Effectively managing your Zurich Futura fund performance is key to the sustainability of your plan for the "Whole of Life".
At the time of purchase, many people believe or are made to believe that the fund performance does not impact the cover term of the plan. This is far from reality.
They usually assume that it only affects the cash surrender value of the plan. Investors do not give the required importance to the fund performance or the cash surrender value because it is an insurance plan
In reality, the fund performance is a key aspect of this plan.
Your policy will sustain for "Whole of Life" only if the investment grows at the rate selected at the inception.
You have to understand that Zurich Futura is a unit linked insurance plan. It aims to provide a cover for a long term with the help of premiums usually paid over a short term(10 or 15 years) and growth achieved by your investment.
Premiums paid after 2 years, pay for the ongoing charges, the cost of insurance and the balance remains invested in the plan. This investment has to grow at rate assumed at the inception of the policy, otherwise, it will not sustain as designed.Although, Zurich Futura is made to withstand intermittent market volatility; the cover could cease; if the account value became zero due to nonpayment of premiums or due to adverse market conditions for a substantially long period of time.
Bear in mind that the plan charges and the cost of insurance are taken from your investment account every month.
Having said that, this can be avoided by managing your plan effectively.
How to improve Zurich Futura Fund Performance?
Rate of Return
The fist step is choosing an appropriate rate of return, in line with your risk appetite; while calculating the premiums. Discuss with your financial advisor the impact of investing in different risk profiles and choose the profile which suits you.
An ideal range is 4% - 6%. Achieving an average growth higher than 6.00% is very difficult over a long term.
Your premiums may go up if you choose a lower risk profile and a lower rate of return. In that case, you can decrease the cover term from 95 years to a lower age in line with your protection needs.
The Futura is a very flexible plan. You can customize the cover amounts, cover term, and benefits according to your protection needs and budget.
Don't hesitate to ask your adviser to show you different options with a lower rate of return and cover terms.
If you are on a tight budget, choose what is more important, a higher cover amount in the present or a longer cover term with lower benefits.
Don't just settle with the options provided by your advisor.
Spend some time to understand how the plan works and engage in customizing your plan to suit your needs and cash flow.
If you already have a Futura plan, you can still restructure it to suit your protection needs and risk appetite.
Obtain online access to your plan. Monitor your Zurich Futura Fund Performance on a monthly basis, and discuss with your advisor if the fund performance is not up to the mark.
Click here to register your online account and monitor your policy
Zurich fund center is a repository of all the necessary information about various funds available to invest within the Futura plan. You can find a lot of useful information and fund factsheets when you access the Fund Centre. Learn how to use it.
Reading this article can help you build robust investment portfolio on the Futura; Mutual funds in UAE – How to build a robust portfolio?
Once the plan is set-up, proactive management of the investment funds is essential. Talk to your advisor on a regular basis and review your plan at least once in a year, if not more.
It helps you to understand if the growth is in line with the projections and make necessary amendment to the investment strategy.
If your advisor is not helpful; please find one who can manage your plan effectively.
Dollar Cost Averaging(DCA)
Understand the concept of Dollar Cost Averaging and use it to your benefit, with the help of your financial advisor.
The following video will explain DCA
When the markets go down, and they for sure will don't panic and make hasty decisions. Analyze the situation carefully, it can also be an opportunity to continue investing in a particular market/fund.
The more you involve yourself in choosing and managing your investment the better your Futura plan will perform. It will also help you wisely invest for your other financial goals like retirement, children's education etc..
If you feel overwhelmed with the investment process, don't hesitate to seek expert help.
I mange a portfolio of more than 300 Futura plans, and I have helped many expats restructure their Futura in line with their protection needs and budget. I can help you as well.
You can arrange a Free Initial Meeting with me to help you analyze, amend and effectively manage your plan.