Birla Sun Life Dream plan vs term plan.

Quite a few of us know for a fact that a term plan covers an individual for a stipulated period. If death occurs during the term the whole cover amount (sum assured) is paid out. If policyholder survives the term he gets nothing. The term of this policy generally is a maximum of 30 years and maximum cover provided by any company is till the age of 65.

On the other hand Birla Sun Life Dream plan is a Unit Linked Insurance plan that provides the huge cover similar to that of a term plan. The minimum and maximum term of the policy is 5 and 25 years maximum age at entry is 50 years and a policyholder can be covered maximum till age 75.

Note: The premiums between both the plans for a similar cover and term are almost similar to each other

Comparisons between the two:-

Traditional term plan have no maturity value but BSL Dream plan returns the fund value less charges till date on maturity
Death benefit in term plan is the sum assured but in BSL Dream plan death benefit is Enhanced Sum Assured plus the fund value till date.
There are no charges levied on the term plan premium as the whole premium generally is considered as mortality premium or charge. For BSL Dream plan charges are levied for mortality, fund management, premium allocation etc and remaining premium is invested in the fund option as selected.
BSL Dream plan covers maximum till age 75 but only if you enter the policy at age 50 as the maximum age at entry is 50 and you can be insured for a maximum of 50 years only. A traditional term plan covers maximum for 35 years and till age 65 only.
As BSL Dream plan is a ULIP plan you get equity and debt exposure as per the fund selected. You have no such option in case of a term plan.

At the end it can be said that BSL Dream plan is good for people nearing their fifties and wanting to insure themselves for the next 25 years. The premium per annum would be as high as sixty thousand per annum but will provide you a cover of approximately fifty lakhs. Also, you application might not be considered on health grounds and you might have to also undergo a medical check-up.
A policyholder who is looking for returns on capital employed and also wants a cover can opt for BSL Dream plan, but one who is looking out for a cover for next 30 – 35 years and is okay with no returns on premium invested can lookout for a term plan.

Insurance- Basics

Insurance is a promise of compensation for specific potential future loss in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.
We all know about insurance but many times we ignore some basic features of insurance policy.
Here we will try to explain some of the words which your agent normally use while explaining any insurance policy.
By explaining the below terms we want to make you familiar with your insurance policy.

Sum assured (also known as Cover) - This refers to the amount paid out on a policy if you die within the Term of insurance plan. In case of an endowment policy Sum Assured can be paid out on maturity along with the bonus and in case of Money back policies a part of Sum Assured is paid out on regular intervals and on maturity along with the bonus.on regular intervals. Endowment policy It is the guaranteed amount to be paid out at maturity with or without Bonus (Depend upon the policy).

Premium - The owner usually pays a fixed premium amount in exchange for the insurance company's guarantee to cover any economic losses incurred under the scope of the agreement of insurance.
Bonus - It is the amount added to the basic sum assured under a with-profit life insurance policy.
Surrender value - The amount payable by the insurer to the owner of an investment-based plan in case he opts to terminate the policy after three years (the mandatory lock-in period) but before its maturity date. The surrender value will be the premium paid till date minus surrender charges and any outstanding loans due.
Endowment Policy – In this plan the amount is paid to a policyholder if he lives survives the term even after the tenure of the insurance contract or to the beneficiary if the insured person dies before the date on which the policy matures.

Term Insurance - Term life insurance is a life insurance plan in which person can get the huge insurance coverage with fewer lower premium. In this plan beneficiary will get the cover amount only if the insured person dies within the policy term. Unlike Endowment policy policyholder don’t get any amount if insured person lives even after the policy expires. One should have atleast one Term Insurance policy. One can consult a financial planner for the best possible insurance solution.

Whole Life Insurance - A life insurance policy where benefits are payable to a beneficiary on death of the insured, whenever that occurs. The premium payment can happen for a specified number of years or throughout life.

ULIP - It is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. Some part of the amount invested in ULIP is used to provide the insurance cover and the remaining is invested in equity and debt investments and denoted as units.
Money Back Plan - A plan in which part of the sum assured is paid back to the policyholder at regular intervals and a part of sum assured is paid at maturity along with bonuses
Rider - An add-on benefit available at the option of the policyholders that may alter certain features of a policy by increasing or restricting benefits.
Survival benefits - The amount payable to a policyholder under an investment-based plan if he survives the policy term. Typically, it is the sum assured plus returns (guaranteed additions / bonus) accrued.


We have tried to explain some of the terms of insurance but if you want to know about any other terms then please contact us.

Ulip's

The expensive cover policy.

A few decades back, only money back and endowment policies used to be sold by LIC agents. The enterance of new private insurers marked the regime of new unique policies that suited individual needs. Now-a-days, except for LIC all other companies are busy selling ULIP’s. Unit Linked Insurance plans as provide you with a cover along with the benefit of enhanced returns on the principal. Lets have a look at the features of this policy:-

1. One can invest a fixed amount monthly, quarterly, semi-annually or annually.
2. Amount saved in a ULIP plan (net of charges) is invested at the applicable Net Asset Value (N.A.V) and denoted in units.
3. Every month a certain amount goes towards charges like the fund management charge or premium allocation charge and so on.
4. The cover provided is generally 5 to 10 times of annual premium.
5. The investor has to choose from a range of sub-options or plans provided by the company. For example a risk averse person can opt for a Protector type fund where 90 to 100 % of the investment is made in Gilts and Money market instruments which are risk free. Similarly an investor with a greater risk appetite can invest in Aggressive fund where 60 to 100% will be invested in equity and equity related instruments.
6. The term of the policy can be between 3 to 60 years with minimum and maximum age at entry and exit differing from policy to policy.
7. Different types of bonuses are declared during the term and on maturity of the policy that either increases the fund value or additional units are added to the policy.
8. You can opt for a single premium or regular premium ULIP plans.
9. In case of death of the investor during the term the company pays out the fund value + bonuses (if applicable) or the Sum Assured (cover) or both. This too differs from policy to policy.
10. Tax benefit u/s 80C for premiums paid upto Rs. 1 lakh p.a. Also surrender value or maturity benefit is exempt from taxes.
11. One can surrender the policy after three years of policy existence and can redeem the fund value as on that date.