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Isn’t it essential to ensure your hard-earned savings are invested in the right funds with minimal costs?
Could Kotak e-Invest be the ideal solution for reaching your financial goals efficiently?
Should you consider Kotak e-Invest as a potential option to maximize your investment journey?
In this article, we will review the Kotak e-Invest plan’s features, costs involved, advantages, disadvantages and potential returns through IRR analysis. This analysis will help you choose the right investment product for your financial journey.
Table of Contents:
What is the Kotak e-Invest Plan?
What are the Features of Kotak e-Invest Plan?
Who is Eligible for the Kotak e-Invest Plan?
What are the Benefits of Kotak e-Invest Plan?
4. Return of Mortality charges
Investment Strategies & Fund Options of Kotak e-invest
What are the Charges under Kotak e-Invest Plan?
Grace period, Discontinued policy & Revival of Kotak e-Invest Plan
Free Look Period of Kotak e-Invest Plan
Surrendering the Kotak e-Invest Plan
What are the Advantages of Kotak e-Invest Plan?
What are the Disadvantages of Kotak e-Invest Plan?
Research Methodology of Kotak e-Invest Plan Review
Benefit illustration – IRR Analysis of Kotak e-Invest Plan
Kotak e-Invest Plan Vs Other Investment Products
Kotak e-Invest Vs. Pure Term + ELSS / PPF
Final verdict on Kotak e-Invest
What is the Kotak e-Invest Plan?
Kotak e-Invest is an Individual, Unit-Linked, Non-Participating, Endowment Life Insurance Plan. Kotak e-Invest Plan is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and requirements.
What are the Features of Kotak e-Invest Plan?
- 100% allocation of your premiums
- Yearly Additions starting from the end of the 6th policy year onwards till maturity or death whichever is earlier based on the plan options.
- 25% to 200% of Life Cover charges deducted will be added to your fund value (if applicable).
- Provides flexibility to choose from two Investment Strategies
- Option of additional protection through optional riders
- Three plan options are available.
- Maximizer – aimed at maximizing your returns for the money invested
- Rising star – ideal for you as a parent to fulfil your Child’s dreams, aspirations and goals
- Retire Rich – covers you till the age of 99 years and the option to avail of Retirement Income in the form of Systematic Withdrawal any time after completion of 60 of age.
Who is Eligible for the Kotak e-Invest Plan?
What are the Benefits of Kotak e-Invest Plan?
i.) Death benefit
For Plan Options – Maximizer / Retire Rich:
Death Benefits will be Highest of:
- Basic Sum Assured less applicable partial withdrawals (if any), Or
- Fund Value (inclusive of Yearly Additions and ROMC, if any)
- 105% of total premiums paid till the date of death less applicable partial withdrawal (if any)
For plan option – Rising Star:
In case of death of Life Insured during the term of the Kotak e-Invest Plan policy, the following benefits are applicable: –
- Higher of (Basic Sum Assured or 105% of Total premiums paid till date of death) less Applicable partial withdrawals are paid as lump sum PLUS
- Regular Monthly Income over outstanding policy term (subject to minimum 36 instalments and maximum 120 instalments).
- The Kotak e-Invest Plan policy remains in force by waiving all future premiums. Future Premiums are infused into the Fund as of the date of Claim settlement.
ii.) Maturity Benefit
For Plan Options – Maximizer / Retire Rich:
On Survival to the end of the policy term, if all premiums are paid up to date and the Kotak e-Invest Plan policy is in force, Fund Value as on the date of Maturity (inclusive of ROMC and Yearly Additions if any) shall be payable.
The maturity proceeds in the case of the Retire Rich option will be paid as lumpsum only. Please note settlement option is not available for the Retire Rich option
For plan option – Rising Star:
Fund Value as of the date of Maturity (inclusive of Yearly Additions) is payable. Here, the Maturity Benefit is paid irrespective of the survival of the Life Insured if the due premiums have been paid till the date of death.
iii.) Yearly additions
Starting from the end of the 6th Policy year, till maturity or death whichever is earlier, 3% of the Annual Premium is infused into the Fund at the end of each policy year.
iv.) Return of Mortality charges
A percentage of the total amount of Mortality Charges deducted in respect of life cover provided throughout the Policy Term will be added back to the Fund Value based on the Policy Term chosen.
Investment Strategies & Fund Options of Kotak e-invest
This Kotak e-Invest Plan enables you to choose the funds that suit your risk-return profile. Kotak e-Invest Plan offers you the flexibility to choose from 2 Investment Strategies:
- Self-Managed Strategy and
- Age-Based Strategy
1. Self-managed Strategy
This strategy offers you the flexibility to choose from a range of power-packed fund options that enable you to maximize your earnings potential. The available fund options will allow you to balance your risk profile with the chosen tenure.
| Fund options | Equity | Debt | Money Market | |
| Classic Opportunities Fund | 75-100% | 0-25% | 0-25% | Aggressive |
| Frontline Equity Fund | 60-100% | 0-40% | 0-40% | Aggressive |
| Kotak Midcap Advantage fund | 75-100% | 0-25% | 0-25% | Aggressive |
| Balanced Fund | 30-60% | 20-70% | 0-40% | Moderate |
| Dynamic Bond Fund | – | 60-100% | 0-40% | Conservative |
| Dynamic Floating Rate Fund | – | 60-100% | 0-40% | Conservative |
| Dynamic Guilt Fund | – | 80-100% | 0-20% | Conservative |
| Money Market Fund | – | – | 100% | Secure |
The risk profile of each fund varies depending on the asset under management. Make sure to choose the fund(s) that match your risk tolerance.
2. Age-Based Strategy
In this investment strategy, allocation is done basis of Age & Risk Appetite. Based on the Risk Appetite of the customer i.e. Aggressive, Moderate and Conservative, allocation is done between Classic Opportunities Fund and Dynamic Bond Fund.
On a monthly basis, units shall be rebalanced as necessary to achieve the given proportions of the Fund Value in the identified funds. The re-balancing of units shall be done on the month-versary (monthly policy anniversary).
| Age of life Insured | Aggressive | Moderate | Conservative | |||
| Classic Opportunities Fund | Dynamic Bond Fund | Classic Opportunities Fund | Dynamic Bond Fund | Classic Opportunities Fund | Dynamic Bond Fund | |
| 0-25 | 80% | 20% | 70% | 30% | 60% | 40% |
| 26-35 | 70% | 30% | 60% | 40% | 50% | 50% |
| 36-45 | 60% | 40% | 50% | 50% | 40% | 60% |
| 46-50 | 50% | 50% | 40% | 60% | 30% | 70% |
| 51 onwards | 40% | 60% | 30% | 70% | 20% | 80% |
What are the Charges under Kotak e-Invest Plan?
A. Premium Allocation Charge
NIL
B. Policy Administration Charge
₹ 400 per annum will be recovered through monthly cancellation of units. This charge is applicable until the end of the policy term.
C. Fund Management Charge
| Fund options | Fund management Charges |
| Classic Opportunities Fund | 1.35% p.a. |
| Frontline Equity Fund | 1.35% p.a. |
| Kotak Midcap Advantage fund | 1.35% p.a. |
| Balanced Fund | 1.35% p.a. |
| Dynamic Bond Fund | 1.20% p.a. |
| Dynamic Floating Rate Fund | 1.20% p.a. |
| Dynamic Guilt Fund | 1% p.a. |
| Money Market Fund | 0.60% p.a. |
| Discontinued Policy Fund | 0.50% p.a. |
D. Switching Charge
The first twelve switches in a policy year are free. For every additional switch thereafter, ₹ 250 will be charged.
E. Partial withdrawal Charge
The first four Partial Withdrawals are free in this Plan. For each Partial Withdrawal thereafter, ₹ 250 will be charged.
F. Discontinuance charge
The charges will be based on the year of discontinuance and the premium amount.
G. Mortality Charge
This is the cost of life cover, which will be levied by cancellation of units on a monthly basis. Given below are the charges per thousand Sum at Risk for a healthy individual
| Attained Age (in years) | 20 | 30 | 40 | 50 |
| Mortality Charge | 0.924 | 0.977 | 1.68 | 4.436 |
H. Miscellaneous Charge
The charge for the replacement of policy document / cheque dishonour is ₹ 250 per request. For premium redirection, a fee of 100 will be charged.
Inference from charges
The charges mentioned above place a significant burden on investors. Generally, other market-related products do not impose fees for switching, withdrawing, or discontinuing your investment.
Over the long run, these charges can significantly impact your returns, thereby affecting your wealth accumulation journey. Charges are higher due to many reasons including high agent commissions.
Grace period, Discontinued policy & Revival of Kotak e-Invest Plan
Grace period
There is a Grace Period of 30 days for the annual, half-yearly and quarterly modes and 15 days for the monthly mode from the due date for payment of premium.
Discontinued policy
In case of discontinuance during the first five policy years, funds will be transferred to the Discontinued Policy Fund. The proceeds of the discontinued policy fund shall be paid to the policyholder at the end of the revival period or lock-in period whichever is later.
In case of discontinuance of the Kotak e-Invest Plan policy after the lock-in period, the policy shall be converted into a Reduced Paid-Up policy with the Reduced Paid-Up Sum Assured i.e. original Sum Assured multiplied by the total number of premiums paid to the original number of premiums payable as per the terms and conditions of the policy.
Revival
Policyholders can revive the Kotak e-Invest Plan policy within a revival period of 3 years.
Free Look Period of Kotak e-Invest Plan
The Policyholder is offered 15 15-day free look period (except electronic policies and policies sold through Distance Marketing mode – which will have 30 days), from the date of receipt of this Kotak e-Invest Plan policy document.
During this period the Policyholder may choose to reconsider his/her decision to hold this Kotak e-Invest Plan policy or may choose to return the same, within the said 15 days /30 days.
Surrendering the Kotak e-Invest Plan
In case you wish to Surrender within the Lock-in Period: the Fund Value (less applicable discontinuance charges) will be moved into the Discontinuance Policy Fund. Proceeds of the discontinued policy shall be refunded only upon completion of the lock-in period.
In case you wish to Surrender after the Lock-in Period: the Fund Value (Main Account + Top Up Account, if any), as available on the date of surrender of the Kotak e-Invest Plan Policy will be paid out immediately and the policy will get terminated.
What are the Advantages of Kotak e-Invest Plan?
- Through the Settlement Option, the Policyholder have the option of taking maturity proceeds either as a lump sum or through pre-selected periodic instalments.
- Retirement Income along with Income Booster attempts to ensure your expenses after Retirement are taken care of.
- The Rising Star option offers a Triple Protection Benefit on a parent’s death through lump sum payout, monthly income and policy continuation till maturity
- Retire Rich Option cover till the age of 99 years
What are the Disadvantages of Kotak e-Invest Plan?
- Loans are not available under this Kotak e-Invest Plan.
- Kotak e-Invest Plan does not offer any liquidity during the first five years of the policy year.
- Sum assured is too low to cover the basic needs of the family.
Research Methodology of Kotak e-Invest Plan Review
In this segment, we will estimate the potential returns of the Kotak e-Invest plan based on a quote from the company’s portal. This analysis will assist you in selecting the right investment product for your portfolio.
Let’s proceed with calculating the Internal Rate of Return (IRR) for Kotak e-Invest.
Benefit illustration – IRR Analysis of Kotak e-Invest Plan
A 35-year-old male invested in the Kotak e-Invest plan for a sum assured of ₹ 15 Lakhs. The Kotak e-Invest Plan policy term and the premium paying term are 15 years. The annualised premium is ₹ 1.5 Lakhs.
| Male | 35 years |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 1,50,000 |
He has chosen the Maximizer option i.e., the wealth creation variant. So, the maturity benefit is available at the end of the Kotak e-Invest Plan policy term.
The values are based on an assumed investment rate of return of 4% p.a. and 8% p.a. The values shown are not guaranteed and they are not upper and lower limits of returns, they have been shown for illustrative purposes only.
| At 4% p.a. | At 8% p.a. | ||||
| Age | Year | Annualised premium / Maturity benefit | Death benefit | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 36 | 2 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 37 | 3 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 38 | 4 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 39 | 5 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 40 | 6 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 41 | 7 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 42 | 8 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 43 | 9 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 44 | 10 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 45 | 11 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 46 | 12 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 47 | 13 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 48 | 14 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 49 | 15 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 50 | 27,95,730 | 15,00,000 | 38,78,009 | 15,00,000 | |
| IRR | 2.67% | 6.54% | |||
Based on the Kotak e-Invest Plan maturity calculator, in the 4% scenario, the fund value is ₹27.95 lakhs with an IRR of 2.67%.
Based on the Kotak e-Invest Plan maturity calculator, in the 8% scenario, the fund value is ₹38.78 lakhs with an IRR of 6.54%.
These results indicate that the wealth accumulation process cannot be significantly accelerated with these returns, potentially leading to a shortfall in the required corpus.
Kotak e-Invest Plan Vs Other Investment Products
As an investor, you will only commit to an investment if the returns outpace inflation. Investing in low-return market instruments is not beneficial.
Therefore, let’s evaluate an alternative investment product that offers a better yield. For this comparative analysis, we will use the same metrics as in the previous illustration.
Kotak e-Invest Vs. Pure Term + ELSS / PPF
A pure term life insurance policy with a sum assured of ₹15 lakhs costs an annual premium of ₹7100, with a policy term and premium payment term of 15 years.
In comparison, Kotak e-Invest charges ₹1.5 lakhs per annum. By choosing a pure-term life insurance policy, you could save ₹1.42 lakhs annually. This saved amount can then be invested according to your risk profile.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 15,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 15 years |
| Annualised Premium | ₹ 7,100 |
| Investment | ₹ 1,42,900 |
Either you can stick to low-risk investments like PPF accounts or you can choose market-related investments like ELSS fund.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 35 | 1 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 36 | 2 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 37 | 3 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 38 | 4 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 39 | 5 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 40 | 6 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 41 | 7 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 42 | 8 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 43 | 9 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 44 | 10 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 45 | 11 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 46 | 12 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 47 | 13 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 48 | 14 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 49 | 15 | -1,50,000 | 15,00,000 | -1,50,000 | 15,00,000 |
| 50 | 38,75,647 | 15,00,000 | 55,94,239 | 15,00,000 | |
| IRR | 6.54% | 10.73% | |||
The final maturity value of a PPF account is ₹38.75 lakhs, with an IRR of 6.54%. This IRR is equal to the Kotak e-Invest plan’s 8% scenario. However, it’s important to note that Kotak e-Invest is a market-linked product, whereas PPF is a Govt-backed debt instrument.
The final maturity value under an ELSS fund is ₹59.66 lakhs, which is subject to capital gains tax. The post-tax maturity value is ₹55.94 lakhs, resulting in an IRR of 10.73% (post-tax return) when combined with a pure-term insurance policy premium.
| ELSS Tax Calculation | |
| Maturity value after 15 years | 59,66,544 |
| Purchase price | 21,43,500 |
| Long-Term Capital Gains | 38,23,044 |
| Exemption limit | 1,00,000 |
| Taxable LTCG | 37,23,044 |
| Tax paid on LTCG | 3,72,304 |
| Maturity value after tax | 55,94,239 |
Investing your savings according to your financial goals provides more flexibility than standard ULIPs available in the market, while also offering inflation-beating returns. Therefore, the Kotak e-Invest plan may not be the best option for achieving your financial goals.
Final Verdict on Kotak e-Invest Plan
Kotak e-Invest offers flexibility in customizing your maturity proceeds according to your goals and requirements. Beyond this feature, Kotak e-Invest is a straightforward ULIP plan that provides opportunities to invest in the market and offers life cover protection.
However, when analysing potential returns, it is clear that Kotak e-Invest is a low-yield product with an inadequate sum assured to protect your family. Opting for this plan could negatively impact your investment journey.
To navigate the financial landscape effectively, it is wise not to combine insurance and investment. Instead, choose a pure-term life insurance policy and invest separately for your life goals. This alternative strategy offers better liquidity and returns compared to Kotak e-Invest.
Isn’t it wiser to make your own investment decisions regarding your investment needs rather than seeking guidance from social media platforms like Facebook, Quora, Twitter, and others?
For any investment-related queries, consult a Certified Financial Planner (CFP). They can customize a financial plan based on your risk tolerance, time horizon, and goals.
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