Kotak Smart Advantage plan is a ULIP plan from Kotak Life Insurance. This plan comes with up to 100%* premium allocation. It is important to notice the star (*). The 100% premium allocation is only from second year that too when the annual premium is over INR 36,000. Point to be noticed is that the first year’s premium does not get allocated towards the fund. This plan claims to give up to 275% assured return on the first year’s premium. This plan comes with a premium payment term (PPT) of 3 to 30 years.
Let us first answer a few questions that would help us in understanding the policy better
- What do you mean by guaranteed 275% return on first year’s premium?
First year’s premium that you pay for the policy does not get allocated to your fund, but will contribute towards fixed return at maturity. This fixed return could be from 100% (for PPT of less than 10 years) up to 275% (for PPT of 30 years). To get this fixed return it is necessary that you have paid all the due premiums. If all the premium are not paid the fixed return is reduced proportionally. - Is this fixed return good?
In case you had put this money in fixed deposit earning a post tax interest of 5%, your money would have given a return of over 400% over 30 years where as this plan is giving only 275%. - Does the plan really give 100% premium allocation?
Technically it does. But as seen in the above two questions this in not entirely true. As the first year premium is not allocated to the fund and gives return far below the average interest rate, considering a 5% post tax interest rate you can assume about 40% of your first year premium is lost. Also from second year 100% allocation is done only if your yearly premium is above INR 36,000. - Are there any other charges?
Like any other ULIP, the following charges are also applicable:- Fund Management charges: Between 1.2 to 2.0% of the fund value depending on the type of fund.
- Administrative charges: Rs. 65 per month (Rs. 780 per year). Can increase by 5% every year.
- Mortality charges: Comparable to other plans. Get periodically subtracted from the fund value.
- Surrender charges: Applicable only if policy gets surrendered with in first eight years.
- Can partial withdrawal be done?
Partial withdrawal can be made anytime after the third year. Charges of partial withdrawal is same as policy surrender. If more than 10% of the fund value is withdrawn it affects your fixed return at maturity. - What are the Settlement options?
Upon maturity or mortality, the plan gives the option of lump sum settlement or Equal installment over a period of up to 5 years. This feature becomes important if your policy maturing coincides with fall in stock market. In such a case, you might not want the fund value to be withdrawn. You can opt for equal installment giving your fund to increase in value before settlement. - What additional benefits are available?
Loyalty bonuses, although small, are provided every five years after the tenth year.
Verdict
- The plan claims to give fixed return, which is small as compared to a fixed deposit even for a PPT of 30 years. It is even worse for shorter PPT.
- This plan also claims to give 100% premium allocation but does so only from the second year
- Gives loyalty bonus every five years starting from the tenth year.
- Has option of top-ups. Allows you to invest some extra amount in your policy if you feel it appropriate.
- Gives option of investing in three different funds: Aggressive, Cautious and Conservative funds.
Overall the plan is worth investing only if you are ready to give a long term commitment as shorter PPTs will reduce your fixed return of the first year’s investment. If you are one of those who like to time the market by investing extra in top-ups and delaying settlement, this can be a good plan for you. Please read the offer document carefully before investing.
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Meta: June 23rd, 2009 by
Tags: Fund Value · insurance · Kotak Life Insurance · NAV · ULIP · unit linked insurance plan33 Comments
which is the best ulip plan then?
Hi Tejas,
There is no ULIP plan that is best for everyone. You will first need to identify the goal that you need to achieve. Discuss with a insurance agent. Understand and study the scheme that is being suggested and take your own decision.
If you are interested in knowing about a particular plan feel free to post a comment.
Thanks and regards,
Ripul
Thanks ripul for an informative article.
Regards
Shweta
Thanks this article was helpful in my decision making
Respected Sir
My age is 30. I have opted for this plan (smart advantage plan) last few days before.
I have opted to pay Rs.50,000/- for a period of 10 years (premium paying term). Please tell me whether this is worthy and I would get good returns.
Please give your reply to my email id: rrkrishnaa @ yahoo . com
Thank you
R.R. Krishnaa
Userful information
Dear Mr. Krishnaa,
As the article says, the plan is worth investing only if you are planning to invest for long term. If you plan to invest in long term ask your insurance agent if the term of the policy can be increased. If you think you are disciplined investor who is not risk averse, it is a good idea to invest in tax saving mutual fund (ELSS) and take a term plan for your insurance needs.
Insurance and investment needs are very specific to a person and cannot be generalized. It is better to get in touch with a investment advisor. The problem is most of the insurance agent is that they themselves do not understand the plan in details. They are more interested in pushing plans that maximize their commission.
Hope this is of help.
Thanks and regards,
Ripul
Dear sir/madam,
I have taken this Kotak Smart Advantage Plan. now I have some grievances. Where should I submit my complaint.
Best Regards
Dharam kumar
Mobile no. 9818966284
My age is 35. I want for this plan (smart advantage plan) after 30 days .
I wanted to pay Rs.25,000/- for a period of 10 years (premium paying term). Please tell me whether this is worthy and I would get good returns.
Hi friends,
First thing, Please dont go for the kotak smart advantage plan.I had taken this plan.
Its of not worth and the executives of kotak are not co-opertaive.Befor taking policy they will talk
very good with you,but after that they will behave like go to hell.
And if you ask any thing after taking the policy they will tell that we haven’t told like this.
Its just like a trap and if you require any further details,executives names, please contact me on this no.-9850890969
Specially PUNE people be-aware from this.
hi ripul,
m not agree with u at all points. in smart advantage. 1st year premium is invested in debt market.
and there is a fund in dis plan named Dynamic floor fund which is a cautious fund and in this transfer of funds are done by fund managers from equity to debt and vice-versa depending on the market situations and that too without any charges anddis fund giving returns of 16%
regards
isha
what if we discontinue after paying the first year premium where PPT is 20 years?
How much return we will get on surrendering after 3 years? Yearly premium is 36000/-
I have been told that the every year the interest would be of 10% compound interest. That is why I have been attracted towards it. Is not this plan a good one? please advise
I have started the following Kotak Smart Advantage Regular (UIN-107L043V01) its been a year and few months..
Is there no NAV listed for this… I am not able to find any NAV for this on the Kotak Site. I am not into investments and all its just for Tax Saving I took this up..
Any Help is appreciated…
Dear Isha,
If you read the brochure from http://www.kotaklifeinsurance.com/ver2/individual/pdf/Kotak%20Smart%20Advantage%20Plan.pdf, on page 7 first para, you will find that the first years premium is not invested in any fund and contribute towards the assured addition advantage. Hope this answers your query. If you still do not agree with me please check the first and second year statement of your policy. You will find that no units were purchased in the fist year.
Regards,
Ripul
Dear Srinivasan,
A Ulip plan will never give you assured return of 10% per annum. The fixed advantage benefit of 110% for 10years term means that: if you invest 1000 Rs yearly premium at the end of 10 year you will get 1100 Rs which is less than 1% compounded interest. As said in the article the plan is good only if you are investing for the long term.
Regards,
Ripul
Dear Renji,
Kotak Smart Advantage plan allows you to invest in one of the following funds: Dynamic Bond Fund, Dynamic Floor Fund or Opportunities Fund. You can find the NAV of these fund at http://www.kotaklifeinsurance.com/omkm/rates_new.jsp.
Hope this answers your question.
Regards,
Ripul
I wish I had seen your feedback earlier. The Kotak’s representative really hid the information on this 1st year premium not getting invested and also that the assured return you can get only if you complete your tenure say 20 years. So when they say that you can withdraw the money after stipulated minimum time period is completely misleading. Not only this, the representative would let you talk to the company’s senior executive and they would even say that the whole money is getting invested. I stopped paying after 1st half yearly premium of 20000. I do not know whether there is any way of getting this money back. I would be grateful if anyone can guide me on at least getting some part of it back.
I WANT TO INVEST IN KOTAK SMART ADVANTAGE PLAN. AS I HAVE BEEN TOLD BY COMPANY REPRESENTATIVE THAT THEY WILL GIVE ME 100% BONUS AFTER 3MONTHS WHICH WILL BE TRANSFERRED TO MY AC BY THEM i.e. IF I GIVE 50000 p.a. ONLY FOR 3 YEARS, THEN IN RETURN THEY PAY BACK 50000 AS BONUS AFTER 3 MONTHS AND FURTHER THEY RETURN US THE AMOUNT OF RS 150000 + 14-16% AS INTEREST p.a..
Dear Raman,
The agent is clearly mis-representing. Ask the person to give you the same in writing. Also ask him to show you the product brochure where it mentions the same. As far as I understand the plan there is no such 100% bonus. If you find the brochure hard to understand go through this article if you still have doubts send me a mail.
Regards,
Ripul
which is the best ulip plan then?
As of now this is the best ULIP plan http://blog.moneyraam.com/2010/04/icici-pru-ace-the-best-ulip-plan-to-invest-in.html
Hi friends,
First thing, Please dont go for the kotak smart advantage plan.I had taken this plan.
Its of not worth and the executives of kotak are not co-opertaive.Befor taking policy they will talk
very good with you,but after that they will behave like go to hell.
And if you ask any thing after taking the policy they will tell that we haven’t told like this.
Sir,
It is very regretful to inform you that I had not received any hard copy statement of my policy no ******* Smart adv Plan against my SBH Chq of Rs 24000/- debited on 30/11/2009 since 9 months. Therefore, It is very important. So, I request you to kindly send softcopy of my policy statement on my email ID i.e. gurmeetsingh_60@yahoo.com. Kindly do it as soon as possible. As it will be beneficial to your KOTAK repo also.
I also would like to know about the full details of my policy such as its dividend, next premium date
NAME OF POLICY HOLDER: GURMEET SINGH
——————————————.
POLICY NUMBER:*******
BASIC PRODUCT; KOTAK SMART ADV PLAN
Dear Gurmeet,
We are independent bloggers and not affliated to any bank. If you want your policy statement you can either go to https://customer.kotaklifeinsurance.com/PolicyManager/NewUser.aspx and register yourself. You will receive password by email. Logon to the site using your password. You will have to add your policy to this newly created account. You will be able to view your policy statement and do other things.
If you not used to internet, you could also call 1800 209 8800 or sent a mail to lifeexpert@kotak.com or visit 8 B, Eight Floor, Atma Ram House, Tolystoy Marg, Connaught Place, New Delhi – 110 001or any other kotak life insurance office close to you.
Thanks and regards,
Ripul
The Kotak’s representative really hid the information on this 1st year premium not getting invested and also that the assured return you can get only if you complete your tenure say 20 years. So when they say that you can withdraw the money after stipulated minimum time period is completely misleading. Not only this, the representative would let you talk to the company’s senior executive and they would even say that the whole money is getting invested. I stopped paying after 1st yearly premium of 25000. I do not know whether there is any way of getting this money back. I would be grateful if anyone can guide me on at least getting some part of it back.
thanks for your analysis. Its really benificial for me to understand this plan. “Kotak Smart Adv”.
i have taken his plan 3 years back. When my agent produce me this plan its seems to be so nice. later on one of my friend told me not to continue this becoz of not much benefit in it.
I would like to withdraw my money, but again terms & conditions not allowed me to get money with 3-4% lesser than my investment.
Request to give best option for withdrawal or should I continue?
Thanks & Regards,
Utpal
In the month of December, 2009 one of the agent suggested my father to take Kotak Smart Advantage Plan. He convinced and took the said plan with annual premium Rs. 15000/- (date of maturity is December, 2024) just to save his income tax. The second premium is due in this month (December) and my father is going to retire by the end of June, 2011. Now should he continue this plan or he shoul withdraw after paying 3 premiums (so far only one premium has paid). How much he will be getting after 3 years to withdraw this plan & what is the procedure. The plan was done by one of your agent at New Tehri (Uttarakhand). Do you have the registered office of Kotak at New Tehri. Kindly clarify all these queries and mail to my e.mail (arvind276@rediffmail.com) or what other means to get your suggestion. My father now helpless to do anything on this issue and in confusion to deposit the second premium or not. Anxiously waiting for your answe.
Arvind Bijlwan
New Tehri
Hi Arvind,
As you said that your father has already paid the first year premium. If you look at the analysis of this plan you will see that the first years premium does not allocate anything to your fund. So if you look at the fund value at this moment it should be zero. The first years premium is already lost. Premium from the second year will get 100% allocation. So if your father was anyway planning to keep the policy he should continue it. If you do not wish to continue after the 3rd year, you might as well stop paying now itself, as first year premium is anyways lost if you do not continue your policy to maturity.
As for contacting Kotak life insurace you can find the details at http://insurance.kotak.com/contact-us.php.
Regards,
Ripul
(For Moneyraam)
My age is 30. I have opted for this plan (smart advantage plan) last year.
I have opted to pay Rs.50,000/- for a period of 10 years (premium paying term). i also paid tow premium.Please tell me whether this is worthy and I would get good returns.
Please give your reply to my email id: rrkrishnaa @ yahoo . com
Thank you
Sanatkumar
My Agent also did not inform me about the first premium which is not invested in any fund. I called customer care and then I got to know about this. Also customer care representative told me that this plan is totally based on unit prices and market, there is no such assured/ guarentee return.
This is the worst ULIP plan I ever have. Its at your own risk, you go for it, only may be if you are looking to invest until 30 years. I lost 40% of what I invested in 3 years. A Big NO from me.
Hello All,
I also had bad exp with this policy.
As already mentioned by Ripul, first premium is lost and thats what Customer Care told me. So I have paid 2 premiums till now and plan to stop this plan. I have 50k annual plan.
Even, if I pay min. 3 annual premiums, and surrender the policy, I will get only the latest fund value. As mentioned earlier, second premium onwards only gets invested in fund. so I could get back only latest value against 1L investment.
I do not see there is anyway to get back the first year premium.
If anybody knows any legal process to get part of it back, please respond at nitin.band@gmail.com
so this policy is good only with long term view.
Thank you,
Nitin