NAME OF THE PRODUCT
IndiaFirst Life Insurance Co. Ltd’s Young India Plan.
WHAT DO YOU GET?
If you survive the term, you will get the fund value. However, you need to choose among two types of death benefit. The first option is that offered by regular child Ulips—the beneficiary gets the sum assured immediately on your death, all the future premiums are waived, the insurer pays the premium on your behalf and the fund value is paid on maturity. In the second option, the beneficiary gets the sum assured immediately along with the fund value and the sum of all future premiums. You need to make your choice at the time of buying the policy.
This plan also pays you in case an accident causes permanent and total disability. The insurer will foot all future premiums and on maturity, you will get the fund value. You could instead choose to get the sum of all future premiums immediately. In this case, the insurer will also pay the fund value and the policy will terminate. Other insurance plans also offer similar benefits on disability.
WHAT ARE THE COSTS?
The premium allocation charge, which is a straight deduction from the premium that you pay, is applicable throughout the policy term. In the first year, it is 6.7% of the annual premium. It reduces to 4% from the second to fourth year and remains at 3.5% for the remaining term.
The policy administration charge is 1.8% of the premium paid per annum, subject to a maximum of Rs 6,000. The fund management charge is fixed at 1.35%. The mortality charge would depend on the age, term and sum assured chosen by the policyholder.
If a 35-year-old takes a policy for 20 years at an annual premium of Rs 1 lakh, the minimum sum assured would be Rs 21 lakh—the minimum sum assured under this plan is 105% of the premium-paying term multiplied by the annual premium. Assuming the fund grows at 10%, the post-cost return on the policy is 6.41%.
MINT MONEY TAKE
This is an expensive plan. But if you decide to go for it, choose the option that staggers the death benefits: sum assured at the time of death and fund value on maturity so that your child has a lump sum to meet the goal you are buying the policy for, while having a cushion to fall back on in case you meet with an unfortunate event.