Bharti AXA launches new policy

Bharti AXA Life Insurance, a joint venture between Bharti Enterprises and AXA, has announced the launch of its new life insurance product Guarantee Builder on Thursday in the City.

A unit linked policy named ‘Guarantee Builder’ offers protection to the policy holder by way of guaranteed return on investment premium paid over 15 years. The scheme will invest up to 40 per cent in equity and up to 60 per cent in debt. The life cover is ten times of the premium paid.

An example of how the policy works is as follows: For a 35-year-old male paying an investment premium of Rs 50,000 a year will have a sum assured of Rs 500,000 as life cover. Total premium paid in 15 years will be Rs 750,000 and the guaranteed return at the end of the 15th year will be Rs 862,500, indicating 15 per cent gain       (Rs 112,500) on the total premium paid. However, the actual gain will be much lower as the policy holder will also have to pay Rs 3,090 every year towards annual policy fee to take care of the administration charges and mortality charges.

For service tax and cess the investor will have to pay extra. Since the total annual policy fee will be Rs 46,350 in 15 years, the actual guaranteed return in 15 years on total investment will be Rs 66,150 (Rs 112,500- Rs 46,350) or around 8.82 per cent.  So, as a pure investment product Bharti AXA’s new policy is not  attractive at all. But the investment protection and life cover attached to it make all the difference. Besides, if the stock prices go up the return from underlying units will be higher. Bharti AXA Life CEO Nitin Chopra said, “ Our premium guarantee product addresses  the need of those traditional and new investors who are wary of market volatility—as is the case currently—but would still like to participate in the India growth story.”

A person not interested in guaranteed return can also opt for non-guaranteed funds where the investment in equity will be between 80 and 10 per cent.