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MSCI Index – A Comprehensive Guide

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As the world of finance continues to evolve, innovative financial instruments are being harnessed to offer investors unique opportunities while ensuring the safety of their initial investments.

One such product is the MSCI Index, a capital guarantee plan prominent in the UAE. The MSCI Index, intrinsically tied to global market performance, offers a robust investment opportunity that extends beyond traditional boundaries.

Its standout feature is an investor-friendly approach that reassures individuals their principal investment will be safeguarded from potential losses. Simply put, regardless of how the underlying investments perform, the fund company absorbs the incurred losses and ensures that the principal amount remains untouched. This striking feature alone offers an appealing safety net for investors venturing into the uncertain landscape of financial markets.

In our discussion below, we will delve into the key features of the MSCI Index, exploring its specific features, the application process, benefits, and associated risks to offer comprehensive insights to both seasoned investors and beginners alike.

What is a Capital Guarantee Plan and MSCI Index?

A capital guarantee plan is an investment strategy that promises the protection of the principal amount invested. This type of plan is designed to guard investors against potential losses by ensuring that the principal amount invested remains intact, irrespective of the performance of the underlying investments.

This innovative financial instrument provides a significant degree of security for investors, making it a highly appealing choice for those who wish to venture into the financial markets without risking their initial investments.

The MSCI Index, which is a significant part of the capital guarantee plan in the UAE, is a globally recognised index that offers an investment opportunity for investors. In the context of a capital guarantee plan, the MSCI Index serves as the underlying investment that the plan is tied to.

As the performance of the plan is linked to the performance of the MSCI Index, it provides investors with the opportunity to benefit from potential market growth while having the assurance that their initial investment is safeguarded from potential losses.

The MSCI Index plan offers a wide range of benefits, which include affordable minimum contributions, guaranteed principal protection, loyalty bonuses, free partial withdrawals, and a guaranteed death benefit, among others. However, it's important to note that these features and benefits are subject to specific conditions and guidelines outlined in the plan document.

Features and Benefits of the MSCI Index

Without further ado, let’s take a look at the salient features and benefits of the MSCI Index -

  1. Flexible Contribution Plans: Investors have the freedom to choose between 10, 15, and 20-year regular contribution plans. This range of options provides flexibility to align with the investor's financial objectives and capacity.
  2. Multiple Payment Options: To enhance flexibility, the MSCI Index plan offers different modes for paying the premium - investors can opt for monthly, quarterly, semi-annual, or annual payments. There's also a pre-pay option for future premiums due which can accommodate up to 3 annual payments per plan year.
  3. Payment Methods: The MSCI Index plan offers multiple payment methods as mentioned below -
    • Credit Card and Direct Debit: Both Credit Card and Direct Debit payments are accepted for all payment frequencies.
    • Check/Cashier Check: This payment method is available for quarterly, semi-annual, and annual payments.
    • Wire Transfer: Wire transfers, just like checks, are also acceptable for quarterly, semi-annual, and annual payments. Plan participants can change their payment method and/or frequency at no cost and enjoy the flexibility to accommodate changing financial situations.
  4. Currency: The plan operates in US dollars (USD), a globally recognised and frequently used currency, which ensures a seamless and straightforward process.
  5. Grace Period: Investors get a 90 days’ grace period to make the premium payments. 
  6. Affordable Minimum Contributions: With a minimum contribution of USD 2,400 per annum, the MSCI Index is accessible to a wide range of investors. The minimum increase is also set at USD 2,400 per annum as a rider, maintaining affordability and ease of increment.
  7. Guaranteed Principal Protection: The plan offers attractive principal protection: 100% for the 10-year term, 140% for the 15-year term, and 160% for the 20-year term, thus safeguarding a significant portion of the investor's principal amount.
  8. Loyalty Bonus: Loyalty bonuses are rewarded as a percentage of total contribution during the period. Bonuses range from 7.5% for 1-15 years and 5% for 16-20 years, incentivising long-term investment.
  9. Free Partial Withdrawals: Investors are allowed free partial withdrawals after the completion of the initial period, subject to maintaining a USD 2,400 surrender value. This ensures liquidity as and when required.
  10. Guaranteed Death Benefit: In the unfortunate event of a death, a guaranteed death benefit amounting to 101% of the account value will be provided. Keep in mind that this benefit does have certain conditions, such as the requirement that all premiums have to be paid within the grace period, after which the benefit may terminate.
  11. Initial Period for Different Terms: The initial period varies depending on the chosen term. It is 13.2 months for the 10-year term, 24.48 months for the 15-year term, and 27.72 months for the 20-year term.
  12. Allocation of Initial Units: Premium payments made during the initial period are fully utilised towards initial units. These initial units are later utilised to fund the annual administration charges over the policy's duration.
  13. Provision for Premium Decrease: After the completion of the initial period, a decrease in the premium is permissible. However, the minimum contribution amount rules apply and this action may negate the guarantee.
  14. Introduction of Accumulation Units: Once the initial period is over, premium payments are entirely assigned to accumulation units. These units are vital in funding the monthly policy fee, structure fee, and any other applicable charges over the policy duration.
  15. Policy Loan Provision: The MSCI Index plan also provides a policy loan option, where investors can borrow up to 40% of the cash surrender value. However, the loan amount and duration are subject to the company's approval.
  16. Policy Assignment: Investors can easily transfer the ownership of their plan to another person. The transfer can be done by submitting a written request from the current plan participant to the company. This feature enhances flexibility in managing the investment and can be useful for estate planning purposes.

Important: It is important to note that some features such as monthly payments, loyalty bonuses, and principal protection are subject to specific conditions and guidelines outlined in the plan document. Investors are advised to familiarise themselves with these details before subscribing to the plan.

Eligibility Criteria for MSCI Index

The MSCI Index allows for a diversity of investors and welcomes applications from individuals, companies, and other legal entities. The plan allows up to two applicants per policy, which creates an opportunity for shared investment responsibilities.

Other eligibility criteria are listed below -

  • Geographical Eligibility: The MSCI Index is not available for sale in the United States of America. This means U.S. citizens, residents, or those residing in the Cayman Islands are not eligible to apply.
  • Issue Age: The plan can be issued to individuals of a wide age range - from 18 to 60 years - depending on the term selected.
  • Country-Specific Restrictions: While the MSCI Index extends its reach to a broad range of countries, there may be certain restrictions for residents of specific countries. For this reason, interested individuals are advised to enquire about these potential restrictions before applying.

How Withdrawal and Surrender of the MSCI Index Works?

The MSCI Index plan comes with both partial and full withdrawal provisions.

  • Partial Withdrawal: After the initial period, investors are allowed to make partial withdrawals provided they maintain a surrender value of USD 2,400. While free partial withdrawals are available, it's crucial to remember that these can negate the guarantee.
  • Full Surrender: Investors also have the option to fully surrender the plan after the initial period. However, this action will be subject to surrender charges, emphasising the long-term commitment nature of the investment.
  • Policy Termination and Reinstatement: If the plan participant fails to make premium payments during the initial period or if the policy runs out of accumulation units at any time, it will lapse. However, the plan participant can request to reinstate the policy within 2 years after the lapse date, subject to the condition that they cover all past-due premiums and charges.

How Do Beneficiaries Work in MSCI Index?

Check out the following points to understand the functioning of beneficiaries with respect to the MSCI Index -

  • Nomination of Beneficiaries: Plan participants can nominate beneficiaries and contingent beneficiaries. These nominated individuals will receive the proceeds of the plan upon the death of the relevant insured.
  • Changing Beneficiaries: Plan participants can request to change their nominated beneficiaries by sending a written request to the company if necessary. This feature ensures flexibility in managing one’s beneficiaries with respect to the plan over time.
  • Plan Maturity: Once the plan reaches maturity, the participant will be notified. At this point, they will be required to provide instructions to the company for the disbursement of the funds, providing a seamless transition at the end of the term.
  • Plan Documents: All plan participants will automatically receive electronic delivery of their plan documents. If preferred, printed versions of the plan documents can also be requested for a fee of $50. This fee covers expedited shipping to the client or general agency.

Note: The selection of a printed version doesn’t mean the replacement of the electronic delivery method.

How to Apply for MSCI Index?

Applying for the MSCI Index plan is a straightforward and hassle-free process, especially when done through an efficient insurance platform like Policybazaar Insurance UAE. Here's a step-by-step guide on how to apply - 

  • Access the Platform: Start by visiting the Policybazaar Insurance UAE platform on policybazaarinsurance.ae. The website is user-friendly and intuitive, making it easy to navigate through.
  • Select Investment Option: On the homepage, locate the ‘Investment’ drop-down menu. Once you click on it, a list of options will appear. From these options, select 'Capital Guarantee Plans'. This will lead you to the dedicated page for capital guarantee plans such as the MSCI Index.
  • Fill out the Lead Form: After navigating to the Capital Guarantee Plans page, you'll be asked to complete a lead form. This form is essential as it captures your personal and financial details and helps the platform to tailor options that best suit your needs. Make sure to provide accurate and complete information to avoid any confusion or delay in the process.
  • View and Select: Once you've completed and submitted the form, you'll be directed to the quotes page. Here, you can view different plans along with their detailed features and prices. Look for the MSCI Index plan and go through the provided information carefully.
  • Apply: After thoroughly reading about the MSCI Index plan, if you decide it aligns with your financial goals, proceed by clicking on the 'Apply' button. This will guide you through a series of on-screen instructions, which will lead you to complete your application process.
  • Wait for Contact: Upon successful submission of the application form, a representative from Policybazaarinsurance.ae will reach out to you. They will assist you with the next steps, clearing any queries you might have, and guiding you through any additional processes that may be required to finalise your investment.

Applying for the MSCI Index plan through the platform of Policybazaarinsurance.ae simplifies the whole process and makes it more accessible to a broad range of investors. With this simplified application process, you're just one step closer to securing your financial future!

Other Investment Options Available

Apart from the capital-guarantee plans, you can check out some other investment options in the UAE - 

Mutual Funds

In mutual funds, the funds are collected from numerous investors to form a diversified portfolio encompassing various types of securities like bonds, stocks, and other assets. This investment portfolio is overseen by skilled fund managers. For individual investors, mutual funds present a chance to venture into a variety of asset classes without necessitating a large upfront capital investment.

Stocks

Stocks, at their core, are investment instruments representing ownership in a company. When an individual or investor acquires a stock, they become a shareholder, which grants them a share of the company's earnings and assets. The trading of stocks occurs on stock exchanges where their prices vary based on the demand in the market and the performance of the respective company.

ETFs

An Exchange-Traded Fund (ETF) serves as an investment vehicle that amasses funds from a multitude of investors to invest in a diverse portfolio that may include stocks, bonds, and various other assets. 

These funds are then traded on stock exchanges, which allows investors to buy or sell shares throughout the day at market prices. Given their versatility and the potential for long-term growth, ETFs have risen in popularity among investors looking for a diversified, yet affordable, investment solution.

Check out some frequently asked questions related to MSCI Index in the next section. 

FAQ's

Q1. What are the primary features and benefits of the MSCI Index plan?

Ans: The MSCI Index plan provides a range of features such as flexible contribution plans, convenient currency, affordable minimum contributions, flexible payment options, and guaranteed principal protection. It also has a structured fee, loyalty bonuses, provision for free partial withdrawals, and a guaranteed death benefit. There are also various other features related to policy management, like termination, reinstatement, loan provisions, and assignment.

Q2. Who is eligible to apply for the MSCI Index plan?

Ans: Individuals, companies, and other legal entities can easily apply for MSCI Index Plan. However, it's not available for sale in the United States and for U.S. citizens, residents, or those residing in the Cayman Islands. As there might be some restrictions for residents of specific countries, potential investors are advised to inquire about these before applying.

Q3. What are the provisions for withdrawing from the MSCI Index plan?

Ans: After the initial period, investors can make partial withdrawals provided they maintain a surrender value of USD 2,400. There's also an option for a full surrender after the initial period (subject to surrender charges).

Q4. Can I change the nominated beneficiaries for my MSCI Index plan?

Ans: Yes, you can change the beneficiaries of your MSCI Index plan by sending a written request to the company.

Q5. What happens when my MSCI Index plan reaches maturity?

Ans: Upon the maturity of your MSCI Index plan, you will be notified by the company and asked to provide instructions regarding the disbursement of the funds.

Q6. What payment methods are accepted for the MSCI Index plan?

Ans: The MSCI Index plan offers multiple payment options - credit card, direct debit, check/cashier check, and wire transfer. You can also change your payment method and/or frequency without any additional charges.

Q7. Can I borrow against my MSCI Index plan?

Ans: Yes, the MSCI Index plan offers a policy loan provision, which allows plan participants to borrow up to 40% of the Cash Surrender Value (subject to the company's approval).

Q8. Can I transfer ownership of my MSCI Index plan?

Ans: Yes, the ownership of the MSCI Index plan can be transferred by submitting a written request to the company. This allows for flexibility in managing the investment and can be useful for estate planning purposes.

Q9. How is the MSCI Index plan beneficial for long-term investors?

Ans: The MSCI Index plan offers a range of benefits for long-term investors such as attractive principal protection guarantees and loyalty bonuses. It also rewards long-term commitment by reducing the surrender charge over time. Additionally, the structured fees, affordable minimum contributions, and flexible payment options make it suitable for long-term investment.

Q10. What is the guaranteed death benefit in the MSCI Index plan?

Ans: In the unfortunate event of a death, the MSCI Index plan provides a guaranteed death benefit that amounts to 101% of the account value, which gives financial security to the investor's family. However, it's subject to certain conditions like whether all premiums were paid within the grace period and so forth.

Q11. Are there any penalties if I decide to decrease my premium after the initial period in the MSCI Index plan?

Ans: Yes, while you can decrease the premium after the initial period, this action may negate the guarantee. Moreover, you must adhere to the minimum contribution amount rules.

Q12. What happens if I fail to make premium payments during the initial period in the MSCI Index plan?

Ans: If the plan participant fails to make premium payments during the initial period or the policy runs out of accumulation units at any time, the policy will lapse. However, the plan participant can request to reinstate the policy within two years after the lapse date provided that they cover all past-due premiums and charges.

Q13. How does one apply for the MSCI Index in UAE?

Ans: Application for the MSCI Index is made quite easy through online insurance platforms like Policybazaar Insurance UAE. You can start the process by accessing the platform and selecting ‘capital guarantee plans’ from the ‘investment’ drop-down menu. 

Once done, fill out the lead form with your personal and financial details. Choose the MSCI Index plan from the quotes page if it aligns with your financial objectives. After submission of the application, a representative will connect with you to help you with the next steps.

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