The Hindu Business Line : Max New York Life's Child Money Back plan

MAX NEW York Life recently launched Stepping Stones — a child money-back plan. Premiums need to be paid over the tenure of the plan; the benefits kick in towards the plan's maturity.

The tenure of the plan can be chosen such that the payouts coincide with key milestones in the child's life. The proceeds received would come in handy to meet the expenses that would arise when the child is entering college or getting married.

Plan features

Regular premiums need to be paid over the entire duration of the plan. Higher the sum assured, lower will be the premium rates per thousand sum assured. The payout of survival benefits is as follows:

Five years before the plan's maturity, 30 per cent of the sum assured is paid;

Two years before maturity, the policyholder will receive a further 35 per cent of the sum assured;

On maturity, the remaining 35 per cent of the sum assured, a guaranteed addition of 30 per cent of the sum assured and non-guaranteed bonus.

Should the policyholder die during the plan's currency, the sum assured and the bonus would be paid immediately, payment of all future premiums is waived and the pending survival benefits remain intact. This will ensure that the child's career is not put into financial jeopardy, should the parent die.

Bonus options

Bonus payments offered by Max New York Life under this plan are non-reversionary. The policyholder can choose between one of the following bonus options:

Receive it in the form of cash;

Use the bonuses to offset future premiums;

Utilise the bonus to increase insurance cover by either buying additional cover on the base policy or by buying term insurance.

Cash value

The policy acquires a cash value from the third year onwards; in case one is in need of liquidity, one can also take a loan up to 90 per cent of the cash value at a rate of interest determined by the company.

Should one not be in a position to continue with the policy, the same can be surrendered for the cash value; alternatively, the cash value can be used to purchase either term assurance for the same sum assured and a reduced tenor, or a similar plan with a reduced sum assured for the same tenor.

Riders

The riders that can be attached to the base policy include the accidental death benefit rider, the critical illness rider, the term assurance rider and the waiver of premium rider.

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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