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INTRODUCTION ON 'WEKEZA MAISHA/INVEST LIFE UNIT TRUST SCHEME', A UNIT LINKED INSURANCE PLAN (ULIP)
1.1.'Initiation Of ‘Wekeza Maisha/ Invest Life Unit Trust Scheme’
The resounding success of Umoja Fund, which was launched by UTT on 16th May, 2007, has further reinforced our confidence that there remains a great appetite still untapped in the country for the forthcoming Collective Investment Schemes (CIS’s). This is how the initiation work on the launching of the second CIS titled ‘WEKEZA MAISHA / INVEST LIFE UNIT TRUST SCHEME’ was commenced by UTT.
The WEKEZA MAISHA / INVEST LIFE UNIT TRUST SCHEME is the first investment cum insurance scheme to be established by the Unit Trust of Tanzania. It is indeed the first such scheme to be launched in the country. The thought process (i.e. rationale) which has gone into establishing and launching this pioneer scheme is enumerated hereunder:
1.2. Unit Linked Insurance Plan (ULIP)
ULIP is a combination of Insurance and Unit Trust (Investment) benefits (i.e. a marriage of Insurance and Unit Trust). Unit-Linked products are those, where the investment benefits are expressed in terms of units and unit price. ULIP is a one-stop solution providing:
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Life Protection (Insurance Benefits)
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Investment and Savings
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Flexibility
1.3. Insurance In Tanzania – An Overview
Tanzania’s Insurance Industry was liberalized in the year 1996 to achieve the following objectives:
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Transforming the insurance industry into a sound and competitive agent for national saving mobilization and development of investment channeling;
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Promoting insurance sector as an effective catalyst for enhanced economic growth;
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Strengthening and promoting the industry health and orderly growth through establishment of operating performance standards and prescriptions;
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Exempting the industry from undue interference;
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Developing efficient, cost effective, comprehensive and customer driven insurance services.
1.4. Why ULIP?
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ULIP came into play in 1960s and became very popular in major parts of the world - Western Europe, America, India etc. (so it is a pioneer effort on the part of UTT to have introduced this product in Tanzania).
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Internationally, ULIP is seen as a ‘Wonder Product’ that simultaneously fulfills an individual’s need for investment and insurance.
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With Unit Trust and Insurance industry being still at a nascent stage in Tanzania, it is a good idea to blend the two in the interest of the common investor.
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ULIP shall lead towards fulfilling the laid down objectives of both the industry – Mutual Fund and Insurance.
1.5. ULIP - The Most Timely In Tanzania ULIP
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Till Mar’2007, there are less than 100,000 Life Insurance Policies issued by various Insurance Companies in Tanzania (out of these, 90 % alone have been issued by a single Insurer).
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The penetration ratio for Life Insurance in Kenya is about 0.82 % of GDP, whereas the same is as low as 0.35 % of GDP in Tanzania. On the other hand, the said penetration ratio in South Africa is about 11.48 % of GDP.
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The share of Life Insurance premium is about 10 % of the total insurance premium written in the country.
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The steady growth in the market premium volume on year to year basis indicates, inter alia an increase in the demand for insurance in the country. It also suggests that the public attitude towards risk and risk awareness is changing positively.
It is in the above context that the Unit Trust of Tanzania has decided to establish and launch the WEKEZA MAISHA / INVEST LIFE UNIT TRUST SCHEME in the country.
1.6. Highlights Of The Wekeza Maisha / Invest Life Unit Trust Scheme
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Objectives: An open – end balanced fund which seeks to generate long term capital appreciation, while also offering additional insurance benefits in the form of Life Insurance, Personal Accident / Total Disability and Funeral Expenses cover.
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Options: The scheme offers investment under two options – (a) Regular Contribution Option and (b) Single Contribution Option.
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Eligible Investor(s) and Entry Age: Open for investment to Resident individual Tanzanians and Non Resident Individual Tanzanians in the age group of 18 to 55 years.
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Tenure: The tenure of a plan membership under the scheme is 10 years.
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Liquidity: Partial repurchase is allowed after completion of 5 years.
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Face Value: The initial (face) value of a unit is TZS100/=
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Issue Price: Units shall be sold at TZS100/= per unit during the Initial Sale period (i.e. from 16th May 2007 to 31st July 2007) and at the prevailing NAV thereafter.
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Contribution Amount: (a) Minimum Contribution Amount:- TZS 1 Million (however an investor may choose a regular contribution of TZS 8,340/- per month) and (b) Maximum Contribution Amount:- No Limit (however life insurance benefits are available only up to TZS 25 Million)
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Life Insurance Benefits (Death or Total and Permanent Disability):
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Regular Contribution Option: Life cover equal to unpaid but not due amount of the chosen Contribution amount subject to a maximum of TZS 25 Million and
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Single Contribution Option: Life cover equal to the chosen Contribution amount subject to a maximum of TZS 25 Million.
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Personal Accident Benefits: Available to the extent of 20 % of the chosen Contribution amount subject to maximum cover amount of TZS 5 Million (irrespective of chosen investment option).
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Funeral Expenses Benefits: Available to the extent of TZS 500,000 irrespective of chosen investment option / Contribution amount. Benefit only available to investors who shall join the plan during the Initial Sale period.
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Loyalty Bonus: Provision to pay Loyalty Bonus on completion of the plan membership period or if death occurs during last year of the plan period.
For more information about Wekeza Maisha Fund, click the following link to download the Offer Document.
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