Financial Daily from THE HINDU group of publications
Sunday, Nov 09, 2003
Financial Daily from THE HINDU group of publications Sunday, Nov 09, 2003 |
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Investment World
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Life Insurance Money & Banking - Life Insurance Max New York Life: Limited Pay Endowment Plan Sowmya Sundar
Maturity benefit
On maturity, you get an amount equivalent to 110 per cent of the sum assured (sum assured plus guaranteed 10 per cent addition). You also get the final bonus payment.
Death benefit
The plan's uniqueness lies in the structuring of the death benefit. If death occurs before the insuree attains age 10, then all premiums are returned with interest. The company, depending on the prevalent market rates, will decide the rate. If death occurs before the completion of five policy years, the sum assured and bonus is paid (if the policyholder opts to receive bonus either on maturity or death). But if death occurs after five policy years, double the sum assured, in addition to the bonus, is paid. The 10 per cent guaranteed addition is paid only on maturity.
Bonus options
Max New York pays non-reversionary bonuses. You have the following options:
Loans
You can take a loan up to 90 per cent of the policy's cash value. The cash value would be a minimum of 30 per cent of the premiums paid, excluding first year's.
Rider options
One can add any of the five riders — Accidental death benefit, Critical Illness, Term Rider, Payor Benefit Rider and Waiver of Premiums rider — to increase protection against specific risks.
Returns
The indicative yield for a policy of Rs 1 lakh sum assured, six years premium payment term for a male aged 30 years and a term of 20 years works out to 5 per cent, assuming that the bonus is declared at 2.5 per cent of the sum assured.
Suitability
It is a normal endowment policy except that it provides extra protection on death. It is suitable for those who want to keep the premium payment term short. The policy may also suit those looking at a regular cash income. Most other endowment policies offer bonuses only on maturity. Despite the 10 percent guaranteed addition, the return is comparable with most other plans.
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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