is the minimum value that BSLI guarantees on a particular NIP at maturity. NIP Guaranteed Value is:
• For 5-Pay option – Higher of Special NIP Guaranteed Value (explained below) OR The highest NIP Value achieved during the first 7 policy years
• For Single Pay option – Highest NIP value achieved during the first 7 policy years
4. Guaranteed Minimum Maturity Benefit
Guaranteed Minimum Maturity Benefit is the sum of all your NIP Guaranteed Values. At maturity and provided you remain invested in the Guaranteed Option, you will receive the Fund Value or the Guaranteed Minimum Maturity Benefit, whichever is higher.
The Unique and Truly Innovative Foresight Advantage – Only for the 5-Pay option
Special NIP Guaranteed Value
At the end of 5th policy year, BSLI will determine a special NIP Guarantee for each NIP invested in this plan. Your NIP Guaranteed Value will then be the higher of this special NIP Guaranteed Value or the Highest NIP value achieved during the first 7 policy years.
The special NIP Guaranteed Value is the sum of two components, as described under (a) and (b) below.
(a) This component gives you the advantage of investing on the best day possible during the policy year in which the NIP was invested. This is calculated as:
It equals the NIP itself multiplied by the ratio of
– the NIP Value as of the end of the 5th policy year
– the lowest NIP Value recorded during the policy year in which the NIP was invested
NIP for year 2 premium (a) = Rs.1,00,000
NIP at the end of 5th year (b) = Rs.1,50,000
Lowest NIP value in the year invested (c) = Rs.80,000
Therefore, the value of the first component = 1,00,000 x (1,50,000/80,000) = 1,87,500
(b) This component helps you to lock-in the gains made by giving you the highest NIP Value achieved during the first 5 policy years.
This is calculated as:
– Highest NIP value achieved during the first 5 policy years less
– NIP value at the end of the 5th policy year
NIP for year 2 premium (x) = Rs.1,00,000
NIP Value at the end of 5th year (y) = Rs.1,50,000
Highest NIP Value during the 5 years (z) = Rs.1,62,5000
Therefore , the value of second component = 1,62,500 – 1,50,000 = 12,500
Adding the two components, we get special NIP Guaranteed Value = 187,500 + 12,500 = 200,000.
As mentioned earlier, the NIP Guaranteed Value will be the higher of Special NIP Guaranteed Value, as calculated above, and the highest NIP Value achieved during the first 7 policy years.
Benefits of BSLI Foresight Plan
You will receive no less than the Guaranteed Minimum Maturity Benefit, as described earlier, if you opt for the Guaranteed Option.
You will receive the Fund Value at maturity, if you are invested in the Self-Managed Option at that time.
In case of the unfortunate death of the life insured prior to maturity, the nominee will receive the Basic Sum Assured plus the Fund Value as of the date of intimation of death. The Death Benefit shall never be less than 105% of total premiums paid to date (excluding any applicable underwriting extras). Any partial withdrawals made will reduce the Death Benefit by the amount of withdrawal.
In case you require funds to meet any exigency, you can surrender your policy after the completion of five policy years, and receive the Fund Value at that time, plus refund of mortality charges for the remaining term to maturity.
You can make unlimited partial withdrawals to meet any financial emergencies
You can meet your financial needs by availing of a loan on your policy.
Policy Charges :
Premium Allocation Charges: 5% on basic premium
Policy Administration Charge: NIL
Fund Management Charges: 1.75% on Foresight 5P Fund
Mortality Charges: A mortality charge is deducted for the Basic Premium when received
Under the 5-Pay Option
Gender Age 25 | Age 35 | Age 45 | Age 55
Male 2.570 | 3.510 | 7.340 | 17.710
Female 2.510 | 3.020 | 5.670 | 13.680
Things that differentiates BSLI Foresight Plan from similar plans in the industry like HDFC Crest, SBI Life Smart Performer, ICICI Pru Pinnacle Super, Bajaj Allianz Max Advantage:
1.All charges except FMC is charged in the premium paying term (5yrs) which reduces erosion of Fund Value in the remaining term
2.Charges are recovered from the basic premium rather than the units (No loss of number of units)
3.Efforts are made NOT to reduce number of units for instance while calculating special NIP Guaranteed Value, lowest NIP value is taken into account, ensuring higher number of units
4.Death Benefit = Sum Assured + Fund Value
Source : http://goo.gl/CiNz5
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