Photo: Bloomberg

Photo: Bloomberg

Product Crack | IDBI 3-in-1 Lifesurance Savings Plan

Product Crack | IDBI 3-in-1 Lifesurance Savings Plan

What is it?

This is a traditional endowment plan that pays the sum assured plus any accrued bonuses on death or on maturity.

What do you get?

On maturity, provided all due premiums have been paid, you will get the sum assured along with guaranteed additions and reversionary and terminal bonuses. Depending upon the performance of the investment fund, known as the participating lifeholder’s fund, the company may declare an annual bonus. This bonus is a percentage of the sum assured and once declared gets guaranteed. Over and above this, the company may declare a terminal bonus at the time of maturity.

On death, the same benefits will be given to the nominee. The company may also pay an interim bonus in case the policyholder death occurs before the next due bonus.

Photo: Bloomberg

What’s special?

The guaranteed additions will be applicable in the first five years of the policy tenor. This guaranteed addition is 50 per 1,000 of sum assured. So if your sum assured is 10 lakh, you will get a guaranteed addition of 50,000 every year bumping up your sum assured to 12.5 lakh in five years.

Subsequently, you will get an additional bonus. However, this bonus will be solely at the discretion of the insurer.

You get a rebate in premium for opting for a sum assured of 10 lakh or more. For a sum assured up to 24.99 lakh, the rebate in premium will be 1 per 1,000 of the sum assured. For a sum assured of above 25 lakh, the premium is 2 per 1,000 sum assured.

Mint Money take

The costs are not known in this policy since it is a traditional plan. However, one can get a sense by looking at the guaranteed payouts. Take the case of a 30-year-old opting for a sum assured of 10 lakh for 20 years. He will need to pay an annual premium of 53,870. Including the guaranteed payout, the maturity benefit will come to 12.5 lakh or a return of just 1.39%. However, since this plan invests largely in debt, we looked at the return assuming a bonus return of 6%. In this case, the net yield came to 3.90%.

The guaranteed payouts are not much to write home about. You are better off buying a term plan and investing the difference in a Public Provident Fund or diversified equity mutual funds.