In this column, FC gives its view on new financial products launched in the market. This is a subjective view. Investors are advised to take professional help in selecting a product and not reach a decision only on the basis of these reviews.
What: It is a non-linked, with profit endowment assurance plan, which offers a combination of protection and savings. This plan provides for automatic increase in risk cover after every five years during the term of the policy.
For Whom: The minimum entry age for the plan is 12 years (completed) and the maximum entry age is 45 years (nearest birthday). The maximum maturity age is 65 years (nearer birthday).
Investment Norms: The minimum sum assured (SA) to be opted for is Rs 1,50,000 and in multiples of Rs 10,000 thereafter. There is no upper limit for investment.
Policy Term: 12 to 20 years
Benefits: In case of death during the policy term, Sum Assured on Death along with vested simple reversionary bonuses and final additional bonus, if any, shall be payable, provided all due premiums have been paid. Where ‘sum assured on death’ is defined as the higher of (a) 10 times of annualised premium or (b) absolute amount assured to be paid on death, which is: (i) during first 5 policy years, 100 per cent of the basic sum assured, (ii) during 6th to 10th policy years, 125 per cent of the basic sum assured, (iii) during 11th to 15th policy years, 150 per cent of the basic sum assured and (iv) during 16th to 20th policy years, 200 per cent of the basic sum assured. However, death benefit shall not be less than 105 per cent of all the premiums paid as on date of death, excluding any taxes, extra amount charged under the policy due to underwriting decision and rider premium, if any.
On maturity, the basic sum assured, along with vested simple reversionary bonuses and final additional bonus, if any, shall be payable in lump sum on survival to the end of the policy term, provided all due premiums have been paid.
FC Verdict: In terms of maturity, it is just like a normal endowment plan, where the returns vary from 6.53 per cent (for a 12-year old person investing Rs 10 lakh or more for the maximum term of 20 years) to 4.33 per cent (for a 45-year old person investing Rs 1.5 lakh for the minimum term of 12 years).
In terms of insurance cover, the progressing amount of sum assured takes care of the need of additional cover due to increase in earnings over the years as well as to cover ever-increasing expenditure in case of any eventuality.
However, one should take other investment products along with this policy, as maturity amount will be calculated only on the basic sum assured and not on enhanced sum assured on death.
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