Reliance Automatic Investment Plan

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Reliance Automatic Investment Plan
Under this Plan, the Investment Risk in the
Investment Portfolio is borne by the Policy
Holder. For Internal Communication Only
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I want an expert to manage my investments for me
so that I make money faster minus the anxiety
I too want to profit from the bull run on stock
markets like all others andTake advantage of
market volatility!!
Reliance Automatic Investment Plan
I want a plan that does all the work while I
relax
I want full control over my investments Its my
money ..so I decide where to put it
I want to have the flexibility to change my plan
with changing lifestyle
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Introducing Reliance Automatic Investment Plan
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• Offers your customers a solution, which adjusts
  automatically to their changing financial needs!!

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Key Benefits Only from Reliance Life

• Automatic Asset Allocation (Ready Made Plan)
  Provides automatic switching of funds to suit
  your changing risk profile with increasing age
• Tailor Made Plan You have the freedom to decide
  on your fund mix
• STP - Systematic shift from low risk to equity
  funds, helps you to average out the cost per unit
• Unique Exchange Option to shift between specific
  ULIP Plans from RLIC (currently allowed between
  Reliance Money Guarantee Plan and Reliance
  Automatic Investment Plan)
• Unmatched flexibility Freedom to utilize as
  high as 52 free switches per policy year
• Top-ups Park your additional savings as top-ups
  (maximum top ups allowed is 25 of total regular
  premium paid till date

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Consumer Speak

• Tell me why should I invest in ULIPs

• Because they offer transparent, market-linked
  returns

I dont know anything about finance market. How
do I make my investments and get better growth?

• Do not worry, the Plan has been designed by our
  experts after a careful consideration of funds.

Sounds fine, but what when my needs change as I
grow older?

• For that we have the Ready Made Plan. This
  automatically changes the fund pattern as per
  your age.

• We realize that your risk appetite may change as
  you grow older. The Ready Made Plan automatically
  takes care of this by switching funds
  automatically as per your life stage .

Will my money be invested in risky options?
OR What if I do not want to invest in risky
options when I grow older?
I do not want any hassles of tracking the funds
or paperwork of switching

• No problem, the Ready Made Plan just comes
  handy, because the plan takes care of switching
  the funds automatically without you having to
  give any instructions.

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Consumer Speak
Wow! very interesting ,but maybe later I may
want to choose my investments myself.

• No problem , we also have a Tailor Made Plan
  option ,In which you can shift laterally between
  any of the funds available under the Tailor Made
  Plan. You can even switch from the Ready Made
  Plan option tailor made plan option if you
  desire later.

What if my financial needs change I like to
buy another plan of Reliance Life Insurance
company ?

• We have the answer. For the first time in the
  industry we provide the unique Exchange Option.
  You can exchange in or exchange out from any
  other specified Reliance Life ULIPs

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Part IIMore Details
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Product Details

• Basic Plan Features
• Policy Limits
• Premium Modes
• Life Cover Benefit
• Maturity Benefit
• Sum Assured
• Surrender Value
• Options Available
• Ready Made Option
• Tailor Made Option
• Exchange Option
• Other Benefits
• Riders
• Tax Benefits

• Flexibility Available
• Systematic Transfer Plan
• Top up Payment
• Partial Withdrawals
• Switching Option
• Settlement Option
• Convenient Premium Payment Options
• Premium Redirection
• Charge Structure
• Miscellaneous
• Summary Snapshot

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Basic Plan Features
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Policy Limits
Life Cover begins only after the age of 12 years.
(last birthday)
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Types of plans based on premium payment

• Regular premium
• Premium to be paid every year for the entire
  policy term
• Minimum premium Rs. 10000 Annual Mode
• Limited premium
• Premium paying term is minimum 5 years and in
  multiples of 5 years
• Minimum premium Rs. 20000 Annual Mode
• Single Premium
• Premium to be paid only once during the term,
  only at the start of the policy
• Minimum premium Rs. 25000

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Premium Payment Modes

• 4 Convenient Premium Payment Modes
• Yearly
• Half yearly
• Quarterly and
• Monthly
• Premium can be paid by
• Cash, cheque, debit/credit card, ECS direct
  debit

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Premium Modes Limits
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Life Cover Benefit

• Life Cover begins only after the age of 12 years.
  (last birthday)

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Maturity Benefits

• Fund Value as on date of maturity
• The policy terminates on payment of the maturity
  benefit.

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Sum Assured
Minimum Sum Assured for Regular/Limited Premium
policies
Higher of 5 times the annual premium OR Half of
term multiplied by annual premium
Minimum Sum Assured for Single Premium policies
For single premium option, the minimum sum
assured is 125 of the single premium amount
Maximum Sum Assured
No Limit
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Options Available on Discontinuance of Premiums

• Premium payment discontinued within 3 years of
  policy inception
• Insurance cover ceases immediately.
• Policyholder can revive the policy within 3
  years revival period
• During the revival period applicable charges
  (except mortality charges) are deducted by
  cancellation of units
• If the policy is not revived, then applicable
  surrender value, if any, is paid at the end of
  the revival period.

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Options Available on Discontinuance of Premiums
(contd)

• Premium payment discontinued after paying at
  least 3 full years premiums
• Life cover continues, by deducting the applicable
  mortality charges.
• Riders are discontinued
• Policyholder can revive the policy within 3
  years revival period
• If within the revival period, the account value
  falls below the amount of annual premium, the
  account value is paid and policy is terminated.
• If the policy is not revived, then with the
  consent of the policyholder, the policy is kept
  in force (by deducting the appropriate charges)
  until such time the unit account value does not
  fall below an amount equal to one annual premium.
• At this point the unit account value is paid to
  the policy holder and the policy is terminated.

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Options Available
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Two Plan options
We manage your money while you relax
Ready Made Option

• Ensures safety of investments as your risk
  appetite reduces with increasing age
• Three prepackaged funds available as per age
  bands
• Fund switch is automatic as you move from one
  age band to another
• With growing age equity exposure is reduced
• Flexibility to switch to Tailor Made Plan option

The fund mix changes automatically with
changing life stage

• Expert fund manager to manage the fund on your
  behalf
• Hassle free investment management

Fund A
Fund B
Fund C
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Ready Made Plan Fund Option
High Risk Appetite
This fund is for the band of 0-40 years of age.
This fund is customized to the general risk
appetite during this period.
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Ready Made Plan Fund Option
Moderate to High Risk
This fund is for the band of 41-60 years of age.
This fund is customized to the general risk
appetite during this period.
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Ready Made Plan Fund Option
Moderate Risk
This fund is for the band of over 61 years of
age. This fund is customized to the general risk
appetite during this period.
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Two Plan options
You control your investments benefit from it

• Decide your own fund mix with this option
• Full flexibility to decide your asset mix
  depending on your risk appetite
• Offers 4 funds - Money Market, Gilt ,Corporate
  Bond Equity Fund
• Allocate your premium in all or any one fund in
  ANY proportion
• Take 100 equity to maximize returns or
  diversify your basket
• 52 free switches in a year
• Flexibility to switch to Ready Made Plan option

Tailor Made Option
You have the freedom to decide on your fund mix
Initial Allocation
New Allocation
Equity (25)
Equity (50)
Corporate Bond (30)
Gilt (25)
Gilt (50)
Money Market (20)
Flexibility to switch between the two plan
options 52 times a year, free of cost
Except for Money Market fund where max
allocation is 40 of premiums at any time
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Tailor Made Plan Fund Option
Low Risk
Low to Moderate Risk
These are low risk - moderate return funds
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Tailor Made Plan Fund Option
Low to Moderate Risk
This is a moderate risk - moderate return fund
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Tailor Made Plan Fund Option
High Risk
This is a high risk high return fund
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Exchange Options

• Customers can take benefit under existing plan
  and use it to purchase specified Unit Linked
  Plan from Reliance.
• This option must be exercised at least 30 days
  before the receipt of benefit under the policy.
• The Key Advantage - Reduced allocation charges
  in the first year.
• The Two Options
• Exchange from Reliance Automatic Investment Plan
  into Reliance Money Guarantee Plan
• Exchange into Reliance Automatic Investment Plan
  from Reliance Money Guarantee Plan

This option can be selected any time on
completion of three policy years.
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Other Benefits
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Rider Benefit

• Accidental Death Accidental Total and Permanent
  Disablement benefit rider
• Term Life Insurance Benefit rider
• Rider benefits are available only with regular
  and limited premium payment
• policies. For limited premium policies the rider
  benefits will be available
• During the premium paying term only.

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Tax Benefit

• Premiums paid are eligible for tax deduction
  under section 80C of the Income Tax Act 1961
• Withdrawals are eligible for tax benefit under
  Section 10(10D)
• Death Benefit are tax free under Section 10(10D)

For details, please refer your tax consultant
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Flexibility Available
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Systematic Transfer Plan - Benefit from a
volatile market

• A procedural shift from a low risk investment in
  to equities
• The initial amount is invested in the Gilt fund
• 25 of units transferred to equity fund every
  week for equivalent fund value
• In effect your average unit cost comes down

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Systematic Transfer Plan How you can benefit
from it
The premium is allocated towards equity funds in
4 installments (once every week) This helps you
to take advantage from rupee-cost
averaging Consider the following table -
If STP option is not selected the total units
would have been 5000 units.
Fund Value If STP option is selected
(5025.39) Rs 45227.3.
Fund Value If STP option is not selected
(50009) Rs 45000
Although the average sale price is Rs 10
(1011109) 40/4 10. The average cost per
units is Rs 9.9 (50000/5025.3) 9.9. STP helps
buy more units when the price is low and fewer
units when the price is high and hence your
average cost per unit Rs 9.9 remains below the
average sale price of Rs 10.
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Top-up Payments

• Helps the customer to increase the investments
• Top-ups allowed only if all the premiums till
  date are paid
• Maximum top-up allowed is 25 of the total
  regular premiums paid till date (i.e. sum of all
  top-ups paid cannot exceed 25 of total regular
  premiums paid till date)
• For example
• If regular annual premium is Rs. 10000, and one
  top-up of Rs. 4000 is made in the 2nd policy
  year
• Then in the fourth policy year, maximum top-up
  allowed is 25 of Rs. 40000 (total of regular
  premium paid for 4 years) less Rs. 4000 (earlier
  top-up made)
• Thus maximum top-up allowed in this case would be
  Rs. 6000
• Minimum top amount allowed is Rs.2500

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Easy Liquidity money when you need it the most

• You can make partial withdrawal from your basic
  plan after 3 years and without any charges from
  6th year onwards
• You can also make partial or full surrender from
  your top-up account without any
• charges after three years from the payment of
  such top-ups
• Better alternative than banks FDs which are
  taxable
• All partial withdrawals are tax free

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Withdrawals

• Are not allowed until the life assured completes
  18 years of age.
• Partial Withdrawals
• Are allowed anytime after 3 years
• Policy continues to remain in force
• Withdrawal charges are equal to surrender charges
• Sum Assured will be reduced to the extent of
  partial withdrawals made in the past 24 months
• Total Withdrawals i.e. Surrender
• Allowed anytime after 3 years
• Policy ceases after surrender

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Switching Option

• Available between
• Tailor Made Plan option the Ready Made Plan
  option
• The funds under Tailor-made Plan option
• When switching from Tailor Made Plan to Ready
  Made Plan, the fund option will depend on the age
  last birthday and the corresponding age band.
• When switching from Ready Made Plan to Tailor
  Made Plan, the policyholder, can decide his own
  fund mix.
• 52 switches in any policy year are free.
• Any additional switch will be charged Rs. 100 per
  switch.

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Settlement Options

• Maturity proceeds can be withdrawn in periodic
  installments within 5 years
• No Life Cover Benefit will be available during
  this period.
• Fund C will apply by default during the
  settlement period.

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Premium Redirection

• Available only for Tailor-made plan
• A written instruction to redirect all future
  premiums in an alternative proportion to the
  various unit funds.
• Redirection will not affect the allocation of
  premium(s) paid prior to the request.

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Charge Structure
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Allocation charges
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Fund Management Charge
Ready Made Plan
Tailor Made Plan
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Surrender Partial Withdrawal Charges

• Apply on Fund Value at the time of surrender or
  partial withdrawal
• No charges on surrender or partial withdrawal
  under top-ups and under single premium policies.

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Other Charges Under The Policy

• Policy Administration Charge
• Rs. 40 per month per policy.
• Mortality Charge
• Based on the applicable mortality table
• Charged on the difference of fund value and sum
  assured (sum at risk)
• Charged on monthly basis, by cancellation of
  units
• Miscellaneous Charge
• Rs. 2 per 1000 sum assured will be collected on
  inception of the policy.
• Switching Charge
• Rs.100 for every switch after the 52 free
  switches
• Charge for Systematic Transfer Plan (STP) Option
  
• No charge, when the facility is requested for the
  first time.
• Subsequent requests charged at Rs. 100
• No charge for cancellation of STP

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Other Charges Under The Policy

• Premium for Rider Benefits
• Will be collected over and above the premium
  under Base Plan.
• Service Tax Charge
• Applicable on mortality charges and the rider
  premium.
• Currently the service tax is _at_ 12.24
• Decided (and can be revised) by the Government of
  India
• Currently service tax is absorbed by RLIC
• In future, RLIC may decide to pass on the service
  tax to the customer

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Automatic Investment Plan Competitive Advantage

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Automatic Investment Plan Competitive Advantage

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Automatic Investment Plan vis-à-vis Competition -
Common Features
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Allocation charges on Reliance Automatic
Investment Plan
Cost Competitive but Customer Value more relevant
than just cost
For Term gt 5
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• Allocation Charges
• Reliance Life offers a discounted allocation
  charge for higher premium slabs
• Reliance Automatic Investment Plan allocation
  charges are lower than ICICI Prudential Birla
  SunLife. Reliance Automatic Investment is better
  than HDFC for lower premium slabs.
• SBI Life charges lower but charges apply for a
  longer duration which make Reliance Automatic
  Investment Plan cheaper in comparison
• Fund Management Charges (FMC)
• Reliance Automatic Investment Plan is cheaper
  than ICICI Prudential Bajaj Allianz on FMC
• Comparable with SBI Life
• Reliance Automatic Investment Plan 1.25 to
  1.5
• ICICI Prudential 0.75 to 2.25
• HDFC Standard Life 0.8
• SBI Life 0.25 to 1.5
• Bajaj Allianz 0.95 to 1.75
• Birla SunLife 1

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Reliance Automatic Investment Plan Value Equation
Assumption The above illustration if for an
individual aged 30, term 10 years.

• On IRR/NPV combined basis Reliance Automatic
  Investment Plan offers more value to our
  customers
• Along with MRP, we have two of the strongest
  ULIP products in the market

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Miscellaneous
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By Default

• In case no plan option has been opted for, the
  plan option by default will be Ready Made Plan
  option.
• If Tailor-made Plan is selected and no fund has
  been opted for, the allocated premiums shall by
  default be invested in the Gilt Fund Option.

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Summary Snapshot
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Reliance Automatic Investment Plan At a Glance
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When to Pitch Which Option

• Explain to the prospect that both are attractive
  options
• If prospect is knowledgeable about the market and
  has the ability and willingness to take informed
  decisions on choice of fund, switches, relative
  allocation to each fund then they can go for
  Tailor-made option.
• In case the prospect is not knowledgeable, or
  would not like to devote time and effort to track
  the same, it can be left to the Fund Managers of
  RLI i.e. he could opt for the Ready-made option
  where the fund mix is predetermined.

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Things to Remember

• Top-ups limited to 25 of the premiums paid to
  date, so it doesnt impact the Sum Assured.
• In case of Partial Withdrawals, one annual
  premium should be retained as balance in the
  policy.
• Partial Withdrawals are allowed three years from
  inception.
• The 52 switches are not weekly, they can be used
  as and when the policy holder wishes.
• In case of the Limited Premium Option, the
  premium paying term can be chosen as 5 years or
  periods in multiples of 5.
• The Exchange Option can be used only with
  reference to another specified ULIP plan.
• In case of the STP option, if the market is
  closed on the 7th, 14th, 21st.or the 28th of the
  month, the investment in the equity fund is done
  on the next working day.
• Returns are not guaranteed.

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Thank You!!