Aviva Fortune Plus Plan: Good or Bad? An Insightful ULIP Review

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Can the Aviva Fortune Plus Plan offer both wealth creation and life protection?

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Can the Aviva Fortune Plus Plan secure your financial future by combining life insurance with investment opportunities?

Can the Aviva Fortune Plus Plan tailor your investments while enjoying tax benefits?

This article explores the features, benefits, and drawbacks of Aviva Fortune Plus, offering insights into how ULIPs work to help you make informed financial decisions.

What is the Aviva Fortune Plus Plan?

Aviva Fortune Plus is a Unit Linked Non-Participating Individual Life Insurance Plan. It not only provides you with a minimum life insurance cover but also grows your savings and returns the charges (Premium Allocation charge; Mortality & Policy Administration Charges) you pay so that you can get an upgrade on your life insurance policy.

What are the features of the Aviva Fortune Plus Plan?

Extend Your Life Cover: Enjoy the flexibility to extend your policy term by an additional 5 or 10 years, ensuring longer protection for your loved ones.
Multiple Fund Options: Tailor your investment strategy by choosing from 8 unit-linked funds, designed to suit various risk appetites and financial goals.
Top-Up Premium Option: Enhance your investment by making additional premium payments, allowing you to boost your policy’s value and benefits.
Flexible Withdrawal Options: Customize your withdrawals to meet your financial needs with Partial Withdrawal and Systematic Partial Withdrawal options.
Additional Protection with Riders: opt for extra security by adding riders to your policy, covering accidental death, and waiver of premium.
Return of Charges at Maturity: Get the benefit of a return of charges at policy maturity, maximizing the overall value of your investment.

Who is eligible for Aviva Fortune Plus Plan?

What are the benefits of Aviva Fortune Plus Plan?

1. Death benefit

The Highest of:

Base Sum Assured, or
Fund Value pertaining to Limited/Regular/Single Premium, or
105% of the Total Premiums received up to the date of death, and

The Highest of:

Top–up Sum Assured, if any or
Fund Value pertaining to Top-up Premiums if any or
105% of Top-up Premiums received up to the date of death, if any

2. Maturity benefit

In case the life insured survives till the maturity date, the following shall be payable:

Fund Value of units pertaining to Limited/Regular/Single Premium; and
R% of the premium allocation charges, mortality charges and policy administration charges, where R% varies as per policy term and
Fund Value pertaining to Top-up Premiums, if any,

What are the fund options in the Aviva Fortune Plus Plan?

You can select from 8 funds tailored to different risk profiles, determined by their asset allocation. Ensure the fund you choose aligns with your personal risk tolerance.

		Asset Allocation
S. no	Fund Name	Equity	Debt	Money Market and Other Cash Instruments	Risk Profile
1	Balance Fund II	0-45%	25-100%	0-40%	Medium
2	Bond Fund II	NIL	60-100%	0-40%	Low
3	Enhancer Fund II	60-100%	0-40%	0-40%	High
4	Growth Fund II	30-85%	0-50%	0-40%	High
5	Infrastructure Fund	60-100%	0-40%	0-40%	High
6	Protector Fund II	0-20%	25-100%	0-40%	Low
7	PSU Fund	60-100%	0-40%	0-40%	High
8	Midcap Fund	60-100%	0-40%	0-40%	High
			Govt Securities	Money Market and Other Cash Instruments
	Discontinued Policy fund		60-100%	0-40%

Systematic Transfer Plan (STP):

This facility is available if at least 10% of premiums are allocated to Protector Fund-II.

This feature will enable automatic switching from Protector Fund-II to Enhancer Fund-II on a weekly or monthly basis, as chosen, during the Aviva Fortune Plus Plan policy term, except in the last 2 years.

During the last 2 years (i.e. last 24 months before maturity), the funds will be switched from the Enhancer Fund-II to the Protector Fund-II.

All switches under STP will be free of cost and do not carry any restriction on the minimum switch amount and minimum balance after the switch.

What are the charges under the Aviva Fortune Plus Plan?

i.) Premium Allocation Charge

This charge is deducted from the premium paid and the balance amount after deducting this charge is invested.

ii.) Policy Administration Charge

This charge will be made by monthly redemption of units from the policy unit account. Policy Administration Charge is applicable throughout the Aviva Fortune Plus Plan policy term.

Policy year	Policy Administration Charge
1-5	0.15% of Annualized Premium subject to a max of Rs. 500 per month
6 onwards	0.35% of Annualized Premium subject to a max of Rs. 500 per month
Single premium	Rs. 200 per month

iii.) Fund Management charge

FMC for all Funds other than the Discontinued Policy Fund would be 1.35% per annum. FMC for Discontinued Policy Fund would be 0.50% per annum

iv.) Mortality Charge

It will be applied on the Sum at risk, which is the difference between the amount of death Benefit Payable minus the Fund Value as on deduction of this charge.

Age	25 years	35 years	45 years	55 years	65 years	75 years
Male	0.9077	1.172	2.5145	7.3252	15.3337	37.2655
Female	0.9126	1.0589	2.0904	6.0197	13.4209	30.8471

v.) Discontinuance charge

This charge will be deducted from the policy unit account in case the policy is discontinued within the first 5 years. It is based on the annualised premium, fund value and the year of discontinuance.

vi.) Switching charge / Miscellaneous charges

NIL

Inference from the charges: The premium you pay is not fully invested in your chosen fund. Various charges are deducted, and only the net premium is allocated to the fund.

Over time, these charges add up as an overhead cost to your investment, ultimately impacting the returns. Unlike ULIPs, other market-linked products do not impose such charges, making them more cost-effective investment options.

Grace Period, Discontinuance and Revival of Aviva Fortune Plus Plan

For other than single premium policies

Grace period

The grace period for payment of the premium is 30 days. During this time the Aviva Fortune Plus Plan policy is considered to be in-force with the risk cover without any interruption.

Discontinuance

Lock-in-period means the period of five consecutive completed years from the date of commencement of the policy.

Policy Discontinuance within the Lock-in-period: the Fund Value will be credited to the Discontinued Policy fund after deducting the applicable discontinuance charges and the risk cover and rider cover, if any, shall cease.

The proceeds of the Discontinued Policy Fund shall be paid to you and the Aviva Fortune Plus Plan policy shall terminate at the end of the Lock-in-period.

Policy Discontinuance after the Lock-in-period: Your policy shall be converted into a reduced Paid-up Policy with the Paid-Up Sum Assured.

Paid-Up Sum Assured = Sum Assured x (Number of Limited or Regular Premiums Received / Total Number of Limited or Regular Premiums Payable under the Policy)

Revival

You have the option to revive the Aviva Fortune Plus Plan policy within the Revival Period of three years.

Free Look Period of Aviva Fortune Plus Plan

If the policyholder disagrees with any of the terms or conditions, he/she has the option to return the policy within 15 days (30 days if the policy is solicited through distance marketing) from the date of receipt of the policy document.

Surrendering the Aviva Fortune Plus Plan

Lock-in-period means the period of five consecutive completed years from the date of commencement of the policy.

For Single Premium Policies

Within the lock-in period: the Fund Value after deducting the applicable discontinuance charges shall be credited to the Discontinued Policy fund.

The proceeds of the Discontinued Policy Fund shall be paid to you and the policy shall terminate at the end of the Lock-in-period.

After the lock-in period: Upon receipt of the request for surrender, the fund value as on the date of surrender shall be payable.

For other than single premium policies

Within the lock-in period: the Funds shall remain invested in the Discontinued Policy Fund. The proceeds of the Discontinued Policy Fund shall be paid to you at the end of the Revival Period or Lock-in-period, whichever is later.

After the lock-in period: If You surrender the policy, Fund Value will be paid to you.

What are the advantages of the Aviva Fortune Plus Plan?

Adjust the allocation of future premiums across different funds at no extra cost.
Make top-up premium payments anytime during the policy term to boost your investment.
Partial withdrawals are allowed after completing 5 policy years or once the life insured turns 18, whichever is later.
Structured, regular withdrawals can be made through the systematic withdrawal option.
Extend the original policy term by an additional 5 or 10 years for continued coverage.
Enjoy unlimited free switches in a policy year to manage your investments effectively.

What are the disadvantages of the Aviva Fortune Plus Plan?

Policy loans are not permitted under this plan.
Liquidity is unavailable during the initial years of the policy.
The sum assured might not be adequate for some financial needs.
Investments are made using the net premium after deducting applicable charges.
The return of charges does not account for the time value of money.

Research Methodology of Aviva Fortune Plus Plan

When selecting an investment product, return on investment is a key factor. The chosen product should deliver inflation-beating returns over the long term.

Let us analyse the Internal Rate of Return (IRR) for the Aviva Fortune Plus Plan using the data provided in the policy brochure.

Benefit Illustration – IRR Analysis of Aviva Fortune Plus Plan

A 30-year-old male purchases the Aviva Fortune Plus Plan with a sum assured of ₹20 lakhs. The policy term is 20 years, and the premium payment term is 10 years, with an annual premium of ₹2,00,000. The fund value is received at maturity.

Male	30 years
Sum Assured	₹ 20,00,000
Policy Term	20 years
Premium Paying Term	10 years
Annualised Premium	₹ 2,00,000

The assumed return rates of 4% and 8% are illustrative scenarios after deducting all applicable charges.

These rates are not guaranteed and do not represent the upper or lower limits of the fund’s potential performance, as fund returns depend on various factors, including market conditions.

		At 4% p.a.		At 8% p.a.
Age	Year	Annualised premium / Maturity benefit	Death benefit	Annualised premium / Maturity benefit	Death benefit
30	1	-2,00,000	20,00,000	-2,00,000	20,00,000
31	2	-2,00,000	20,00,000	-2,00,000	20,00,000
32	3	-2,00,000	20,00,000	-2,00,000	20,00,000
33	4	-2,00,000	20,00,000	-2,00,000	20,00,000
34	5	-2,00,000	20,00,000	-2,00,000	20,00,000
35	6	-2,00,000	20,00,000	-2,00,000	20,00,000
36	7	-2,00,000	20,00,000	-2,00,000	20,00,000
37	8	-2,00,000	20,00,000	-2,00,000	20,00,000
38	9	-2,00,000	20,00,000	-2,00,000	20,00,000
39	10	-2,00,000	20,00,000	-2,00,000	20,00,000
40	11	0	20,00,000	0	20,00,000
41	12	0	20,00,000	0	20,00,000
42	13	0	20,00,000	0	20,00,000
43	14	0	20,00,000	0	20,00,000
44	15	0	20,00,000	0	20,00,000
45	16	0	20,00,000	0	20,00,000
46	17	0	20,00,000	0	20,00,000
47	18	0	20,00,000	0	20,00,000
48	19	0	20,00,000	0	20,00,000
49	20	0	20,00,000	0	20,00,000
50		28,16,352	20,00,000	49,84,785	20,00,000

	IRR	2.22%		5.97%

At a 4% return scenario, the final maturity value is ₹28.16 lakhs, with an IRR of 2.22% as per the Aviva Fortune Plus Plan maturity calculator. This is lower than the interest rate offered by a bank savings account.

At an 8% return scenario, the final maturity value is ₹49.84 lakhs, with an IRR of 5.97% Aviva Fortune Plus Plan maturity calculator. This is less than the rate of return typically offered by bank fixed deposits.

A market-linked product generating returns lower than traditional debt instruments is unfavourable for investors, as it hinders long-term wealth accumulation. Furthermore, the sum assured is inadequate to meet the family’s future financial needs.

This return analysis highlights that the Aviva Fortune Plus Plan is suboptimal both as an insurance product and an investment option.

Aviva Fortune Plus Plan Vs. Other Investments

Let us compare the Aviva Fortune Plus Plan with alternative investment options to help you make an informed decision.

For this comparison, we will use the same figures from the earlier benefit illustration. With an annual premium of ₹2,00,000, we will explore other strategies for achieving better returns.

Aviva Fortune Plus Plan Vs. Pure term + PPF/ELSS

For life cover, opting for a Pure Term Life Insurance policy is a prudent choice. A term policy with a sum assured of ₹20 lakhs costs approximately ₹12,400 annually, leaving ₹1,87,600 for investment.

This remaining amount can be invested in an asset class that aligns with your financial goals. The policy term is 20 years, and the premium-paying term is 10 years.

Pure Term Life Insurance Policy
Sum Assured	₹ 20,00,000
Policy Term	20 years
Premium Paying Term	10 years
Annualised Premium	₹ 12,400
Investment	₹ 1,87,600

To evaluate different asset classes, we consider two scenarios: investing in PPF for debt and ELSS for equity. After paying the term insurance premium, the remaining amount is invested in either PPF or ELSS.

Final Verdict on Aviva Fortune Plus Plan

The Aviva Fortune Plus Plan invests the net premium (after deducting applicable charges) into funds of your choice. These funds range from Debt (low risk) to Balanced (medium risk) and Equity (high risk). You can select a single fund, or a combination based on your personal risk appetite.

While the plan refunds some charges at maturity, an analysis of returns indicates that the potential earnings are significantly low.

Despite being a market-linked product, the returns are often lower than those of traditional debt instruments. High charges gradually erode returns over time, potentially derailing your financial goals.

Investing in the market through ULIPs is not recommended due to their liquidity constraints and comparatively lower returns and it also has a high agent commission.

A better approach is to choose a pure-term life insurance policy for comprehensive coverage and invest separately in market-linked instruments. This strategy ensures adequate life coverage while providing the flexibility to achieve your financial goals on time.

Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?

When selecting financial products, consider your risk tolerance, investment horizon, and life objectives.

For personalized advice, consulting a Certified Financial Planner is a wise decision. Their expertise can guide you through the complexities of financial planning, helping you make informed and confident choices.
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ELSS Tax Calculation
Maturity value after 20 years	1,14,51,883
Purchase price	18,76,000
Long-Term Capital Gains	95,75,883
Exemption limit	1,25,000
Taxable LTCG	94,50,883
Tax paid on LTCG	11,81,360
Maturity value after tax	1,02,70,523

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