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1. What should an investor/policyholder verify before accepting and signing a ULIP proposal?

The investor/policyholder has to verify the following:

• Illustration projecting benefits payable in three scenarios and depending on portfolio: optimistic, realistic and pessimistic. E.g. from ICEA Money Market: 3%; 7% and 10% returns as indicative of the market trends

• Features and benefits

• Limitations and exclusions

• All the charges deductible under the policy

• Payment on premature surrender

• Lapsation and its consequences

• Disclosures requirements.

2. Can the investor/policyholder seek refund of premiums if not satisfied with the policy, after purchasing it?

Yes, the policyholder can seek refund of premiums if he disagrees with the terms and conditions of the policy, within “Free Look period”. The refund will be equal to the fund value less charges levied through cancellation of units, subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover.

3. What are the offer price and the bid price?

The offer price is the value of each unit of the fund on a given day or month. The initial offer price at the point of purchase is normally indicated in the policy schedule or displayed in the ICEA website.

The bid price is the price at which the unit is redeemed in the event of withdrawal, surrender and maturity.

4. What is the benefit payable in the event of risk occurring during the term of the policy?

The Sum Assured and/or value of the fund units is normally payable to the beneficiaries in the event of risk to the life assured during the term as per the policy terms and conditions.

5. What is the benefit payable on the maturity of the policy?

The value of the fund units with bonuses, if any, is payable on maturity of the policy.

6. Is it possible to invest additional contribution above the regular premium?

Yes, the investor/policyholder can invest additional contribution over and above the regular premiums as per his/her choice. This “TOP UP” can be any amount, subject to a minimum of Kshs.2,000.

7. Can an investor/policyholder “switch” the investment fund after taking a ULIP?

Yes, “SWITCH” option - shifting the investments in a policy from one fund to another – is provided in the ICEA ULIP, subject one free switch in a year. For switches beyond one, one-off flat fee of Kshs2000 is charged per switch. This fee will be reviewed annually.

8. Can a partial encashment/withdrawal be made?

Yes, Products may have the “Partial Withdrawal” option which facilitates withdrawal of a portion of the investment in the policy. This is done through cancellation of a part of units.

9. What happens if the investor/policyholder discontinues payment of premiums?

• Discontinuance within two years of commencement – If all the outstanding premiums have not been paid for at least two consecutive years from inception, the insurance cover shall cease immediately, but can be revived within the period allowed by ICEA Limited; if the policy is not revived within that period, the policy lapses at zero fund value.

• Discontinuance after two years of commencement -- If all the outstanding premiums have not been paid for in the subsequent years after two consecutive years from inception, and at the end of the period allowed for revival, the contract may be continued as a paid-up policy or may be terminated by paying the surrender value. If so opted for by the policyholder and risk premiums are paid, the insurance cover will continue.

10. What information related to investments is provided by the ICEA to the policyholder?

ICEA Limited will send an annual statement, covering the fund performance during previous financial year.

11. What is a ULIP?

ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance plan which provides a combination of risk cover protection and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. In a ULIP, the investment risk is borne by the investor-cum-policyholder.

The investor’s premiums will buy life insurance protection as well as units in a fund of his/her choice i.e. you choose how to allocate your insurance premiums towards protection and investment.

12. What is a Unit Fund?

The allocated (invested) portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the investors/ policyholders are pooled together to form a Unit fund.

13. What is a Unit?

It is a component of the Fund in a ULIP.

14. How much of the premium is used to purchase units?

The full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges, fees and deductions outline in FAQ 6 above. However, the actual premium used to purchase units varies from portfolio to portfolio. The total monetary value of the units allocated is invariably less than the amount of premium paid because the charges are first deducted from the premium received and the remaining amount is used for allocating units.

15. What are the main differences between a traditional endowment and a ULIP?

• Payments will depend on the price of the units at the time of claim.

• Being Investment-linked and like other types of investments, are exposed to investment risk. The unit price of an investment fund is linked to the total value of the plan, which fluctuates with the movements in the unit price. Hence, you may realize a gain or loss when you sell your units, and may even get less than what you invested. Past-performance of an investment-linked fund's track record is only a guide to future performance.

• Give you flexibility and leverage to choose your own level of protection and investment, to increase your premiums and coverage when your finances improve in the future and to choose the type of funds or portfolio (ICEA Equity Fund, ICEA Money Fund and ICEA Growth Fund), based on your risk appetite.

• Allows you to periodically vary the amount of your premium payments (either in single or regular-premium as well as periodic premium injections) or coverage based on your own personal financial situation. The single premium allows you to immediately invest more to generate returns.

• Allows you to switch funds after periodically evaluating your options carefully to find the right plan with the right fund to suit your changing needs.

16. What Types of Funds does a ULIP Offer?

ICEA offers a wide range of funds to suit one’s investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available in ICEA Limited, along with an indication of their risk profiles:

General Description Nature of Investments Risk Category	Nature of Investments	Risk Profile
ICEA Equity Funds	Primarily invested in company stocks with the general aim of capital appreciation	Medium to High
ICEA Money market Fund (Fixed Interest, bank deposits, Bonds and other money market instruments)	Invested in corporate bonds, government securities and other fixed income instruments	Low to Medium
ICEA Growth Funds	Combining equity investment with fixed interest instruments	Medium

17. Are Investment Returns Guaranteed in a ULIP?

Investment returns from ULIP are not guaranteed. The investment risk in investment portfolio is borne by the investor/policyholder. Depending upon the performance of the unit linked fund(s) chosen; the investor/policyholder’s investment may go up, remain static or even go down. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund.

18. What are the Charges, fees and deductions in a ULIP?

ICEA ULIPs contain the following charge structures:

Premium Allocation Charge

This charge is the charge expressed as a percentage of the premium received before allocating the units under the policy. The rate of this charge depends on the policy year to which the premium pertains.

Risk Cover Charges

These are charges to provide for the cost of insurance coverage under the plan plus any supplemental riders. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc. Unless premium for the risk cover and riders is paid separately, they will also be deducted by cancellation of units from your unit account at each month anniversary.

 

Fund Management Charge

This is a charge levied for management of the fund(s) as a percentage of the value of assets and is appropriated monthly or annually, by adjusting the Net Asset Value of the fund. The monthly rate of fund management charge is 0.125% (1.5% per annum). This charge is subject to periodical review.

Policy/ Administration Charges

These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate.

Partial Withdrawal Charge:

This is a charge levied on the unit fund at the time of partial withdrawals of units during the contract period. The First 3 partial withdrawals are free of any charge in each policy year. Any subsequent transaction will attract a charge of Kshs2000. We may increase this charge in future.

Surrender Charges

A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

Fund Switching Charge

One fund switch is allowed each year without charge; subsequent switches are subject to charges.

Premium Redirection Charge:

This is a charge levied on a redirection of premiums made by you. There is no charge for the first three premium redirections during a policy year. Subsequent premium redirection during a year will be charged at the rate of Kshs2000 per request.

Service Tax Deductions

Before allotment of the units the applicable service tax is deducted from the risk portion of the premium. Investors may note, that the portion of the premium after deducting for all charges and premium for risk cover is utilized for purchasing units.

NOTE: All these charges are not static. ICEA has the right to revise fees and charges periodically.