The key factors which have contributed to the reduction in costs on KSIP, have been the excellent response to the product from consumers across various HNI and non-HNI segments and a better than expected experience in costs during the 9 months of existence of the plan.

KSIP, which levies a one-time underwriting charge, based on the sum assured at the time of buying the policy, has been brought down substantially.

The reduction in charge would be applicable to all amounts over the cut-off sum assured. Another notable change is the removal of surrender charge after the tenth year. Consumers who want to surrender the plan after the tenth year do not have to pay any surrender load. On surrender, they would be entitled to the full value of their units without any exit charge / load.

Commenting on the changes, Rathin Lahiri, AVP marketing, OM Kotak Said," Since we had a favourable experience in terms of underwriting costs, we decided to pass on these benefits to consumers. Reduction in this charge has also enabled us to slightly reduce premiums on the product, over the cut off sum assured. "

Lahiri, further added, "KSIP has shown a phenomenal performance in the last nine months. The unique proposition that we offer consumers is guaranteed maturity amount, while investing in equities. Another feature that has attracted large investors is the fact that returns from switching between funds is totally tax free, which is huge advantage that we offer over mutual funds. Also, the fund management charges and buy sell spread in KSIP are on the lower side compared to similar investment options available in the market today."

Kotak Safe Investment Plan is an investment-cum-insurance plan, where the premium money net of expenses is invested in the capital markets by way of four fund options — money market, gilt, balanced, and growth. Launched in June 2003, KSIP has posted a return of over 43 per cent in the growth fund and over 35 per cent in the balanced fund till March 2004. The huge popularity of KSIP is evident from the fact that premiums from this plan already account for about 30 per cent of the premium income of the company. The plan has one of the lowest fund management charges of 1.5 per cent on its growth fund, 1.3 per cent on balanced fund, 1.0 per cent on gilt fund and 0.60 per cent on money market fund.

The buy sell spread on the fund a mere 0.43 per cent on the growth fund, 0.35 per cent on balanced fund, 0.10 per cent on gilt fund and 0.01 per cent on money market fund. The policyholder is entitled to receive all gains from the markets. In case the markets do not perform well, he still gets back the guaranteed sum assured. On maturity, the policyholder would receive the market value of units or the guaranteed sum assured,
whichever is higher. Similarly, in the event of death, the family would receive the market value of units or the sum assured, whichever is higher. Also, the policyholder is benefited with tax-free returns.