The Hindu Business Line : Aegon Religare’s new insurance scheme

Aegon Religare Life Insurance has launched the Star Child Plan, a ULIP that offers the option of investing in varied proportions of debt and equity. The plan also comes with an auto balancing option.

Fund choices: The fund has four options - secure, debt, balanced and enhanced equity. In the secure fund option, investment will be in debt and money market instruments. Under the enhanced option, 75 to 100 per cent will be invested in equity with an option to invest 0 to 25 per cent in debt and money market instruments.

Policyholders can switch from one fund to another at any point. Four switches are free.

Premium and charges: The minimum annual premium is Rs 12,000. For the single premium option, it is Rs 50,000. Based on the annual premium, the premium allocation charges will vary from 10 per cent to 30 per cent.

Comment: For investors planning for goals such as marriage and education and opting for the limited premium payment period, it is advisable to pay single premium rather than opt for periodic payments.

This will enable them to save substantial premium allocation charges. Single premium option can be opted by those looking for five times the premium as sum assured.

Term: The term of the plan can be 10 to 25 years. The plan provides flexible premium payment terms with a five, 10, 15-year timeframe or a period equal to the term for which the policy is taken. Age wise, the eligibility stands at 18 to 60 and the maximum maturity age is 75.

Sum assured: The minimum sum assured is five times the annual premium or 1.25 times the single premium. The maximum sum assured is five times the single premium with an upper limit of Rs 1 crore. For those who do not fall under the single premium option, the maximum sum assured is based on the policy term. Monthly payment option can be directly debited from your bank account.

Top ups: The minimum top up is Rs 5,000 while the upper limit is subject to conditions. Two riders can be added or removed at any time during the policy term subject to underwriting requirement. One is ADDD rider, which covers accidental death and the other is critical illness.

Invest protect option: Policyholders can minimise risk on investment during maturity through this option. If policyholders opt for this, he can minimise the risk on the investment at the time of maturity.

Under this facility, they will not be required to opt for the allocation proportions. Instead, a systematic monthly switch to low-risk funds in the last three years of policy is done to protect the accumulated value against any market fluctuations.

Partial withdrawal: This option provides the flexibility to make withdrawals. These withdrawals are allowed from the fourth year, provided all regular premiums of first three policy years have been paid.

Minimum withdrawal should be Rs 5,000 and maximum withdrawal in any policy year is 50 per cent of the fund value at the beginning of that year.

Comment: If your investment is based on any goals with a target return, and your targets are reached ahead of maturity due to favourable market terms, it is advisable to switch the accumulated value to a debt fund or an investor can utilise the same in advance towards set goals. At the same time, it is not advisable to go for partial withdrawal in the first seven to eight years due to high initial charges.

Death benefits: The sum assured is paid on death. The policy continues for the beneficiary and all units remain invested in the unit account. All the premiums due after death of the life insured are paid by the company. If the premiums have not been paid for the first three policy years and the policy has lapsed, death benefit would be the value of the fund as on that day; the policy is terminated after the payment of the fund value.

After death of life insured, nominee has the right to switch, partially withdraw, exercise the settlement option or choose invest protect option. However, the nominee cannot surrender the policy after the death of the life insured.

This column is intended to acquaint investors with features of new insurance products and is not a recommendation to invest. Investors are advised t o compare similar products already available before making a decision.

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