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Nath Balakrishnan

THIS is a variant of the regular endowment plan in the sense that premiums need to be paid only over a limited term, though the policyholder is covered throughout the plan.

People whose income streams are compressed over a shorter timeframe, such as actors and sportsperson, can consider investing in such a plan.

Plan details

The premium paying term depends on the duration chosen. For instance, if one opts for a five-year duration, premiums can be paid either over one, two or three years. For a 25-year plan, premium payments need to be made over 16 years (maximum).

On maturity, the policyholder will get the sum assured, the guaranteed additions (at Rs 50 per thousand sum assured for the first five policy years) and the reversionary bonus declared by the corporation from the sixth policy year onwards.

If the policyholder dies, the beneficiary receives the sum assured and the additions/ bonuses that have accrued till the date. These benefits will be paid out even if death occurs after the premium-paying term has ended.

Riders

Two riders can be attached. They are the Term Assurance Rider, under which a payout equal to the sum assured in the rider will be made on the death of the insured; and the Accidental Death and Disability rider, under which the sum assured under the rider will be paid out as a lumpsum on death, or over a ten-year period if the insured suffers total and permanent disability in an accident.

Surrender value

The plan acquires a guaranteed surrender value after three policy years. One can also take loans at rates determined by the corporation.

Rebates

This plan is eligible for rebates depending on the mode of premium payment chosen and the extent of cover.

The yearly premium payment option entitles the policyholder to a 2 per cent rebate on premiums; a sum assured of Rs 50 lakh entitles the insuree a Rs 0.50 per thousand sum assured rebate.

Pieces under this column seek to examine insurance products in detail. Readersare requested to compareproducts featured under this column with similarproducts offered by otherplayers before arriving at an investment decision.

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