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Kotak Wealth Optima Plan-ULIP Review (2023): Is it Good or Bad?

by Holistic Leave a Comment | Filed Under: Insurance

Listen to this article


Table of Content:

1.) Introduction

2.) Features of Kotak Wealth Optima Plan

3.) Investment Strategies of Kotak Wealth Optima Plan

  • Self-Management Strategy
  • Age-Based Strategy

4.) Monthly rebalancing

5.) Safety on Maturity

6.) Enhance your fund growth after the lock-in period

7.) Boosting your long-term savings through wealth booster

8.) Additional protection through optional riders

  • Kotak Accidental Death Benefit Rider (Linked)
  • Kotak Permanent Disability Benefit Rider (Linked)

9.) Benefits of Kotak Wealth Optima Plan

  • Maturity Benefit
  • Death Benefit
  • Tax Benefit

13.) Enhancing your options

14.) Kotak Wealth Optima Plan (ULIP) Analysis with Illustration

15.) Charges of Kotak Wealth Optima Plan

  • Premium Allocation Charge
  • Policy Administration Charge
  • Fund Management Charge (FMC)
  • Switching Charge
  • Partial Withdrawal Charge
  • Discontinuance Charge
  • Mortality Charge
  • Miscellaneous Charges

16.) Advantages of Kotak Wealth Optima Plan

17.) Disadvantages of Kotak Wealth Optima Plan

18.) Is Kotak Wealth Optima Plan worth to invest?

19.) The IRR of Kotak Wealth Optima Plan

20.) Kotak Wealth Optima Plan vs. ELSS + Pure Term Insurance

21.) Cancelling/Surrendering Kotak Wealth Optima Plan

22.) Final Verdict: Kotak Wealth Optima Plan-ULIP Review

Introduction:

The IRR of Kotak Wealth Optima Plan

Kotak Wealth Optima Plan vs. ELSS + Pure Term Insurance

Cancelling/Surrendering Kotak Wealth Optima Plan

Final Verdict: Kotak Wealth Optima Plan-ULIP Review

Kotak Wealth Optima plan is a ULIP investment/insurance plan. The policy ensures your life insurance coverage to safeguard your family in the event of your unexpected passing. It also gives you the option to choose from the premium payment term, investment method, and investment horizon of its plan.

But, is this plan really worth spending your time and money on?

Let’s analyse the plan from top to bottom before deciding.

In this article, we are going to see the review of the Kotak Wealth Optima Plan. 

Features of Kotak Wealth Optima Plan:

  • Option to be covered for life
  • Options to select between two investment strategies.
  • Increases fund growth through Yearly Additions after the lock-in period
  • Wealth Boosters can help to increase long-term savings.
  • Providing optional riders for additional security.

Investment Strategies of Kotak Wealth Optima Plan:

This insurance policy gives you the option to choose between two investment strategies that suites your risk-return investment portfolio. 

  1. Self-Management Strategy
  2. Age-Based Strategy

1.) Self-Management Strategy:

To maximize your potential earnings this investment strategy offers you a wide range of fund options. Also, this allows you to balance risk in your investment portfolio during your policy term.

2.) Age-Based Strategy:

In every life stage, people’s financial requirements will change. So, sometimes you need to change your investment plans according to these changes. The “Age-based Strategy”, allows you to personalize your investment strategy based on your risk tolerance level and age. It helps you to balance the debt and equity ratio in your investment portfolio.

Here based on your age and risk appetite, you can do allocation between Classic Opportunities Fund and Dynamic Bond Fund.

Monthly rebalancing:

To achieve the above fund value, rebalancing is necessary for Units on monthly basis. The rebalancing will be done on the monthiversary (monthly policy anniversary).

Safety on Maturity:

When your insurance policy reaches your maturity period, there is a possibility for you to lose your accumulated savings during short-term market volatility. So, to prevent this from happening, the policy will be transferred from the above funds to Money Market Funds during the last 12 months.

If you want, you can also switch to a Self-Management Strategy. Here you don’t have to pay an additional charge for switching between the strategies.

Enhance your fund growth after the lock-in period:

To enhance the fund growth, your policy will begin to collect annual additions from the 6th policy term till the end of the policy term.

Boosting your long-term savings through wealth booster:

In addition to the Yearly Additions, the policy also rewards Wealth Boosters from the 10th policy year onwards for every 5 years.

Additional protection through optional riders:

You can the option to increase the protection of your life cover with the following two options.

1.) Kotak Accidental Death Benefit Rider (Linked):

According to this additional rider, if something happened to you during the rider benefit term, then in addition to the basic sum assured, Rider Sum Assured will be paid to your family.

2.) Kotak Permanent Disability Benefit Rider (Linked):

If the policyholder becomes permanently disabled due to an accident during the Rider Benefit term, then the Rider Sum Assured will be paid to the policyholder. And he can continue with the basic policy. No maturity benefit will be paid under this rider policy.

Benefits of Kotak Wealth Optima Plan:

1.) Maturity Benefit:

At the end of the policy term, the Fund Value shall be payable if all the premiums have been paid on time.

You can get the maturity benefit as a lump sum or you can choose from the settlement options.

2.) Death Benefit:

If the policyholder passes away, then the nominee or his family will be paid the highest of the following as a death benefit.

  • Basic Sum Assured fewer partial withdrawals if any
  • Fund Value inclusive of Yearly Additions & Wealth boosters, if any 
  • 105% of the premium(s) paid up to the time of death

3.) Tax Benefit:

Under the Income-tax Act, 1961, the policyholder can get a tax benefit. It is advisable to consult your tax advisor for a better understanding.

Enhancing your options:

“The Change is Unchanged.”

To keep up with the changes in time, Kotak Wealth Optima gives you a few more options to increase more value of your investment in their plan.

Charges of Kotak Wealth Optima Plan:

1.) Premium Allocation Charge:

You have to pay a portion of the premium. That is applicable till the end of your premium term.

 2.) Policy Administration Charge:

This charge is subjected to the capital amount of Rs.500 per month.

3.) Fund Management Charge (FMC):

The annual Fund Management charges are mentioned below in the table,

4.) Switching Charge:

The first 12 switches in the policies are free. After that, the policyholder needs to pay Rs. 250 for each switch. You will not be charged to switch between strategies. But, the Fund Management Charges are applicable.

5.) Partial Withdrawal Charge:

The first 12 partial withdrawals are free. But after that, you need to pay Rs. 250 for each partial withdrawal.

6.) Discontinuance Charge:

Following are the discontinuance charges.

Mortality Charge:

The following information mentioned in the table below is the cost of the life cover. You will be charged by cancellation units on monthly basis.

Miscellaneous Charges:

Following are the charges per thousand sum at risk for a healthy individual.

Advantages of Kotak Wealth Optima Plan:

  • Allows you to choose between the two investment strategies.
  • Wealth Boosters can help you to increase your long-term savings.
  • Increases fund growth through Yearly Additions after the Lock-in period.
  • Maturity profits can be acquired in the form of a lump sum amount or by following the Settlement Options.
  • After completion of the 5th policy year, partial withdrawals will be permitted. But the policyholder has to pay 5 premium terms without fail in order to get the benefit.
  • You have the option of complete withdrawal any time during the settlement period without paying any charges.

Disadvantages of Kotak Wealth Optima Plan:

  • The policyholder bears the investment risk in the investment portfolio.
  • There is no liquidity option available to the policyholder during the lock-in period of 5 years. So, during the lock-in period, until the end of the lock-in period, the policyholder cannot surrender or withdraw the funds invested in the insurance policy.
  • Partial withdrawal is allowed only if the life insured is a major. It is not allowed during the discontinuance stage or the settlement stage.
  • Loans are not obtainable to the policyholder under this plan.
  • “While switching between funds is a possibility, each strategy requires adequate time to execute and provide high returns.”
  • During the settlement term, the life insured will bear the risk of investment in their investment portfolio.

Is Kotak Wealth Optima Plan worth to invest?

After analysing all the factors, it makes us think, is it worth investing in this insurance plan?

As mentioned earlier, Kotak Wealth Optima Plan is a ULIP. This means it has risk involved in the investment and the lock-in period for this policy is 5 years which will be a great disadvantage for you.

Before making a decision let’s compare this insurance plan with other investment plans and see whether it is worth to invest or not.

Kotak Wealth Optima Plan (ULIP) Analysis with Illustration:

Let’s take, Ms. Ranjini as a 35 years old working professional. Below is an illustration that can help you to analyse the Kotak Wealth Optima Plan.

The IRR of Kotak Wealth Optima Plan:

Now, let’s calculate the investment return by using the online Kotak Wealth Optima return calculator provided by Kotak life here.

Let’s calculate the IRR of the Kotak Wealth Optima Plan. 

In the worst-case scenario, let’s take the assumed gross return as 4%. 

As you can see in the above illustration, the Kotak Wealth Optima Plan gives us an IRR of 2.87% in the worst-case scenario. For 20 years, you will have the maturity benefit of Rs. 1, 13, 36, 810 and the Death benefit will be Rs. 1, 00, 00, 000.

Now let’s take the assumed gross return as 8% in the best-case scenario.

As per the return calculator, the Kotak Wealth Optima Plan gives us an IRR of 6.85% in the best-case scenario. For 20 years, you will have the maturity benefit of Rs. 2, 17, 92, 568 and the Death benefit will be Rs. 1, 52, 86, 575.

Even after taking the risk, Kotak Wealth Optima Plan gives us the return that we can simply earn from risk-free investments. And, it can barely help us to beat the inflation.

Such as PPF, Bank FDs, NPS, and Post Office schemes to get the same return as Kotak Wealth Optima Plan.

Kotak Wealth Optima Plan vs. ELSS + Pure Term Insurance:

Since this insurance plan involved risk, let’s compare other investment that has risk-return benefit.

So, here I am taking ELSS for comparison.

Annual Contribution: Rs. 10, 00, 000

Tenure: 20 years

Premium in Term Insurance: Rs. 14, 500

Sun Assured: Rs. 1, 00, 00, 000

ELSS Investment Amount: Rs. 9, 85, 500

Assumed interest rate: 12% with risk

Now, let’s calculate the investment return by using the online Kotak Wealth Optima return calculator provided by Kotak life here.

Now, let’s see the IRR of ELSS.

As you can understand from the illustration, it gives us an IRR of 11.18% for the same 20 years.

With the contribution of 7 years, it gives us Rs. 99, 42, 721, and after 13 years of without contribution, it gives us Rs. 4, 33, 84, 995.

As we can see, ELSS gives us a better return compared to Kotak Wealth Optima Plan for a long-term investment.

Now, if you want to invest in Kotak Wealth Optima Plan, then think twice before making your decision.

If you have already taken this plan and decided to cancel/surrender this plan.

Canceling/Surrendering Kotak Wealth Optima Plan:

If you are not satisfied with Kotak Wealth Optima Plan, then you can return the policy by stating your reason to cancel/surrender this policy within 15 days of the policy purchased date. But it will be extended up to 30 days if you had purchased this plan online.

After deducting proportionate risk costs, stamp duty, and the cost of the proposer’s medical examination, you will be entitled to a reimbursement of the non-allocated premium plus charges charged by the cancellation of units plus fund value at the date of cancellation.

For more details, you can read the brochure here.

Final Verdict: Kotak Wealth Optima Plan-ULIP Review:

On the investment side, it promises that it can help you to increase your wealth with trust and confidence. And, it offers life coverage to help your family financially after you. 

But in reality, even though it offers you both investment and insurance protection, it doesn’t fulfill either of them. 

On the investment side, it has risk, but the investment return is not enough to beat the inflation rate. And, we can get the same investment return, if we invest in risk-free investment products.

If we compare life protection with pure term insurance, it seems we paid more than we should. So, simply it does not help you to create long-term wealth. 

So, instead, if you want, you can choose a risk-free investment and term insurance combo for a better result. Or if you don’t mind taking a risk, then you can go for a mutual fund plus term insurance for long-term wealth creation.

If you have any comments or questions, write them in the comment box below.

Or are you interested in creating a Comprehensive Financial Plan for your financial goals?

Skip the queue by registering for your 30 Minute FREE Financial Plan Consultation. Click the ‘‘BOOK YOUR SLOT NOW!’’ button below. 

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Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

Google Reviews

Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
based on 61 reviews

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