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Sowmya Sundar

HDFC's single premium policy offers protection for whole life by paying a lumpsum. It is an investment-cum-insurance plan that does not require you to undergo a medical examination.

It is a `with-profits' policy,that is, bonuses are declared and compounded annually. Accumulated bonuses become payable at the end of the term or on the death of the insuree. A terminal bonus may also be paid on either event.

Choose your term

The policy can be for whole of life or for a minimum term of 10 years and additions of five years — that is, 10, 15, 20 years, and so on. On termination of the chosen term, you receive the sum assured plus accumulated bonuses.

The policy can be surrendered after a minimum of six months and the surrender value received. On death, the nominee gets the sum assured plus accumulated bonuses.

The single premium for the plan is Rs 950 per Rs 1,000 sum assured.

Suitability

Basically an investment plan, it is similar to LIC's Bima Nivesh.

It is suitable for those with a large surplus looking for a life-long investment and wanting to leave behind a legacy for their kin. The single premium earns returns in the form of compounded bonuses. The premiums are flat and are not based on the age of the policyholder.

The advantage of the plan is that it allows you to save for your family for the long term. Other investment plans in the market are only for the short term and need constant rejigging and portfolio management. Though returns can be expected to be nominal, it is a life-long investment which keeps accumulating.

If you are in your sixties or seventies, this policy can be considered, provided you have made alternative arrangements for your regular income. There is no regular income from the policy as the bonuses are paid only when the policy terminates.

If life cover is your priority, this product is not for you. Being a single premium policy, withdrawals are taxable. The premium, however, would qualify for rebate under Section 88.

Readers are requested to compare products featured under this column with similar ones offered by other players.

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