ULIP's SATHYA

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ULIPs : An Introduction

(ICICI)

Most importantly, what are ULIPs? Here, you will find all the information you need to set yourmind at ease about how to invest in ULIPs, and which ULIP is right for you.

ULIPs are a category of goal-based financial solutions that combine the safety of insuranceprotection with wealth creation opportunities. In ULIPs, a part of the investment goes towardsproviding you life cover. The residual portion of the ULIP is invested in a fund which in turninvests in stocks or bonds; the value of investments alters with the performance of the underlyingfund opted by you.

Simply put, ULIPs are structured in such that the protection element and the savings element aredistinguishable, and hence managed according to your specific needs. In this way, the ULIP planoffers unprecedented flexibility and transparency.

Working of ULIPs

It is critical that you understand how your money gets invested once you purchase a ULIP:

When you decide the amount of premium to be paid and the amount of life cover you want fromthe ULIP, the insurer deducts some portion of the ULIP premium upfront. This portion is knownas the Premium Allocation charge, and varies from product to product. The rest of the premiumis invested in the fund or mixture of funds chosen by you. Mortality chargesand ULIP administration charges are thereafter deducted on a periodic (mostly monthly) basisby cancellation of units, whereas the ULIP fund management charges are adjusted from NAV ona daily basis.

Since the fund of your choice has an underlying investment – either in equity or debt or acombination of the two – your fund value will reflect the performance of the underlying assetclasses. At the time of maturity of your plan, you are entitled to receive the fund value as at thetime of maturity. The pie-chart below illustrates the split of your ULIP premium:



Things to know more about ULIPs

Q1. What is a Unit Linked Fund?

Unit Linked Fund is a pool of the premiums paid by the policyholders which is invested in a

portfolio of assets to achieve the fund(s) objective. The price of each unit in a fund dependson how the investments in the fund would perform. The fund is managed by the insurancecompanies.

Q2. What does a Unit stand for?

A Unit stands for a portion or a part of the underlying segregated unit linked Fund.

Q3. What is Net Asset Value?

Net Asset Value (NAV) is the value per unit calculated in rupees.

Q4. What is a Fund Value and how is it calculated?

Fund Value is the product of the total number of units under the policy and the NAV. Thefund value for the purpose of claims, surrenders or any other clause stated shall becalculated on the basis of NAV.

Q5. What do I get at the end of my policy term?

The benefit received at the end of policy term is termed as maturity benefit. Thepolicyholder is entitled to receive fund value as maturity benefit.

Q6. What should I verify before signing the proposal?

You should verify:

All the charges deductible under the policy

Features and benefits

Limitations and exclusions

Lapsation and its consequences

Other disclosures

Illustration projecting benefits payable in two scenarios of 6% and 10% returns asprescribed by the life insurance council.

Q7. What will my family receive if something happens to me?Investment returns from ULIP may not be guaranteed.” In unit linked products/policies, theinvestment risk in investment portfolio is borne by the policy holder”. Depending upon theperformance of the unit linked fund(s) chosen; the policy holder may achieve gains or losseson his/her investments. It should also be noted that the past returns of a fund are notnecessarily indicative of the future performance of the fund.



Q9. Can I change / switch my asset allocation?

Yes, you can change the investment pattern by moving from one fund to other fund (s)amongst the funds offered under a particular product. Such a change between funds istermed as a Switch. There will be a flat charge levied for any switch over and above the freeswitches.

Q10. What is Premium Re Direction?

Premium Re-Direction is the facility that allows a policyholder to modify the allocation of amount of renewal premium into a different investment pattern from the option (investmentpattern) exercised at the inception of the policy.

Q11. Can I partially withdraw from my policy?

Yes, you can en cash withdraw a part of the fund anytime after completion of three years,subject to surrender charges as applicable to each individual plan.

Q12. Can I foreclose my policy? Are there any charges applicable?

Yes, you can foreclose your policy by Surrendering the policy. Surrender means terminatingthe contract once and for all. On surrender, the surrender value is payable to you which isFund Value less the surrender charge. Surrender Charge means a charge levied on the fundvalue at the time of surrender of the policy.

Q13. What does redemption mean?Redemption means en cashing the units at the prevailing NAV offered by the company.This is applicable in case of exercising partial withdrawal, switch, maturity, surrender,settlement option or in the case of payment of death benefit.

Q14. What is the Settlement Option?

Settlement Option also known as periodical payment, means an option available to thepolicyholder to receive the maturity benefit as a structured payout over a period of up to 5years after maturity.

Q15. What is the date of commencement?

Date of Commencement of Policy as shown in the policy certificate is the date on which theage of the life assured and the term of the policy are calculated and the same are shown onthe policy certificate.

Q16. What is a Regular Premium Contract?

Regular premium contract means a ULIP where the premium payment is in level and paid inregular intervals like yearly, half-yearly or monthly.

Q17. What is my monthly due date?

Monthly due date means the date in any subsequent calendar month correspondingnumerically with the date of the commencement of the policy. In the event that there is nodate in any subsequent calendar month corresponding numerically with the commencementdate, then the due date shall be the last date in that subsequent calendar month.



Q18. What does “Cover Cessation Date” mean?

Cover Cessation Date (Date of Maturity) as shown in the policy certificate is the date onwhich the policy contract comes to an end and is the date on which the maturity benefitbecomes payable.

Bajaj Allianz ULIP

Unit Linked Insurance Plans

Market linked insurance plans invest the premium in to the

equity, debt and cash markets by the way of allocating units,

which like any other mutual fund have a NAV and the customer

is free to switch between one fund class to another depending on

the risk factor he wishes to be in. ULIPs offer a better return than

the traditional endowment plans and offer a great deal of flexibility along with great returns making them the finest product

offering. We at Bajaj Allianz Life Insurance have developed a

number of Unit Linked Insurance ULIP products which range

from single premium to a regular premium option along with

investment funds ranging from index funds to mid-cap funds and

debt market linked funds.

Change in methodology of NAV of ULIP funds

It is hereby informed to the esteemed policyholders of the Company that as per the directionsissued by IRDA vide circular REF:IRDA/F&I/CIR/INV/173/08/2011 dated 29th July 2011 and a

subsequent clarification vide corrigendum Ref: IRDA/F&I/CIR/INV/187/08/2011 dated 17th

August 2011, the Company with effect from 18th August 2011 has carried out a change in the

methodology for calculation of NAV funds which is applicable to all unit linked

products/policies of the Company, including the existing unit linked policies issued by the

Company. The policy documents shall accordingly stand modified.

Old formula for computation of NAV:

Market value of investment held by the fund plus / (minus) the expenses incurred in the purchase / (sale) of the assets plus the value of any current assets plus any accrued income net of fund

management charges less the value of any current liabilities less provisions, if any. This gives the

net asset value of the fund. Dividing by number of units existing at the valuation date (before any

new units are allocated/ redeemed), gives the unit price of the fund under consideration.



Modified formula as stipulated by IRDA:

Market value of the investment held by the fund plus values of current assets less value of

current liabilities and provisions, if any. This gives the net asset value of the fund. Dividing by

the number of units existing on the valuation date (before creation/redemption of units) ),gives

the unit price of the fund under consideration.

The Company hereby confirms that implementation of the new methodology for calculation of

NAV does not in any way change the number of units to be credited to the policyholder.

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New Silk Route tries to come out of Rajat Gupta's shadowDecember 13, 2011 12:07 IST

New Silk Route, private equity major, is trying hard to come out of

the shadows of co-founder Rajat Gupta, who has been accused of

providing tips to another co-founder, convicted insider trader, Raj

Rajaratnam.

NSR says it is business as usual.

It has initiated an image makeover by appointing an advisory group

comprising veterans from corporate houses, financial institutions and foreign institutions.

Parag Saxena, CEO & founder-partner, said the advisory board was being formed to help with

portfolio companies and 'introduce it to capital markets'.



"We are looking at six to seven experts from companies, financial institutions and supra-national

organisations, amongst others," he told Business Standard .

He refused to disclose more details.

He said, Gupta's exit did not necessitate any changes within NSR.

"Gupta was never involved with the day-to-day running of the portfolio. He was never on any of

the boards of any of the 15 portfolio companies," he said.

The head of private equity practices with a global advisory firm said the move to appoint an

advisory group was a 'clear signal' that the company was adapting to global standards as a private

equity firm.

"Rather than connecting to Rajat Gupta issues, this move could be in line with activities of other

PE majors such as Bain, KKR and Blackstone, which have advisory groups comprising industry

veterans," he added.

To return money to its investors, NSR also set its eye on exiting from its portfolio companies.

NSR, which invested about $750 million in 14 portfolio companies, has made just one exit so

far.

The private equity made a partial exit from Destimoney Securities, a wholly-owned subsidiary of

Destimoney Enterprises -- formerly known as Dawnay Day AV Financial Services.

"We expect that a four-year period from the fund's closing in late 2008 is a reasonable time to

expect exits," said Saxena.

"We hope to realise some exits during the next 12 months. We cannot comment on specific exit

strategies at this time."

However, a few of NSR's investments, such as KS Oils [ Get Quote ], are still in trouble.

NSR had invested about Rs 135 crore (Rs 1.35 billion) in KS Oils in 2009, by paying Rs 48 per

share, for a stake of seven per cent.

This year, shares of KS Oils dived after reports that the company faced Rs 400-crore (Rs 4

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billion) loss related to trading in mustard oil futures by promoters.

Currently, KS Oils shares are trading at Rs 6.7/ share on the Bombay Stock Exchange [ Images ].

NSR currently holds 9.48 per cent in KS Oils.

Investment banking sources said the Gupta association did act as a hurdle in certain deals like,

Indian Oil [ Get Quote ] Tankage.

Saxena, though, remains optimistic about the next fund-raising of NSR. "Our LPs (limited

partners or investors) have been very supportive and all capital calls have been met. No key-man

clause has been triggered by recent events," he says.

"We expect usual and customary provisions in any future fund-raising. Our investment

anticipated investing through late 2013 and we are on plan."

New Silk Route is an Asia-focused growth capital firm founded in 2006 with $1.4 billion under

management, focused on the Indian subcontinent, as well as other economies in Asia and North

Africa.

"We have seen no impact by Rajat Gupta issue on our performance, and don't expect any such

impact in the future," Saxena said.

"We are seeing a strong pipeline for new investments and are very excited about the prospects

for our existing portfolio and future investment opportunities in the region."

New Silk Route (NSR), the private equity firm co-founded by Rajat Gupta, who has beenarrested and indicted in the US on insider trading charges, has formed an advisory boardcomprising international business experts Nina Shapiro, Herbert A. Henzler and Supratim Bose.

The advisory board is to help identify global opportunities for NSR’s portfolio companies. Thesewould include potential business partnerships, strategic transactions and public offerings onexchanges in Asia, Europe and North America, stated the firm. NSR expects to appoint moreindividuals to the advisory board in the coming months.

Gupta is accused of providing tips to Raj Rajaratnam, the billionaire hedge fund tycoon who hassince been sentenced in the US to a 11-year jail term for insider trading.

Shapiro served as vice president, finance, and treasurer of the International Finance Corporation.Henzler is special advisor to the chairman of Credit Suisse Group. Bose, who had a 28-yearcareer at Johnson & Johnson, has also been recently appointed at Boston Scientific Corporationas executive VP and president, Asia-Pacific.

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Parag Saxena, founder and CEO of New Silk Route, said, “The purpose of the strategic advisory board will be to provide guidance and identify potential business opportunities for ourinvestments in markets across the globe.”

“European and US companies have a strong desire to capitalise on the economic growth potential

in India and the West Asia,” said Henzler. “This has the potential to make NSR’s portfoliocompanies extremely appealing as business partners across multiple industries.”

NSR manages $1.4 billion and has invested about $750 million in 14 portfolio companies. “Weexpect that a four-year period from the fund’s closing in late 2008 is a reasonable time to expectexits,” said Saxena in an earlier interview with Business Standard.

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