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Sowmya Sundar

THIS is a unique product targeted at the girl child. The product's distinctiveness is that it provides double cover for the life of the insuree and her spouse, and also pays a lumpsum at age 20 for meeting expenses such as marriage and education.

How it works?

The policy is available only for female children in the 1-12 age group. Premiums have to be paid till the child grows up to be 20, after which the full sum assured is paid as survival benefit.

Bonuses accrue even after the payment of survival benefit till the life assured attains age 50 or dies. On maturity at age 50, all accrued bonuses are paid. The policy also returns all premiums on death of the proposer.

Risk cover

The risk cover commences after two policy years or on the insuree attaining age 7, whichever is later.

The risk cover continues till the life insured turns 50. The unique feature of the policy is the spouse of the insuree is also covered till the date of maturity.

The risk cover on the spouse will commence after age 20 or one month after the intimation of marriage or three months after the date of marriage whichever is later.

If the female life insured dies before her husband, the sum assured and bonuses are paid, and the policy terminates.

But if the husband dies before the insuree, then an amount equal to the sum assured is paid immediately. The life cover on the insuree continues and the policy also continues to earn bonus till maturity.

If the life insured dies before age 7 or two policy years, all premiums paid are refunded and the contract ends.

Returns

Assuming LIC declares bonus at the rate of 3.5 per cent on the sum assured every year till maturity, the return works out to 4.4 per cent. Given the double life cover on the female life and that of spouse, the policy is attractive, especially for a parent looking at a long-term life cover for the girl child.

This also provides a cushion for meeting expenses that might arise on the child attaining a certain age.

(Pieces under this column seek to examine insurance products in detail. Readers are requested to compare products featured under this column with similar products offered by other players before arriving at an investment decision.)

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