The Hindu Business Line : Tata AIG's Assure Educare

Assure Educare is a child endowment policy from Tata AIG. It comes in two variants: Educare 18 which matures when the child grows up to be 18, and Educare 21 which matures at age 21.

How it works?

Educare is an endowment policy in which premiums are paid throughout the policy term. Educare 18 can be taken for children in the 30 days-eight years age group.

For Educare 21, the minimum and maximum entry age are 30 days and 11 years respectively.

Payout on maturity

The maturity benefit or payout on attaining age 18 or 21 — depending on the plan — consists of five components: Sum assured (life cover), a 10 per cent guaranteed addition, a 20 per cent guaranteed education benefit, accumulated reversionary bonus and a terminal bonus. The guaranteed additions are based on the sum assured and are payable regardless of the company's performance.

The accumulated bonus and the terminal bonus are not guaranteed but are based on the company's investment performance.

The terminal bonus is payable depending on the level of reversionary bonus accumulated. The guaranteed addition and terminal bonus are payable either on death or on maturity of the policy only if the policy has been in force for 10 years.

Options upon death

If the policyholder (parent) dies during the premium paying term, the payout is equivalent to the sum assured plus 10 per cent guaranteed addition plus accumulated reversionary bonus and terminal bonus.

Additionally there are the following options too:

If any person willingly agrees to pay the future premiums, the policy will continue to be in force without any changes.

If you have opted for the "Payor Benefit rider" while taking the policy, all future premiums on the basic policy and the rider are waived on death or total disability of the parent.

Surrender the policy: In this case you will get the surrender value and the policy will cease to exist.

Automatic premium loan option: The company will pay the future premiums by taking a loan against the policy's cash value as long as the cash value exceeds the premium amount.

Reduced paid-up option: The sum assured stands reduced according to the premiums paid, and the policy continues with a reduced sum assured.

If the child dies

The payout in case of the child's death depends on the number of years the policy has been in force, and is a percentage of the sum assured.

The payout will be 20 per cent within a year, 40 per cent after the first year, 60 per cent after the second year, 80 per cent after the third year, and 100 per cent after four years.

Loans

You can take a loan once the policy acquires a surrender value, that is, after three years. The loan amount will be calculated as a percentage of the surrender value.

Premiums payments

The indicative premiums for a 30-day-old male child is Rs 6,888 for Educare 18 and Rs 9,100 for Educare 21 for a Rs 1 lakh sum assured.

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