Clarifying birla range. Review on Aditya Birla Sun Life Insurance

Having read the reviews and comments here, esp the last one by young investor, I realised how poor our knowledge is about insurance products.I think the reason waslack of transparency.In the last review, some talk of 12 percent cover charges, some of 65 percent, some about 35 percent agents commissions.

I hold a dozen policies of various companies, including 9 from birla so will share here what my concept is.

You see I am 53 years old and have earned very good money from life insurance o. for the last 33 years.The reason was that one had to pay small amounts of premium every month or annual, and, due to the nature of long investments, money used to grow as li.cdeclared bonuses of 7 to 10 percent annual, based on their returns. Their agents would get a commission for the first five years of the policy. We were not wiser about anything except that we got handsome tax free income.

My last investment was in lic bima nimesh in 2001, which gave me returns of 11 percent per annum for 5 years, compounded so this year, on investment of 9.45 lacs, I got 15.04 lacs in 5 years-tax free profit.

So with that as background I entered private insurers when they came to India 6 years back and since I had immense faith in aditya birla companies, I took a number of their policies.

Now to answer the queries

1. Polcies-there is a policy called classic life which insures you for only 5 times your annual investment so it is primarily an investment policy, with only 12 percent administrative charges in 1st year and 2 to 4 percent in next 4 years.

There are other policies called flexi cash flow or flexi life line where a mix is of insurance and investments. Here the administrative charges are 55 percent to 65 percent in 1st year and reduce in subsequent years. This is like a classic old lic policy where you lose money if ypou withdraw before 5 years.

Pure term policies have low premia and no payback.

2.Investment options.-these decide where you want your investment money parked.If you want pure equity, opt for magnifier-this is current hot favourite, gave returns of 45 percent last year. Then is enhancer where 35 percent is in equity, then balancer, protector and creator. Risks are highest in pure equity and lowest in debt fund options. You can switch from one to another, based on market conditions.

3.long term is fine-insurance should not be terminated in a hurry, be it in any company. 2 lacs is not a small amount to waste.

My returns have been as follows

1. Classic life -started in may 2004,  rs 1 lac per annum, insured for 10 lacs. ON 1/12/06, amount in enhancer option is 2.98 lacs.(paid so far 2.5lacs total). Now any time I can draw out since 2 policy years are completed. I just have to leave behind 25 k rs to service the insurance part of the policy.

   
   




2. Flexi lifeline-started in march 2004. Premium 2.52 lacs per annum, payable in monthly instalments. On 1/11/06, corpus is 6 lacs, of which I  can draw out 5.4 lacs. Option here is also enhancer, now converted into magnifier.This is probably the option with the previous blogger.

   
   

3.flexi cash flow-started on 05/02/2002.Annual premium 21, 120 rs.Insured amount 2.5 lacs.In case of diagnosis of critical illness 2.5 lacs to be paid whether spent or not(heart attack, stroke, caner, kidny failure). On 5/1/2007, I will get 68 thousand as cash back.Total corpus invested in builder option as on date is 86 thousand rs.