Financial Daily from THE HINDU group of publications
Sunday, Jul 03, 2005
Financial Daily from THE HINDU group of publications Sunday, Jul 03, 2005 |
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Investment World
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Life Insurance Money & Banking - Life Insurance Columns - Insurance Corner An Young Star plan Nath Balakrishnan
THE Young Star plan is a unit-linked offering from the stable of HDFC aimed at providing financial benefits to one's child. We'll examine some of the key features of this policy. Plan details Under this plan, the parent is the policyholder. Under the Life benefit option, in the event of the death of the life insured during the policy term, the beneficiary — the child — will receive the sum assured under the policy. Subsequent premium payments till the end of the policy term will be borne by the insurer and the maturity benefits, which is the unit value of the fund, will also be paid to the beneficiary. Under the Life and Health benefit option, the policyholder can append the equivalent of a critical illness rider to the basic plan; the basic sum assured gets paid on the diagnosis of one of six critical illnesses. After this payout is made, the policyholder will not be required to make further premium payments and the death benefit will cease to have value. Payment on maturity would be the same as in the case of the Life benefit option. Fund options The policyholder can choose from five funds to invest the premiums he pays. The funds vary in their risk profile. At one end, the Liquid Fund invests entirely in bank deposits and money market instruments; at the other, the Growth fund invests wholly in equities and hence carries a higher degree of risk. Policyholders can choose their investments in accordance with their risk appetite. Investments in these funds do not carry any guarantees and returns are a function of investment performance. The policyholder can also switch investments between funds. In case the policyholder has additional liquidity, the surplus can be invested into this plan in the form of top ups. Protection levels The policyholder can choose from different levels of protection such as low, medium and high. The extent of protection is a function of the policyholder's age and is a multiple of the annual premium paid. Higher the entry age into the plan, lower is the protection that can be taken. The extent of life cover can also be reduced during the term of the plan. Other features The policy can be surrendered any time during its term and the fund value adjusted form surrender charges would be paid to the policyholder; the policy can also be made paid-up after three years' premiums have been paid. Cash can be withdrawn, as long as the balance after withdrawal does not fall below Rs 15,000. Charges As with unit-linked plans, there are charges such as premium investment charges, fund management charge, mortality charge and any charge incurred for policy surrender before three years' premiums have been paid.
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