Review: Reliance Wealth + Health Plan

Reliance Life Insurance Company has come out with its new Reliance Wealth + Health Plan. How good is the Reliance Wealth + Health Plan? Should I invest in Reliance Wealth + Health Plan?
Should I buy this Reliance Wealth + Health Plan for tax-saving purpose? In this article, I’ll attempt to review the Reliance Wealth + Health Plan, and attempt to answer some such questions.

Reliance Wealth + Health Plan, claims to offer a mix of unit linked health insurance plus a savings and investment product. It also offers you a tax benefit for the amount of premium you pay towards this plan. This plan from Reliance Life offers the Hospitalization and Surgical Benefits and also covers Critical Illnesses. In short this plan provides you with a Personalised quality Health cover that fits your LifeStyle

The Claimed Key Features of Reliance Wealth + Health Plan

• A Unit Linked plan with Unique Savings Component
• Twin benefit of market linked return and health protection
• Choose from two different plan options
• Flexibility to take care of your family’s health
• Flexibility to switch between funds / plan options
• Option to pay Top-ups
• Option to package with multiple riders
• Liquidity through partial withdrawals

Key Benefits - Reliance Wealth + Health Plan
• A comprehensive health plan that
- helps you to pay for your routine medical expenses
- covers multiple major surgeries
- takes care of the follow-up tests and medicines post hospitalization
• Lump sum cash benefits for non covered injuries
• Fund option including Equity fund to harvest the best from the growing Equity market
• Income tax benefit under section 80C, 80 D and 10(10D) of the Income Tax will be available.
• Save today for future medical expenses

The so called claimed “Flexibility” offered – You can use the funds in your account to pay for current medical expenses, including expenses that your insurance may not cover through partial withdrawal, or save the money in your account for future needs, such as:
• Health insurance for medical expenses and savings in the eventuality of unemployment
• Cover Medical expenses after retirement
• Cover Out-of-pocket expenses
• Cover Long-term care expenses
It all looks good, but, the amount of this money will depend upon the actual NAV or fund value of your holdings, and that is subject to market risks. So ultimately, there is no certainty.

How does Reliance Wealth + Health Plan work?

The plan offers to insure multiple lives. The principal insured is the policyholder and the other insured person(s) are the family member(s). The family consists of the Principal Insured (Policyholder), the Spouse as Insured Spouse and the first two eligible children by seniority in age. The plan takes care of the hospitalization expenses which include:
• Daily Hospitalization expenses
• Intensive Care Unit expenses
• Post Hospitalization expenses in the form recuperation benefits
Charges:

The allocation charges are deducted from the premiums before allocation of units. The insurance charges (along with the service charge), are deducted through cancellation of units whereas the fund management charge is priced in the unit value.

Biggest problem – everything linked to your contribution “If the Principal Insured is admitted in a hospital ward other than Intensive Care Unit (ICU), the daily cash benefit will be 5% of Annual Premium subject to a maximum of Rs.2500 per day.” That means if you are paying an annual premium of 10,000, then the maximum daily Hospital cash benefit you can claim is just 5% or just Rs. 500 per day. For spouse, the maximum cap is limited to 1500 only, again dependent on your contribution (5%). For children, it is maximum of 1250 only, limited to just 2.5% of your contribution.

Other problem – must stay in the hospital for atleast 48 hours. For less than that, you cannot claim anything.

Recuperation Benefit is available ONLY if one stays for more than 5 days or 120 hours and have eligibly claimed the Daily Hospital cash benefit

Death benefit - No life insurance – only an amount equal to the NAV value of your fund units will be paid to you, that too NAV value on the date of death. Moreover, there are NO DEATH BENEFITS FOR THE DEPENDENT SPOUSE OR CHILDREN – another drawback.

Funding Options:

1. Ready-made Plan Option
This plan means that your money will be invested as per your date of birth. The younger you are, the more exposure you will have for equities and shares. The elder you are, the more money will go towards bonds, gilts, money market instruments and debt securities.

2. Tailor-made Plan Option
This plan means you have the full freedom to choose how your money is invested. You have 4 different types of financial securities to choose from – Money market, Gilts, Corporate Bonds, Equities. Depending upon your risk appetite, you can select the investments with which the so called “fund managers” will play around with your money. Ultimately, all depends upon the LUCK and RANDOMNESS, about how the selected stocks/bonds will perform.

Withdrawal Options:
Partial Withdrawal: Withdrawal not allowed for first 3 years. Only after 3 years – part withdrawal is allowed.
Heavy charges – 5% if withdrawn in 4th year, 3% for 5th year and nil for 6th year onwards.

Not only that, there are limitations on the amount you can withdraw. For year 4 and 5 - only 10% of total fund, year 6 to 9- only 15%, Year 10 to 14 – only 20%, 15 years and above – 25% of the fund value. Last 5 years before maturity – 95% of the fund value can be withdrawn.
Switching Option: 52 FREE switches can be exercised during a year, meaning 1 switch per week.

Nomination facility is available – in case of death only

Charges: HUGE, HUGE AND HUGE CHARGES
1. Allocation charges
Year 1 – straightaway 25% charges deducted.
Year 2 onwards - 5%

2. Hospitalization charges: No figures available – they say it will vary & deducted on a monthly basis – God knows what these charges are

3. Administration Charges: Each month, 40 Rs. will go away

4. Fund Switching Charges: After 52 free switches, Rs. 100 per switch

5. Fund management charges – varies from 1.25% per annum to 1.5% per annum, depending upon your investment plan choice.

So, if after paying the heavy charges to the Reliance Fund management team and the hundreds of limitations that the insurer has in claiming the insurance and hospitalization benefits, if one still believes that he/she can benefit from this policy from, Reliance Wealth + Health Plan, then one must apply for it.

Tax benefit is available, so last minute tax saving attempts can be made through this Reliance Wealth + Health Plan. All the best!

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