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Sowmya Sundar

LIC's Komal Jeevan is a child money-back policy taken on the life of the child. The policy pays a certain percentage of the sum assured in four regular instalments after the child becomes a major. Premium payments cease at age 18.

How it works?

The policy matures when the child grows up to be 26. Once the child attains majority, the survival benefit is paid in four instalments — 20 per cent each at age 18 and 20, and 30 per cent each at age 22 and 24. The policy gives guaranteed additions at Rs 75 per Rs 1,000 sum assured on every policy anniversary till age 26. However, these additions are not compounded. The guaranteed additions are paid on death or maturity at age 26. The life cover is available till age 26.

The risk commences only after the assured attains age seven or two years after the commencement of the policy. For instance, if a policy of Rs 5 lakh is taken at age five, the annual premiums will work out to Rs 50,632. The guaranteed addition at age 26 will be Rs 7,87,500. The return on investment is 5.14 per cent.

Death benefit

If death occurs during the policy term, the sum assured along with guaranteed additions till date is paid regardless of earlier instalments. A loyalty addition is also paid on maturity or death at the company's discretion.

Riders

The plan offers two riders, premium waiver benefit and Term rider benefit, which can be taken by the proposer up to age 50. The term benefit rider can be taken up to 20 per cent of the sum assured subject to a maximum of Rs 1 lakh. The benefits are payable if the proposer dies before the completion of the premium payment term.

Rebates

The policyholder is also eligible for a premium and sum assured rebate. A premium rebate of 1 per cent of the premiums for half yearly payment mode and 2 per cent on yearly payment mode is given. For a sum assured of greater than or equal to Rs 2 lakh, a one can get a rebate of Re 1 for every Rs 1,000 SA.

Loan availability

No loans can be taken under the policy.

Suitability

The policy is basically a savings product. It enables you to save regularly and get a lumpsum at regular intervals to pay for expenses such as higher education or marriage.

An attractive feature of the scheme is the guaranteed additions till maturity, though premium payments cease at an earlier date. But the child is not provided protection if the parent dies, as the policy is taken on the child's life. The policy is suitable for those looking at savings per se.

(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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