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- Rated 0.5 stars
- Kotak Premier Life Plan
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Kotak Premier Life Plan is a limited premium paying participating whole life plan. It is the flagship Insurance Policy of Kotak Life Insurance which is being sold aggressively by the company.
Features of the Plan:
Entry Age – Min – 3 years
Maturity Age – 99 years
Premium Paying Term – Fixed PPT of 8, 12, 15 and 20 years
Policy Term – 99 years less entry age
Premium Payment Option – Only Limited pay
Maximum Premium – No limit, subject to underwriting
Minimum Sum Assured on maturity – Rs. 2,00,000
Premium Payment Mode – Yearly, Half yearly, Quarterly, Monthly
Analysis of Plan is as under:
- The Policy is a Whole Life Endowment which means that the underlying will be Debt instruments. This is a big disadvantage. Why should we invest in Debt when tenure of investment period is 99 years. Equity should be underlying with that kind of tenure as Equity becomes very safe in long term.
- The policy will have an average annual expense of 2.25% which is very high especially when underlying is Debt. You can invest in Debt Mutual Funds which charge approx. 0.5-1% p.a.
- In the illustration of policy, it has been shown that policy will give approx. 19 Crores at the end of 99 years if premium of Rs. 1 Lac is paid for 12 years by a 4 years old policy holder. If you invest similar amount in Equity mutual funds which give approx. 15% per annum then maturity value after 99 years will be approx. Rs. 41,854 Crores. You will be getting Rs. 41,834 Crores more by investing in Equity Mutual Funds.
- The Insurance policy will give 19 Crores after 99 years. If we assume inflation of 6% then the value of 19 Crores in Present Value will be only Rs. 6 Lacs. So technically, you are giving them 12 Lacs to erode the value by 50%.
- Also, the liquidity in the policy is bad. The Policy will charge high surrender fees till 99 years. Its better to invest in Equity Mutual Funds which don’t charge exit load after 1 year.
Final Recommendation – Please don’t invest in this policy and save your hard earned money from destruction.
High Surrender Charges
Poor Product Structure