May 25, 2007 06:30 PM
8300 Views
The reason I invested in Aviva had nothing to do with faith or knowledge of the company but because a young patient of mine had taken up a job there and was falling short of his premium targets. I , being fond of the boy, decided to help him out and paid an upfront annual premium of 2.5 lacs and opted for quarterly payments from 2nd year onwards. My first premium was paid on 8th Oct 2005.
I recently got my statement from Aviva up to 31st march 2007 and was pleasantly surprised to note that my units were now worth 5.12 lacs which was a whooping 1.37 lacs more than what I had paid to the company so far as premium. This was a first for me in my experience with ULIPs , so I decided to share this with the group in case some youngsters are inclined to diversify into the insurance by way of ULIPs. Incidentally I own a total of 9 ULIP policies with ICICI, Birla sunlife, LIC and Aviva , so I am in a position to lay out the comparisons for you, so please read on.
The details of my Aviva policy are as follows
NAME- Aviva Life Bond Five-Unit Linked(LFB).
FUND OPTION----GROWTH
SUM INSURED VALUE--- Rs. 12.5 lacs ( is the base insurance. The ULIP earnings will be added to this in case of death of policy holder).
ANNUAL PREMIUM--- Rs. 2.5 lacs
DURATION OF PREMIUM---- 5 years.
DURATION FOR WHICH INSURANCE WILL LAST----- 10 years( 5 years after payment of last premium).
EXTRA MORTALITY CHARGE---NIL.
INITIAL MANAGEMENT CHARGE--5 % of the Initial Unit value per Annam for 1st 5 years.
POLICY ADMINISTRATION CHARGE--Rs 53 per month.
From what I can make out, it is here that the company has a difference from other companies. It invests the entire premium amount into the units and keeps deducting the charges as the units make money. For example when I paid 2.5 lac rs, Rs 2, 48, 630 was invested in the market straight away in the form of 13, 159.204 units at NAV of Rs 18.894 on 8th Oct 2005. As against this when I invested in birla sunlife at the same time in 2 policies, the administrative charges were deducted upfront. In the case of the classic plan, an investment plan, out of a premium of 1.35 lacs, only Rs 1.15 lacs was invested in the units while 20 k deducted as admin charges. As a result, the policy will never be more than the invested amount till 3 years have passed. In the case of birla's flexi-life line, a pure insurance plan , out of 2.5 lacs 1st premium, only 84 thousand was invested in units while 65 % was deducted as admin charges. This is a joke as far as ULIPs go as it will be 5 years before the fund value equals my pay-in premium.
Thus Aviva has clearly added value to my investment while offering insurance also. Today, the NAV is Rs 27.097. So the value of the initial 13159 units is now Rs 3, 56, 575.This means a return of 1.06 lac rupees on 2.5 lacs in 15 months or 42.4 percent return absolute and 33.9 % annual. This is better than most mutual funds and, to my knowledge , all insurance ULIP plans. In case anyone is aware of better returns, I request you to point it to me.The balance is being now paid by me in quarterly instalments of 62, 500 rupees , out of which in my 7th April instalment, Rs 61, 850 has been invested in units. Again, this is a sound and investor friendly policy.
To summarise, I strongly recommend this company to go with for your insurance needs esp where investment and capital preservation are the prime requirements.
However, aviva definitely lacks the service level which birla or even LIC provides. They do not have premium reminders in place, the customer care phones do not work well. So chose your agent well when you go for this product
