Category: Insurance

One of the most common questions I get is about children insurance plans, and usually the comment is accompanied with the name of a plan and a request to review it. I am not too familiar with child insurance plans, and the problem with following this approach is that I don’t know if there are plans better than the ones I have looked at. I thought it would be good if there were one page with child insurance plans, and I was a bit surprised to see that no one has already done that.

So I started by creating my own list of child insurance plans.

There are several child insurance plans in India, and I have created this list of every child insurance plan that I came across.
I think you can divide them into the following different categories:

1. No different than a normal plan: There are a few plans that some insurers have labeled as child insurance plans but which are totally indistinguishable from any other policy they offer.

2. Child is the insured: In these type of plans, the insurance is on the child, and I can’t understand why companies are offering such plans. What is the point on offering insurance on children?

3. Health insurance for children: These plans provide health insurance for children, and though not many parents think about medical or health insurance for children, these can be useful at times. I used to have one of these plans in my own childhood and it was a good because it came handy when I got an appendix operation in my college.

4. Parent is the insured: These are like term plans and pay up on the demise of a parent. These are of two types – they either pay the whole amount at the time of the death, or wait till the child becomes a major and then pays them.

5. Money-back plans: These are the most common type of child insurance plans where you pay a premium for a number of years and then the insurance company pays you back at set time periods. In children plans you usually get this amount when the child is 18 years old or some other milestone like that.

I have tried to list all the child insurance plans that I could find and took their description from the website itself. The idea was to see the whole list at one place and then narrow down ones that you find interesting to review further in later posts.

If you know a plan that’s missing from this list please let me know and I will update the post. If you want some parameters added then you can leave a comment and I’ll try to see if I can get that added on this post itself.

Insurer	Name of the Policy	Features
National Insurance Company Limited	Amartya Siksha Yojana Policy	The policy is basically intended for covering expenses to be incurred after happening of the accidental contingency to the insured parent/guardian of the insured student child for continuation of the insured students education in respect of the covered course till completion of the course.   The Policy will also cover the first admission fees but will excluded Donation /Capitation Fees if any.
National Insurance Company Limited	Vidyarthi – Mediclaim for students	VIDYARTHI-Mediclaim for Students is a unique policy designed to provide Health and Personal accident cover to the students. It also provides for continuation of insured students education in case of death or permanent total disablement of the guardian due to accident. Parents/Legal Guardian of individual student in any Registered Educational Institution affiliated to any State Board, Council, University and AICTE or any other Govt. Statutory Authority, within the territory of India may take this policy. The Educational Institutions may also take a Group Policy covering named students enrolled with them.
Future Generali	Future Generali Flexible Money Back	Key Features:   A Flexible insurance plan with two Money Back options Guaranteed Money Back payouts after the premium payment term Compounded Guaranteed Additions @ 3.5% of the Sum Assured during  first 5 policy years Compounded Reversionary Bonuses from 6th policy year till maturity even after premium payment stops. On maturity, balance of Guaranteed Money Back Payout plus Guaranteed Additions & vested Bonuses are paid On Death or Accidental Total & Permanent Disability, 100% of Sum Assured is paid immediately and all future premiums are waived. The nominee also receives all Guaranteed Money Backs when due.
Future Generali	Future Generali Select Insurance Plan – Child Insurance Plan	Key Features   Specially designed Unit Linked Insurance plan to achieve your medium to long term financial security and goals through regular savings. 3% Premium Allocation Charge & 4% Policy Administration Charge in the first year. Advantage of five robust funds to match your risk appetite. Flexi plan where you can decide your premium amount, policy term, mode of premium payment , extent of life cover along with a host of options like switching , partial withdrawal and additional benefit riders.
LIC India	Jeevan Anurag	LIC’s Jeevan ANURAG is a with profits plan specifically designed to take care of the educational needs of children. The plan can be taken by a parent on his or her own life. Benefits under the plan are payable at prespecified durations irrespective of whether the Life Assured survives to the end of the policy term or dies during the term of the policy. In addition, this plan also provides for an immediate payment of Basic Sum Assured amount on death of the Life Assured during the term of the policy   Assured Benefit Payment of 20% of the Basic Sum Assured at the start of every year during last 3 policy years before maturity. At maturity, 40% of the Basic Sum Assured along with reversionary bonuses declared from time to time on full Sum Assured for the full term and the Terminal bonus, if any shall be payable. For example, if term of the policy is 20 years, 20% of the Sum assured will be payable at the end of the 17th,18th, 19th year and 40% of the Sum Assured along with the reversionary bonuses and the terminal bonus, if any, at the end of the 20th year.
LIC	Komal Jeevan	This is a Children’s Money Back Plan that provides financial protection against death during the term of plan with periodic payments on survival at specified durations. This plan can be purchased by any of the parent or grand parent for a child aged 0 to 10 years.
LIC	Children’s Deferred Endowment Assurance Plan – Vesting at 21	This is an Endowment Assurance plan designed to enable a parent or a legal guardian or any near relative of the child (called proposer) to provide insurance cover on the life of the child (called life assured). The plan has two stages, one covering the period from the date of commencement of policy to the Deferred Date (called deferment period) and the other covering the period from the Deferred Date to the date of maturity. The insurance cover on the child’s life starts from the Deferred Date and is available during the latter period. The Deferred Date in case of Plan No 41 is the policy anniversary date coinciding with or next following the date on which the child completes 21 years of age.
LIC	Marriage Endowment Or Educational Annuity Plan	Product summary: This is an Endowment Assurance plan that provides for benefits on or from the selected maturity date to meet the Marriage/Educational expenses of the named child. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deductions, as opted by you, throughout the term of the policy or earlier death. Bonuses: This is a with-profit plan and participates in the profits of the Corporation’s life insurance business.  It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year.  Once declared, they form part of the guaranteed benefits of the plan. Such bonuses are to be added till maturity even if the life assured dies before the maturity date. Final (Additional) Bonus may also be payable provided a policy is of a certain minimum term.
LIC	Jeevan Kishore	Product summary: This is an Endowment Assurance Plan available for children of less than 12 years of age. The policy may be purchased by any of the parent/grand parent. Commencement of risk cover: The risk commences either after 2 years from the date of commencement of policy or from the policy anniversary immediately following the completion of 7 years of age of child, whichever is later. Premiums: Premiums are payable yearly, half-yearly, quarterly or monthly throughout the term of the policy or till earlier death of child, or single premium. Bonuses: This is a with-profits plan and participates in the profits of the Corporation’s life insurance business.  It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year.  Once declared, they form part of the guaranteed benefits of the plan. A Final (Additional) Bonus may also be payable provided policy has run for certain minimum period. Â
LIC	Jeevan Chhaya	Product summary: This is an Endowment Assurance plan that provides financial protection against death throughout the term of the plan. Besides payment of Sum Assured immediately on death, one-fourth of Sum Assured is payable at the end of each of last four years of policy term whether the life assured dies or survives the term of the policy. Premiums: Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the term of the policy or till the earlier death. Bonuses: This is a with-profits plan and participates in the profits of the Corporation’s life insurance business.  It gets a share of profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year.  Once declared, they form part of the guaranteed benefits of the plan. Bonuses for full term on the full Sum assured are paid at the end of the term even if death occurs during policy term. Final (Additional) Bonus may also be payable provided policy has run for certain minimum period. Â
LIC	Child Career Plan	This plan is specially designed to meet the increasing educational and other needs of growing children. It provides the risk cover on the life of child not only during the policy term but also during the extended term (i.e. 7 years after the expiry of policy term). A number of Survival benefits are payable on surviving by the life assured to the end of the specified durations. Â
LIC	Jeevan Ankur	LIC’s Jeevan Ankur is a conventional with profits plan, specially designed to meet the educational and other needs of your child. If you are the parent of a child aged upto 17 years, LIC’s Jeevan Ankur is the most suitable insurance plan for you which ensures that your responsibilities are met whether you survive or not and without depending on anyone else. The risk cover under this plan will be on your life as a parent and the named child shall be the nominee under the plan. The policy term shall be based on the age at maturity of the child.
AEGON Religare	AEGON Religare Educare Plus Insurance Plan	AEGON Religare’s Educare Plus Insurance Plan provides you with lump sum payouts during the last four policy years so that recurring college fees are never a hassle!
AEGON Religare	AEGON Religare Rising Star Insurance Plan	In case of your death during Policy Term, benefits to nominee: Higher of cover amount (Sum Assured) or 105% of all premiums paid immediately All future premiums waived off and paid by the company into the Policy Fund value, policy continues Amount equal to the annualised premium excluding rider premium will be paid every year to the nominee On maturity, Policy Fund Value will be paid In case you survive the Policy Term, you will receive the fund value existing on the maturity date Auto rebalancing of funds Partial Withdrawal Tax benefits as per prevailing tax laws. Please consult your tax advisor for details.
Aviva	Aviva Family Income Builder	Benefits That I Will Receive Guaranteed Income for self: Pay annual premium every year for 12 years and get Double the annual premium every year from 13th to 24th year. Guaranteed Income for family in case of your death: If death occurs after the first policy year, an amount equal to Double the Annual Premium is guaranteed as annual payouts for family from 13th to 24th year, if all due premiums were paid till death. Future premiums are not required to be paid by the family. If death occurs during the first policy year, an amount equal to the Annual Premium is guaranteed as annual payouts for family from 13th to 24th year, if all due premiums were paid till death. Future premiums are not required to be paid by the family.
Aviva	Aviva Young Scholar Advantage	Death Benefit: All future premiums are waived off and invested as a lump sum amount into the fund, so the policy continues even in the unfortunate event of the parent’s death The amount of Life Cover shall be payable to the nominee Life Cover pertaining to Top-up premiums, if any, shall also be payable to the nominee In case of death due to an accident between age 18 to 60, an additional amount under the in-built Accidental Death cover shall also be paid Rider Benefit: Aviva Child Education (CE) Rider – fixed monthly amount as chosen by the policyholder at inception is paid throughout the Policy Term to ensure uninterrupted education of the child in the event of parent’s death Comprehensive Health Benefit (CHB) Rider – upon disability or covered critical illness the Life Cover is paid immediately, future premiums are waived and paid as a lumpsum into the fund and the policy continues with investment benefits intact Aviva Term Plus Rider- an additional amount equal to the Aviva Term Plus Rider Sum Assured is paid on death of insured. To view Rider Brochures,click here.   Loyalty Additions: You will be eligible for Loyalty Additions, if you continue paying all due premiums The addition will be 1.5% of Fund Value pertaining to regular premiums at the end of year 11 and thereafter at the end of every subsequent 2nd policy year till the end of the Policy Term Loyalty Additions will be added even after the death of the insured parent Maturity Benefit: On maturity, the Fund Value pertaining to both regular premiums and Top-up premiums will be paid to the policyholder along with accrued Loyalty Additions, if any as on the maturity date. This Maturity Benefit will be payable to the Nominee in case of death of the policyholder prior to maturity Settlement option – This allows you to keep the money invested in the fund even after maturity and enables you to receive the same systematically over a period of 1 to 5 years. You can opt for this option at maturity
Aviva	Aviva Young Scholar Secure	Death Benefit: Upon death, Life cover is paid to the nominee (beneficiary) and the policy continues with all benefits intact. Any installment already paid by us will not be deducted from the death benefit. All future installments of Tuition Fee Support, College Admission Fund & Higher Education Reserve will be paid on the scheduled dates Additional benefits as detailed below will also be paid if the corresponding riders are opted for: – Aviva Term plus rider Sum Assured is also payable on death if this rider has been opted for – An additional sum equal to ADB Rider Sum Assured would be payable, if ADB Rider has been opted and death is due to an accident. – Aviva Dread Diseases rider Sum Assured is paid on contracting any of the 18 critical illnesses covered or on suffering Permanent Total Disability (PTD) due to illness or accident, while the policy continues with Death Benefit intact. The said benefits are applicable only if the policy is inforce as on date of evantuality Guaranteed Education Support Benefit: This plan provides guaranteed Tuition fee support, College Admission Fund and Higher Education Reserve irrespective of you being there or not. Please click here for further details on payout pattern. If you would like to understand the benefits using an Illustration please click here
Birla Sun Life Insurance	BSLI Bachat Child Plan	Once you have chosen your premium amount, you receive a series of benefits as follows:   1. You will get a life cover for the financial security of your family. 2. You stand to receive premium rebates for choosing annual and semi-annual mode of payment. You get a rebate of 4% if you choose to pay annually, and 2% for semi-annually. 3. Your policy continues till maturity, as you planned to secure your child’s future in case of an untimely demise. 4. On maturity, you will receive a lump sum which you can use to fulfill your child’s dreams and goals. 5. You have the advantage of liquidity on your savings to access your money any time you need it after three policy years. 6. You have the option of double life cover in case of accidental death, for a nominal additional premium, to ensure enhanced financial security of your family
Birla Sun Life Insurance	BSLI Classic Child Plan	You choose the Savings Date that suits your financial goals for your child. 2.  Your Policy Term will be the Savings Date + 20 years. 3.  You choose the Basic Premium you want to pay every year. 4.  You will receive Basic Sum Assured which is the minimum death benefit payable on the demise of the primary life insured. The Basic Sum Assured is automatically determined as your Basic Premium multiplied by: • ​The higher of 10 or the number of years to maturity divided by 2, for entry ages below 45; or • The higher of 7 or the number of years to maturity divided by 4, for entry ages 45 and above 5.  You have an option to choose an Enhanced Sum Assured and increase the financial security for your child’s future. With this option you can choose any amount of additional life cover over and above the Basic Sum Assured at a nominal cost. 6.  You have an option to choose from our range of riders and customise your family’s future financial security.
Birla Sun Life Insurance	BSLI Dream Child Plan	You choose the Guaranteed Savings Date that suits your objectives. Your Guaranteed Savings Date is the policy anniversary when your child’s attained age is from 18 to 27 years, subject to a minimum of 10 policy years. 2. Your Policy Term will be your Guaranteed Savings Date + 20 years. 3. You decide the Basic Premium you want to pay every year. 4. You will receive Basic Sum Assured which is the minimum death benefit payable on the demise of the primary life insured. The Basic Sum Assured is automatically determined as your Basic Premium multiplied by: • The higher of 10 or the number of years to maturity divided by 2, for entry ages below 45; or • The higher of 7 or the number of years to maturity divided by 4, for entry ages 45 and above 5. You have an option to choose an Enhanced Sum Assured to increase the financial security for your loved ones. With this option you can choose any amount of additional life cover over and above the Basic Sum Assured at a nominal cost. 6. You have an option to choose from our range of riders to further customize the financial security of your loved ones.
Canara HSBC Life	Canara HSBC Oriental Bank of Commerce Life Insurance Future Smart Plan	Our Future Smart Plan is a unit linked child plan that provides long-term investment opportunity to build a bright future for your child. Its comprehensive insurance cover (Sum Assured on death and Premium Funding on death or disability) ensures that your plan for your child’s future continues unaffected, in any unfortunate event.
Edelweiss Tokio Life	Edelweiss Tokio Life – Education	This is a non participating guaranteed endowment Plan. • All the benefits of the plan are guaranteed. No benefit is contingent on the company’s investment performance. • The plan provides for flexibility in both premium payment and benefits. You can choose among various premium payment terms depending on your income. For payouts, you can choose the option that best matches your child’s particular education needs. • Unplanned expenses are taken care of, with the option of a guaranteed flexible amount, as chosen by you. The comprehensive death benefit pays not only a lump sum amount to your family, but also waives future policy premiums, thereby protecting the maturity value that you had planned for your child. In addition to all this, the plan also offers a monthly benefit to take care of your child’s needs in the years before graduation.
HDFC Life	HDFC SL YoungStar Super II	In case of your unfortunate demise or critical illness, we will pay the greater of Sum Assured (less partial withdrawals) or Fund Value to your child (Beneficiary). The policy will terminate. We will pay 100% of all the future regular premiums to the Beneficiary as and when due, on an annual basis. Please refer to the sales brochure for details.
HDFC Life	HDFC SL YoungStar Super Premium	The Triple Insurance Benefit helps you secure your child’s immediate and future needs. In case of your unfortunate demise or critical illness, we will pay the Sum Assured to your child (Beneficiary). Your family need not pay any further premiums. With Save -n- Gain benefit ,we will pay 50% of all the original regular premiums towards your policy and 50% of the premiums will be paid to the Beneficiary as and when due, on an annual basis. Any Death Benefit or Critical Illness cover terminates immediately.
ICICI Prudential Life Insurance	ICICI Pru Smart Kid RP	This plan guarantees educational benefits to your child. It provides you with two options to receive those benefits.
ICICI Prudential Life Insurance	ICICI Pru Smart Kid Premier	You need to choose the premium amount, sum assured, coverage option, premium payment option, premium payment mode, policy term and portfolio strategy for your policy. After deducting the premium allocation charges, the balance amount will be invested in the portfolio strategy of your choice. At maturity, the Fund Value including Top up Fund Value, if any, shall become payable. Alternatively, the Settlement Option can be chosen. In the unfortunate event of death of the parent (Life Assured) during the term of the policy, the Company shall pay the full Sum Assured and shall also waive all the future premiums payable under the policy while continuing the allocation of units as if the premiums are being paid. However, if the joint life option is chosen, the death benefit shall become payable on death of either of the parents, whichever is earlier. The maturity benefit shall become payable on the date of maturity.
IDBI Federal Life Insurance Co Limited	Childsurance	Pay premiums for a limited period or for the entire term of the plan – Pay additional top-up premiums whenever you want. Grow wealth faster and get tax benefits Choose how your money is invested from a wide choice of investment options, based on your return expectations and risk tolerance – Choice of wide range of fund options, with varying levels of risk and return Choose your investment strategy – Manage your investments as per your choice with complete flexibility or – Opt for Systematic Allocator, a facility which balances your asset allocation between equity and debt based funds to provide growth and safety, aligned to the maturity of your plan Boosters to help your savings grow faster – Receive Guaranteed Loyalty Additions** at the end of specific terms as a reward for making long-term investments
ING Life	ING Aashirvaad	Guarantee 1:- Guaranteed Maturity Benefit (GMB) with flexible payout options ING Aashirvad guarantees the target amount you have aimed for your child and offers flexible options to receive your maturity payout that will take care of your child’s key financial needs. Option A – Part Staggered & Part Lumpsum to fulfill your child’s education and marriage needs Option B – Single Lumpsum Payment for post graduation or marriage needs Guarantee 2:- Guaranteed Death Benefit paid in addition to the GMB, on the life of the parent and the child, in case of any unfortunate event Guarantee 3:- Guarantee of Premium contribution by the company (waiver of all future premiums) in the unfortunate event of the demise of the parent. Guarantee 4:- Guaranteed Life Cover for your child for a period of 30 years even after policy has reached maturity.
ING Life	Creating Life Child Protection Plan: A Children Life Insurance Policy	Payment to child in case death of parent and at maturity Future premiums waived in case of death of parent Reversionary Bonus Benefit Â
ING Life	Creating Life Money Back Plan-Financial planning for children	Payment to child in case death of parent Future premiums waived in case of death of parent Guaranteed Survival Benefit Reversionary Bonus Benefit
Kotak Life	Kotak Child Advantage Plan	Save up for your children’s education or marriage through the Kotak Child Advantage Plan – a savings-cum-life-insurance plan. Not only can you accumulate money for your children, you also protect them from unfortunate financial consequences as a result of eventualities like an untimely death of the parent.
Kotak Life	Kotak Headstart Child Assure Â	Your regular investments made with this plan will provide you with a planned corpus upon the maturity of the plan, ensuring that the cost of education will never be a deterrent to fulfilling your children’s dreams.   Secure the well-being of your family through triple protection In the unfortunate event of a parent’s death, Kotak Life Insurance helps lessen the financial burden the child might face by providing the benefit of triple protection as follows: Your beneficiary is paid the life cover amount immediately to compensate for immediate loss of income. All future premiums of this insurance policy will be waived and fully paid for by Kotak Life Insurance. Your beneficiary will receive the fund value of the insurance policy.
Kotak Life	Kotak Child Edu Plan	Edu Booster Policy Anniversary After the Child’s Birthday % of Basic Sum Assured 15 years 15% 17 years 20% 19 years 30% 21 years 60% Total Payout 125%     Â
Kotak Life	Kotak Child Future Plan	Future Booster Age of Child % of Basic Sum Assured After Child’s 23rd Birthday 15% After Child’s 25th Birthday 110% Total Payout 125%
Max Life Insurance	Shikhsha Plus II	Immediate Family Support: 100% of applicable Sum Assured is paid immediately in the event of death ofLife Assured. This ensures that the child doesn’t have to depend on anybody else in your absence. University Education Pool: Upon policy maturity, the prevailing Fund Value is paid out to take care of higher education expenses of your child. It is calculated as (Accumulated Units x prevailing NAV). University Education Support: In the event of death of Life Assured, all future premiums are funded by us to boost the University Fund corpus and protect the child’s dreams of studying in an university of his/her choice. School Fee Support: 10% of Sum assured will be paid immediately along with Immediate Family support. From the next policy anniversary following the date of death, 10% of the base sum assured will be paid on each policy anniversary to provide for school expenses subject to a maximum of 100% of the base sum assured but not beyond the original term of policy. Talent Enhancement Withdrawal: To encourage and nurture your child’s special talents, you can withdraw a specified amount from your Fund Value to assist talent enhancement.
Max Life Insurance	Max Life College Plan	Key Features: Living and maturity benefit: The total payout is 120% of Sum Assured. There are guaranteed cash backs every year from child’s age 18 to 21. Child’s age Money back (% of Sum Assured) 18 40% 19 20% 20 20% 21 40% + (Accrued Reversionary Bonus + TerminalBonus, if any)
PNB Metlife	Met Bhavishya	PNB MetLife offers ‘Met Bhavishya’ – a guaranteed money back plan that pays out funds to help you meet the education and career milestones of your children. With this plan, the Life Insured is that of the parent. The plan also has inbuilt guaranteed additions to add value to the policy over its term. There are two options to choose from and fixed term benefits, periodic additions & terminal additions are payable based on the option that you select. The policy is suitable for parents with children between the ages 0-12 and parents in the age group of 20-50 years old.
PNB Metlife	Met Smart Child	Today, your role in your child’s life extends from being a provider to a nurturer, a mentor and a friend. You are a part of your child’s dreams and rising aspirations – the one responsible to ensure that your child gets what they aspire for. This decision requires you to plan and be prepared for tomorrow. Our specially designed plans take care of the ever changing requirements of your child, be it the rising education cost, financial planning for his extracurricular developments or marriage. We understand each of your roles and participate with you to realize your child’s every dream.
PNB Metlife	Met Junior Endowment	PNB MetLife offers ‘Met Junior’ – a flexible endowment plan that combines savings and security. Your children’s well-being is your highest priority. So we offer a plan which offers both timely and efficient “Return on Investment”. All with a guarantee. Met Junior is available in both participating (UIN:117N010V01) as well as non-participating versions(UIN:117N005V01).
PNB Metlife	Met Junior Money Back	PNB MetLife offers ‘Met Junior Money Back’ – a money back plan that combines savings and security. Your child’s well-being is your highest priority. So we offer you a money back plan which provides guaranteed periodic survival benefits at the end of 5, 10 & 15 years, along with guaranteed growth of your savings.  A plan which offers both timely and efficient “return on investment” with payouts at different milestones.
Reliance Life Insurance	Reliance Child Plan	As a parent, it is only natural to dream of a smooth and blissful life for your child. Which is exactly why you need to secure your child’s tomorrow, today. Reliance Child Plan helps you save systematically so that you can give your child the much-needed financial security in the future. Simply put, Reliance Child Plan gives you the freedom to enjoy every moment with your child today, without worrying about his/her tomorrow.   Key Features Risk protection for you during the term of the Policy Accumulated bonus at the end of the Policy Term 25% of Sum Assured payable every year as lump sum Benefit during the last four Policy Anniversaries All future premiums are waived in the event of unfortunate loss of life Guaranteed Fixed Benefits continue even after loss of life of the Policy holder More value for your money by way of High Sum Assured Rebate Choose to add the Benefit of two Riders – Critical Illness and Accidental Death Benefit and Total and Permanent Disablement Rider Policy participates in profit even after the loss of life of the life Assured
SBI Life Insurance	SBI Life – Scholar II	A traditional participating plan, SBI Life – Scholar II has guaranteed benefits which are payable at the regular intervals during the term of the policy. In an unfortunate event, your nominee would receive full sum assured along with vested bonus, plus regular guaranteed survival benefit. Key Features:  • Twin benefit of saving for your child’s education and securing a bright future despite the uncertainties of life. • Full risk cover throughout the policy term irrespective of payment of survival benefits installments. • Option to receive the installments in lump sum at the due date of first installment of Survival benefit. • Rebate for Female lives and High Sum Assured. • 15 days Free Look Period.
SBI Life Insurance	SBI Life – Smart Scholar	Key Features:  • Secure your child’s future by gaining from the financial markets and much more. • Dual protection for your family, in case you are not around – • Payment of base Sum Assured and • Inbuilt Premium Payor Waiver benefit to ensure continuance of your benefits. • Accident Benefit which includes Accidental Death benefit and Accidental Total and Permanent Disability (Accidental TPD) benefit, is an integral part of the plan. • Free allocation of units by way of regular Loyalty Additions, giving periodic boosts to your investments. • Enhanced investment opportunity through 9 varied fund options including P/E Managed Fund, Index Fund & Top 300 Fund. • Twin benefits of market linked return & insurance benefit. • Liquidity through partial withdrawal(s).
Tata AIA Life Insurance	Tata AIA Life Insurance United Ujjwal Bhawishya Supreme	In case of unfortunate demise of the parent (Life Assured), the death benefit is paid and policy benefits continue till maturity. The company will waive all future regular premiums in case of Death or Total Permanent Disability of the parent (Life Assured). On maturity, get Fund Value that provides for your child’s education needs You can withdraw* money from your fund for the important events in your child’s life Option of 7 Investment Funds to suit your investment risk profile You can avail of additional protection by attaching Riders to your basic policy Tax benefits u/s 80C and 10(10D) of the Income Tax Act, 1961
Tata AIA Life Insurance	Tata AIA Life Insurance Gyan	Safety Net (Inbuilt Waiver of Premium Benefit# ) In case of death of the insured, Sum Assured is paid, policy benefits continue, future premiums waived and paid by the company In case of total permanent disability too, future premiums paid by the company Security Net (Inbuilt Waiver of Premium Benefit# + Family Income Benefit) Safety Net benefits + additional Family Income Benefit that serves as readjustment income to supplement your family’s expenses #2 options available to choose from the Waiver of Premium benefit as per your needs Family Guard to guard your child’s education savings by investing 100% future premiums into your fund Family Advantage to provide supplementary income for other educational needs where 50% of the future premiums gets invested into your fund and 50% given as cash payouts Guaranteed Maturity Addition** to augment savings planned for your child’s dreams Avail additional risk protection through 3 Riders Customize your investment strategy as per your risk profile through Choice of 7 Fund options Choice of Portfolio Strategies: SMART (Systematic Money Allocation & Regular Transfer ) and AAA (Automatic Asset Allocation)
 Tata AIA Life Insurance	TATA AIA Life StarKid	From policy anniversaries following 18th birthday till 21st birthday, 20% of Sum Assured is paid to ensure expenses such as college fees etc. are provisioned On maturity, the balance 20% of Sum Assured is paid along with Simple Reversionary Bonus, Terminal Bonus# and Guaranteed Additions*,equal to five years premium In-built Payor benefit – protects your child’s future in case of an unfortunate event in your life In case of death/disability of the payor During the premium paying term: all future premiums will be waived off After premium paying term and before maturity: 50% of the Sum Assured is paid to the nominee In case of death of insured child, the nominee gets Sum Assured, plus Guaranteed Addition* equal to 5 years premium, plus Simple Reversionary Bonus accrued till death and Terminal Bonus# Tax Benefits u/s 80C and 10(10D) as per the Income Tax Act, 1961
 Tata AIA Life Insurance	TATA AIA Life Assure Career Builder	Key Features 20% of Sum Assured is paid on policy anniversary following 18th, 21st and 24th birthday of the child, which can be used to finance your child’s college, post-graduation and professional studies On maturity at age 27, get 40% of Sum Assured + Guaranteed Addition* of 10% of Basic Sum Assured + Compound Reversionary Bonus and Terminal Bonus# In case of death of insured, the nominee gets Basic Sum Assured, plus Guaranteed Addition* of 10% of Basic Sum Assured, plus Compound Reversionary Bonus accrued till death and Terminal Bonus# All the Periodic payments do not affect the full payment of the Sum Assured in case of the insured’s death Option of attaching Tata AIA Life Payor Benefit Rider (UIN: 110C002V01) Tax benefits u/s 80C and 10(10D) of the Income Tax Act, 1961
 Tata AIA Life Insurance	TATA AIA Life Assure Educare	Option to choose maturity at age 18 or 21 of the child On maturity, you get 100% Sum Assured, plus Guaranteed Addition* of 10% of Basic Sum Assured, plus Guaranteed Education Amount* of 20% of Basic Sum Assured, plus Compound Reversionary Bonus and Terminal Bonus# In case of unfortunate death of life insured, the nominee gets Sum Assured, plus Guaranteed Addition* of 10% of Basic Sum Assured, plus Compound Reversionary Bonus accrued till death and Terminal Bonus Option to attach Tata AIA Life Payor Benefit Rider (UIN:110C002V01) Tax benefits u/s 80C and 10(10D) of the Income Tax Act, 1961
 Tata AIA Life Insurance	TATA AIA Life Assure 21 Years Money Saver Plan	Guaranteed coupons of 10% of Sum Assured every 3 years from 3rd policy anniversary to meet your periodic short-term and mid-term goals On maturity, you get Final coupon of 40% of Sum Assured, plus Guaranteed Loyalty Addition* of 10% of Sum Assured, plus Compound Reversionary and Terminal Bonuses** On death of the insured, the nominee gets Sum Assured, plus Guaranteed Loyalty Addition* of 10% of Sum Assured, plus Compound Reversionary and Terminal Bonuses** Option to opt for Riders for ‘added protection’ at nominal extra cost Tax benefits u/s 80C and 10(10D) of the Income Tax Act, 1961 * In case the policy has been in force for 10 years; ** Depending on company performance

Even in this age and time, families and the support system is relevant to us Indians. I was speaking to a friend in the US, and he said that it’s only we Indians who move from being dependant to our parents to being independent and then again being dependant to our children, in one lifecycle.

Like our peculiar culture, Health Insurance in India has a peculiar home-grown plan, the Family Floater health insurance plan.

Family Floater as the name goes is an insurance policy covering an entire family in a single cover amount that “floats” amongst all the family members.

If a family of 4 is covered under a floater of Rs. 5 Lakhs. All or any member can use the Rs. 5 Lakhs annual cover till the cover completely exhausts.

Pros and Cons of Family Floater Health Insurance:

Pro: The primary reasons why floaters are popular and are preferred over individual coverage plans are that they are more cost effective. The family floater concept works under a simple belief that though all members are under risk of hospitalization, not all members would fall ill in a given year. This results in unused individual cover for that member.  At the same time, there could be one large hospitalization for one of the members. For instance, buying a Rs. 3 Lakh individual cover may not have effective long term use in a family of 4, as much as a Rs. 10 Lakh cover spread across all the 4 members.

Another advantage of a family floater is that if there is any kind of limits or cappings on hospital room charges, you enjoy better benefits on a floater cover, than in the individual plans. For instance a Rs 3 Lakh individual cover for a couple gives them a Rs. 3000 room in Oriental Individual Mediclaim for each of them. If they buy a Rs. 5 Lakh floater cover, their room eligibility moves up to Rs. 5000 per day per room. Same is the case with Max Bupa, Religare, Star Health and some other plans.

Con: The major negative of a Floater is the risk of one of the members swiping out the entire cover, leaving the others uncovered. (However, this issue has been addressed through restore/recharge plans discussed below)

How to calculate health insurance coverage for floater plans?

1. Calculate the cover you want individually, taking healthcare inflation into consideration. Read my blog post on Health Insurance planning for retirement
2. Make it a floater by adding additional sum insured for family members as follows:

Young – Less than 40 years: Calculate the minimum individual cover you want, and add an ad hoc 50% additional cover for your wife, plus 25% for each child.

Not Young – Above 40 years: Calculate the minimum individual cover you want, and add 75% for your spouse. Add 25% for each child below 25 years.

Old – Above 60 Years: Calculate the minimum individual cover you want, and add 100% for your spouse. Add 25% for each child below 25 years. Note, family Floaters become very tricky as you grow above 60 years, especially when there are ailments that you are suffering from. Do speak to a unbiased health insurance advisor before you take the call.

Types of Family Floaters:

Extended Family Covers:

Most of the family floater plans cover only Self, Spouse and Kids, but there are some special plans which cover more members. Oriental Happy Family Floater provides for covering Parents and Parents-in-Law, while Max Bupa’s Family First has options to cover 13 relationships, which include parents, in-laws, grandparents, daughter-in-law, grandchildren etc.

Individual/Floater Combination:

Max Bupa’s Family First plan provides a combination cover for all family members. Here each family member has an individual cover, and a separate floater is available for all members covered in the plan. This plan ensures that every member is insulated with an individual cover, at the same time in times of need have the option of dipping into the family pool too.

Restore/Recharge Options:

As mentioned earlier, floaters have a drawback, where one member or one event can completely wipe out the cover for the remaining members. Restore or Recharge feature provides an excellent feature, where if the health insurance cover exhausts during a particular year, and there is another treatment required in the same year which is unrelated to the earlier claims, the plan provides 100% additional coverage. Some plans like Apollo Optima Restore and Star Comprehensive provide this 100% restore only on complete exhaustion of the coverage in the particular year, whereas Religare Care offers an improved restore option, where the recharge of sum insured triggers for even sum insured falling short in a particular claim.

Some points to note, before you sign-up:

1. Some Family Floaters have a maximum renewal age, after which they convert into Individual mediclaim policies. Ensure you are aware of this clause before you sign-up.
2. Family Floater policies require all your family members to be mandatorily covered. In most policies, you cannot buy a policy for your wife, without covering yourself, unless you prove that you are already covered through another health insurance plan.
3. If any of your family members are above the age of 50 or have a higher risk of falling ill, it is advised that you go for a considerably higher cover, or go for a separate top-up or critical illness health insurance for such members.
4. As mentioned earlier, keeping healthcare inflation in mind, review and upgrade your coverage by a minimum Rs. 2 Lakhs every 2 years.

Mahavir Chopra is the Head – Personal Lines & eBusiness at Medimanage.com, a specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage’s free advisory services here. Read his blogs on health insurance here

LIC Flexi Plus is a new ULIP launched by LIC this year, and this product gives you life cover and invests a part of your money in either a debt or mixed fund. The life cover is ten times your annual premium.

It used to be that ULIPs were ridiculously expensive but with changes in the last couple of years, their costs have come down and you can’t outright dismiss them these days.

However, they still have costs at multiple levels, and because this relatively low cost regime has not been in existence for very long, it is not possible to see how ULIP funds have really performed compared to equity or debt mutual funds after these changes. We will look at the costs later on in this post, but first let’s take a look at the key features of LIC Flexi Plus.

Insurance

The life insurance cover is ten times your annual premium, and they deduct mortality charges for that from your premium in order to account for the life cover expense.

Investment

You can choose to invest  your money in either a debt fund or a mixed fund. Here is some quick information about them from the LIC Flexi Plus page.

 

Fund Type	Investment in Government / Government Guaranteed Securities / Corporate Debt	Short-term investments such as money market instruments	Investment in Listed Equity Shares	Details and objective of the fund for risk /return	SFIN No.
Debt Fund   Mixed Fund	Not less than 60% Not less than 45%	Not more than 40% Not more than 40%	Nil Not less than 15% & Not more than 25%	Low risk Steady Income –Lower to Medium risk	ULIF00118 0912LICFLX+DBT512 ULIF00218 0912LICFLX+MIX512

Plan Payment Term

This is quite an important thing to look at in my opinion as the term is either 10 years or 20 years, and you are locked in to the ULIP for these many years. You can of course discontinue the fund but there is penalty in doing that, and you don’t want to invest here if you can’t pay the premium for the entire term.

The flip-side of this is you can’t exit out of it if the underlying funds don’t perform well.

LIC Flexi Plus Costs

The costs associated with LIC Flex Plus are as follows.

Premium Allocation Charge

These are charges that get deducted from your premium before the money is used for anything else. In the case of Flexi Plus, the premium allocation charges are as follows:

Premium	Allocation Charge
1st  Year	7.50%
2nd  to 5th  Year	5.00%
Thereafter	3.00%

Mortality Charge

The second charge is the mortality charge which is the insurance cost of the ULIP. The mortality charges are dependent on age, and the table below gives a snapshot of how these are charged.

Age	25	35	45	50
Rs.	1.36	1.66	3.73	6.29

Policy Administration Charges

The next cost related to this is policy administration charges, and they are charged per month as follows:

 

Policy Year	Policy Admin Charge
1	 Rs. 50
2	 Rs. 41.20
3	Rs. 42.44
4	 Rs. 43.71
5	 Rs. 45.02
6 and over	Rs. 34.78 and increasing by 3% every year after that

 Fund Management Charges

Since there are funds that will manage your money, this ULIP has to bear fund management charges as well, and those are as follows.

• 0.50% p.a. of unit fund for Debt Fund
• 0.60% p.a. of unit fund for Mixed Fund

The above were all the charges that I could find related to this fund, and while they are not as crazy as they used to be – it’s not very cheap either.

Conclusion

As you can see the LIC Flexi Plus is not exactly cheap, and in a way comes with a long lock in period which you can break after 5 years without a penalty, but before that you will have to pay a penalty called the discontinuation charge which is charged as follows:

Where the policy is discontinued during the policy year	Discontinuance charges for the policies having annualized premium up to Rs. 25,000/-	Discontinuance charges for the policies having annualized premium above Rs. 25,000/-
1	Lower of 15% * (AP or FV) subject to a maximum of Rs. 2500/-	Lower of 6% * (AP or FV) subject to maximum of Rs. 6000/-
2	Lower of 7.5% * (AP or FV) subject to a maximum of Rs. 1750/-	Lower of 4% * (AP or FV) subject to maximum of Rs. 4000/-
3	Lower of 5% * (AP or FV) subject to a maximum of Rs. 1250/-	Lower of 3% * (AP or FV) subject to maximum of Rs. 3000/-
4	Lower of 3% * (AP or FV) subject to a maximum of Rs. 750/-	Lower of 2% * (AP or FV) subject to maximum of Rs. 2000/-
5 and onwards	NIL	NIL

Given the role LIC has played in some of the PSU IPOs in the past, and all these other concerns about the product, I can’t find a good reason to invest in this. I would much rather invest in a balanced fund (Read: Best Balanced Funds in India) or simply a debt fund instead of this and buy insurance separately.

LIC has launched two products in the new year, and in this post I’m going to review one of them, which is the New Jeevan Nidhi Plan.

This is an insurance product that gives you life cover and at maturity, you are then compulsorily required to either buy an annuity product from LIC or buy another single premium deferred pension product from LIC.

This is a key thing to remember – you are bound to invest the maturity proceeds in another LIC pension product, and to that extent I wonder if you wanted to do that, why not buy that product right now itself?

As far as I can see – LIC has two types of annuity products – immediate annuity and deferred annuity.

LIC Jeevan Akshay is an immediate annuity product, which means you pay, and start getting the annuity immediately, you can’t build your funds over a number of years, and then get pension. So this won’t be suitable for anyone who doesn’t need pension right now.

LIC New Jeevan Suraksha however is what’s called a Deferred Annuity Product, and that means you pay premiums over a number of years, and then get a pension after the maturity of the product.

The key difference however is that New Jeevan Nidhi gives you a life cover as well, which is not given in New Jeevan Suraksha. It is important to emphasize here that the life cover you get from this product will at best beef up your existing life insurance, and on its own is not going to amount to much if you do indeed meet your maker.

So, based on this, I think someone who is looking for the following things should investigate this product further:

1. Your retirement is still a number of years away
2. You want to buy a pension product from LIC when you retire.
3. You have life cover right now which you want to beef up with some other insurance products.

Please leave a comment if you can think of any other reasons, or if you feel there is any error in my reasoning.

New Jeevan Nidhi Plan Features

Life Cover

This product gives you life cover and in addition to the sum assured there is a Rs. 50 per 1,000 Guaranteed Addition for each completed year in the first five years, so if you die within the first five years then you will get the sum assured plus the guaranteed additions accrued to you.

After the first five years, the plan starts to participate in the profits of LIC, which is called the Reversionary Bonus, and you will get the basic sum assured plus guaranteed addition plus the reversionary bonus plus any other final bonus declared.

This money can be paid out in lumpsum or also in form of an annuity.

Vesting Benefit

Vesting is when the term of the policy is complete and you’re ready to get the benefits from the policy.  The New Jeevan Nidhi page on the benefits show that if they made a profit of 8% per year during the term of the policy for a 35 year old who took a policy for Rs. 1 lakh for 25 years, the total premiums paid will Rs. 1,03,025 and the total benefits will be Rs. 2,33,500. The annual premium comes out to Rs. 4,121.

Now the important thing to remember is that this is just an example, and your returns could be lower than this if LIC makes less money or higher than this if LIC makes more than this, but it’s best to be conservative at the time of investing and think that you are not likely to get higher than this amount. (Anyone reading the stories of LIC bailing out PSU IPOs could tell you that)

In fact in their illustration if they make a profit of 4%, there is no bonus at all, and you get just Rs. 1,25,000 in that case which shows you how much the returns can vary, and no one can really look that far out in the future and say what will happen during that time.

Eligibility Criteria and Other Features of New Jeevan Nidhi

You have to be at least 20 years old and no more than 60 years of age to take this policy. You need to at least get a minimum basic sum assured of Rs. 1 lakh, and the policy term can be from 5 to 35 years.

The premium can be paid monthly, quarterly, half yearly, yearly or you can even buy a single premium policy. There are rebates in the sum assured if your premium is over a certain amount and that also depends on your premium payment term.

 Conclusion

The current high interest rate environment gives you a lot of options (Read: 10 Safe Investments in India) where you can invest your money for long durations of time and get sure returns, and I tend to favor those instead of buying this with all the uncertainty over returns, and then the condition to invest only in a LIC annuity product after vesting.

This is the third guaranteed returns product that I’m looking at here in the past two weeks, and I’m quite embarrassed to admit that I can’t understand how this product works.

I’ve tried to explain what I’ve understood of it but I’m certainly open to comments from people who understand this better than me.

Premium Payment

Let’s start with the thing that is amply clear, viz. the premium payment term is 10 years regardless of how long you take the policy for.

Policy Term

So you pay premium for 10 years, but you can take the policy for 10, 15 or 20 years.

Survival Benefit

At the end of every five years (except for when the policy is maturing) you get 125% of the annual premium if you survive, which is called ‘Survival Benefits’ in insurance jargon.

Guaranteed Additions

There is this thing called guaranteed addition in this product and what they do is add 7% of the annual premium to the survival benefit at the end of the 5th year, 8% at the end of the 10th year, and 9% at the end of the 15th year.

However, if I’m reading this correctly, they don’t actually pay you these guaranteed additions at the end of the 5th, 10th or 15th year, rather these additions accrue to you, and you need to wait for maturity to get these benefits.

Maturity Benefit

At the maturity, they give you the sum assured plus your guaranteed additions minus the payments they have already made to you during the course of the policy.

I think if you took a 20 year old policy, this is how your payments will look like at various years. The product brochure says that for a 35 year old, the sample premium for getting Rs. 1,00,000 insured is Rs. 6,585 which is what I have taken.

 

Year	Premium	Survival Benefit	Guaranteed Addition	Maturity Benefit
1	Rs. 6,585
2	Rs. 6,585
3	Rs. 6,585
4	Rs. 6,585
5	Rs. 6,585	Rs. 7,408	Rs. 461 (7% of premium)
6	Rs. 6,585
7	Rs. 6,585
8	Rs. 6,585
9	Rs. 6,585
10	Rs. 6,585	Rs. 7,408	Rs. 527 (8% of premium)
11
12
13
14
15		Rs. 7,408	Rs. 592 (9% of premium)
16
17
18
19
20				Rs. 1,00,000 + (Rs. 461 + 527 + $s. 592) – (7,408×3)

 

I’m quite uncertain about the guaranteed addition in this product mainly because I’m unable to understand if they are going to give you 7% of the premium at that year or will they add that 7% for every year that you have held that policy? Similarly for 8% and 9%?

Usually, I shy away from writing about products where I have so many questions myself but I see that almost every website that has written about them has reproduced the press release with a few edits, and don’t do much to advance the discussion.

I hope this will post will at least arm you with the right set of questions to ask your agent if they approach you to sell this product.

A couple of weeks ago I wrote about SBI Life’s Smart Income Protect and a similar product was launched by Tata AIA recently in which you pay money for 12 or 15 years, and then it pays you a guaranteed sum for a set period.

This product is Tata AIA’s MahaLife Supreme Endowment Insurance Fund.   

The idea is that you pay a premium for either 12 or 15 years, and then based on that the MahaLife Supreme plan will pay you for 18 or 20 years. There is an insurance component as well where they will give you a life cover of ten times the premium.

The annual payment that they make to you is also calculated as a percentage of your sum assured and has a tiered structure.

First, let’s take a look at the two key options of this plan.

Plan Option	Option A	Option B
Max Entry Age	55 years	55 years
Policy Term	35 years	30 years
Premium Payment Term	15 years	12 years
Policy Pays You For	20 years	18 years
Minimum Premium	Rs. 15,000	Rs. 20,000

An example of how the money will be paid out is given in the brochure of the product, and for Option A they have the following details:

Option A

Age of the life insured	Annual Premium	Basic Sum Assured	Guaranteed Annual Income	Maturity Benefit
35 years	50,000	500,000	Rs. 52,000	734,500

So in this example, you pay Rs. 50,000 for 15 years at the end of which the company pays you Rs. 7,34,500 and then for the next 20 years pays you Rs. 52,000 per year.

I created a spreadsheet to calculate the IRR for this it came out to be 4.2%. However, the assumption that I have made is that you get the maturity benefit at the end of 35 years (policy term) and not 15 years, which is the premium payment term.

If you get the maturity benefit at the end of 15 years then the IRR is an excellent 7 plus percent, and with the added insurance and tax benefits I would say that this is a good product. So if someone can clarify when the maturity will  be paid that will be great.

The tax benefit is that the premium is eligible under Section 80C and you can take advantage of that if you haven’t already exhausted the 80C limit.

This plan is quite similar to the SBI Life Income Protect but there are two key differences.

First, the lump sum payment is made earlier in SBI Life Income Protect than in this plan, where that plan pays the lumpsum at the end of the premium payment term, this plan pays it at the time of maturity.

The second difference is that in this plan you know what you will get paid right from day one, whereas in that plan there is a variable component so there is that bit of uncertainty of how much will be added to the variable part based on the company’s profits.

Finally, the big similarity is that they are both guaranteed income products so the returns are relatively lower as you’d expect, and as I said in the earlier post, you can’t rely on these type of products for insurance and at best, they can only supplement whatever existing insurance you have.

SBI Life Insurance has come out with a new traditional participating plan called SBI Life – Smart Income Protect. Under this plan, you pay a certain premium for 5, 10 or 15 years, and after that the plan pays you a guaranteed amount every year for the next 15 years. You can also choose to get a lumpsum paid at maturity. There is an insurance component to the plan as well.

Returns of SBI Life Smart Income Protect

The returns of this plan are divided into two parts – the guaranteed part and the non guaranteed part.

Let’s look at the guaranteed returns from this plan first. You get 11% of the sum assured every year for 15 years after you have paid for 5, 10 or 15 years based on which plan you choose.

The Smart Income Protect plan page has a very helpful calculator that allows you to input your details and shows you how much your premium is expected to be. The payout is of course 11% of the sum assured so that part doesn’t change.

The non guaranteed part is the sum that you will get as lumpsum based on the discretion of the company, and based on how much profits they have themselves generated. The benefit illustration shows this at 6% or 10%, which is the standard number all insurers pick to show these type of calculations.

I put in some details to calculate premium and payout for a 29 year old who takes the policy without any riders and got the following details. (Click to enlarge)

 

I have created this spreadsheet for calculating the return on this policy and it shows that if you only consider the guaranteed returns then the IRR of this policy is 2.3%, if you consider the bonus they have shown at 6% then your IRR is 4.01% and if you consider the bonus at 10% then your IRR is 5.30%.

The one thing to note about this IRR calculation is that I have included the value of service tax in the cash outflow as well, and that may change to a higher or lower rate in the term of your policy.

Insurance Component of Smart Income Protect

The plan offers life insurance and then you have the option to choose up to four of the following riders:

1. SBI Life – Accidental Death benefit rider (UIN: 111B015V01)
2. SBI Life – Accidental Total & Permanent Disability benefit rider (UIN: 111B016V01)
3. SBI Life – Criti Care 13 Non Linked Rider (UIN: 111B025V01)
4. SBI Life – Preferred Term Rider (UIN 111B014V01)

You have to remember that any such plan will at best partly fulfill your insurance needs, and if you want to really insure yourself then the term plan is the best way to go where you can get a large amount insured with relatively lower premiums.

If you have a term plan, then these type of plans will help you supplement that insurance but on their own, this won’t fully take care of your insurance needs. Other than that, this looks like a fairly standard offer for these type of plans.

Tax Benefits Under Smart Income Protect

The most important tax benefit is under Section 80C, where the premium can qualify for tax deduction within the overall 80C limit. If you choose the Criti Care 13 Rider then that’s eligible for tax deduction under section 80(D).

In the last budget they put in a condition that if the premium exceeds 10% of the sum assured in any year then the premium won’t be eligible for 80C deduction.

The way this plays out in these type of policies is that if you choose a term of 15 years then the premium will be less than 10% of the sum assured but then if you chose a period of 5 years then it will certainly be higher than 10% of the sum assured. I think the 10 year range is somewhere in between but this is something you have to keep in mind if you want the tax benefit.

Look at what the premium is and if it’s greater than one tenth of the sum assured then you aren’t eligible for the 80C deduction.

Jitendra P.S.Solanki is a CFP and the Founder of JS Financial Advisors, based at Delhi/NCR. A management graduate from IIT Roorkee, he has 10 years of experience in financial services and started his Financial Planning Practice after becoming a CFP in 2010.Along with services on Financial Planning for masses, he has recently started services for families with special children’s in association with professionals from the specific field. Link to page with about special needs financial planning. He blogs at Your Pocket Money.

Plan for Disabled- Jeevan Adhaar & Jeevan Vishwas

In an episode of Satyamev Jayate, the plight of disabled in India was highlighted. It showed how these people are neglected in providing even the basic amenities. Although there are stories where one has fought to regain a common man life in India, the situation is highly critical. At present in India, there are approximately 4-8% of total population disabled as per a world bank report in 2007.

Worldwide life insurance companies also works for the benefit of special needs. Companies like Met Life USA have dedicated advisors who specialize in advising such families. However, India has to go very far. Nevertheless, LIC made a good start in 1996 by launching Jeevan Adhar –a life insurance plan for disabled dependents. Later the company came out with Jeevan Vishwas for the benefits of families not able to take advantage from Jeevan Aadhar. With an objective to provide regular income for meeting the disabled needs, these plans are the only options in our country today.

Here is a brief review of these two products:

Features of the Policies

Type	Jeevan Adhar-Whole life	Jeevan Vishwas- Endowment Assurance
Who can take	Any person between 22-65 years of age	Any person between 20-65 years of age
SA	Min-50000, Max- No limit	Min-50000, Max-No limit
Premium paying term	10,15,20,25,30,35 or till the earlier death. Single premium option is also available	The term of the policy or single premium.
Guaranteed Additions	Rs 100 per thousand p.a. up to age 65 of life assured or death if earlier	Rs 60 per thousand p.a. for term of policy or death if earlier
Variable Additions	Terminal Additions are applicable if minimum 10 years premium have been paid. The rates depend on the future experience of the company	On the life assured surviving the date of maturity, or on earlierdeath after five years, Loyalty addition, if any may be paid at such rates and on such terms as may be declared by the Corporation
Benefits	On death of life assured 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lumpsum and rest 80% is utilized to pay annuity for 15 years and life thereafter, based  on the age of handicapped dependent	On maturity of policy 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lump-sum and rest 80% is utilized to pay annuity as per the chosen options, based  on the age of handicapped dependent
Supplementary/Extra Benefits	These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits	These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits
Surrender Value	No SV	Guaranteed or Special SV as applicable in endowment plans
To whom benefits Is payable	The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent	The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent
Income tax benefit	Under section 80DD of IT act	Under section 80C of IT act
Is disability certificate required	Yes-from govt. hospital	Only  parents declaration is required
Special Provisions	In the event of the handicapped dependent predeceasing the life assured the contract ceases and the life assured will have the option of keeping the policy for a reduced paid up or receive refund of premiums paid	In the event of the handicapped dependent predeceasing the life assured the life assured will have the option to surrender the policy or keep it in force by regularly paying the premium and will have the option f taking the benefits in lump-sum or bifurcating it in 20-80 ratio as enumerated above

 

Why Two Policies?

Initially LIC launched Jeevan Adhar policy but the rules were very stringent. The criteria for disability was under rule 11A of income tax rules, which eventually didn’t catered to the needs of handicapped dependent whose degree of handicap was lower. To bridge this gap the company introduced Jeevan Vishwas where the guardian can provide benefits to their handicapped dependent whose degree of disability does not meet the criteria in Jeevan Adhar.

The Difference

There are many benefits introduced in Jeevan Vishwas in comparison to Jeevan Adhar. Firstly, it has a maturity value which assures the payment within a specified period. Secondly, annuity in Jeevan Vishwas has many options now. One can select on the basis of his/her dependent requirement. However, the guaranteed bonus in Jeevan Vishwas is much lower than Jeevan Adhar policy.

Returns

Jeevan Adhar has very high returns when you compare with any traditional plans. However, the age restriction of 65 years to receive guaranteed bonus lowers the return of the policy as you live beyond this term. In Jeevan Vishwas the bonus rates are higher than other traditional plans but lower than Jeevan Adhar.

Here is a snapshot of returns these two policies generate at different stages of life. (Based on Illustration as per LIC website)

Jeevan Aadhar

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4095 for Rs 1 lakh SA and paid for 15 years.

Age at Death	Total Premium Paid (Rs)	Guaranteed Additions (Rs)	Variable Additions (Rs)	IRR
45	40950	190000	0	27%
50	61425	240000	0	15.76%
55	61425	291000	1000	11.74%
65	61425	390000	33000	8.46%
75	61425	400000	140000	6.68%

 

Jeevan Vishwas

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4008 for Rs 1 lakh SA and paid for the term of policy or earlier death.

Ageat Death/Maturity	Total Premium Paid (Rs)	Guaranteed Additions (Rs)	Variable Additions (Rs)	IRR
45	40080	154000	0	23.64%
50	60120	184000	1000	13.12%
55	80160	214000	10000	9.02%
65	120240	280000	31000	5.58%

 

Disadvantages

There are two major drawbacks in these policies:

1. Bonus till 65: Jeevan Adhar is a whole life policy and so there is no maturity. The proceeds go to the beneficiary only after the death of the policyholder. There is always a high probability that you may outlive the term of the bonus declaration.
2. Annuity:  The benefit in both the policy is partly in lump-sum and majorly as annuity. In India the annuity rates has been very low and not inflation indexed. A fixed annuity is a deterrent to the beneficiary since the expenses grows every year. Thus, although annuity is paid for the life time the money received may fall short in the future.

Should Parents of Disabled Dependent Consider

The risk of dying too early is always there but not certain. However, families with disabled dependents look products which can give fixed income to meet the regular needs in their absence. The product suits in the requirement but cannot be entirely relied upon. Combined with a term insurance it can work for the objective since it guarantees a fixed income to the beneficiary.

For this week’s senior citizen’s post I chose health insurance for senior citizens, and I got the idea for the post from this comment on the Suggest a Topic page.

R.Ganesan August 4, 2012 at 3:45 pm [edit]

Dear Manshu,
I am reaching Sixty and my wife’s age is little less than this. We are finding it very difficult to get health insurance coverage. I approached two companies one in private and the other in public sector. Both have declined my requests. What exactly is the reason for this indifference to the elderly population. Can you suggest me a way out.

I just happened to chance upon a post from Manikaran Singal shortly after I read the comment and he has done a good job of listing down the options for health insurance for parents.

I then browsed through reviews of the options listed in his post, and got a general impression (perhaps wrong?) that nationalized companies are easier to deal with when the time actually comes to get the claim.

United India Insurance is a nationalized insurance company that has a health plan for senior citizens so I decided to browse through the documentation available for this plan.

Here are some key things I found about this senior citizen insurance plan, and I don’t know if these are common terms for other senior citizen plans or not since this is the first one I’ve ever looked at so please leave comments to share your experience.

• You have to be a minimum of 61 years of age, and a maximum of 80 years of age to get this policy.
• The sum insured can be between Rs. 1 lakh and Rs. 3 lakhs.
• For a sum insured of Rs. 3 lakhs, the premium is Rs. 9,900 for 61 – 65 years, 12,250 for 66 – 70 years, Rs. 14,050 for 71 – 75 years and Rs. 17,300 for 76 – 80 years.
• The room, boarding and nursing expense is limited to less than 1% of sum insured per day.
• ICU expenses are limited to less than 2% of sum insured per day.
• Pre and post hospitalization expenses are subject to a limit of 10% of the sum insured.
• Pre – existing conditions will not be covered till 48 months of when you get the policy.

There are two documents that detail out the list of exclusions and also how much will be paid in a lot of scenarios and I think they serve as a very good guideline of not only what you get in this plan, but the questions you should ask if you are looking at another plan.

Here are the three documents related to this plan:

• Senior Citizen Health Insurance Policy
• Senior Citizen Rate Chart
• Senior Citizen Prospectus

Other than this, I found one more article that has a list of some senior health plans in addition to what Mani has listed, and MediManage has an article on health insurance of seniors above 70 years of age that they did earlier this year which I found useful too.

Being a part of health insurance services company I have always noticed that there are large number of people, who at first show keen interest in buying Health Insurance services, but after they are recommended some of the best suitable health insurance policies, they suddenly just disappear. Intrigued by this, we did a detailed internal analysis and a customer survey, and we realized that most people, including some of the brightest professionals, delay their decision/action to buy, primarily due to 3 reasons:

a) The product has no instant gratification or compulsion to buy.

b) Expectation of a perfect match to their requirements (and)

c) Due to over exposure to multiple product features, advertisements, and promotions.

 

Our Internal Customer survey done with Medimanage.com customers, revealed that point c) is an important external influence on the decision making process of the health insurance buyer. To-be consumers are confused with multiple products, from various brands, and hence delay their decision on purchase of a health cover, till they can find a recommendation or reference they can depend and rely on. We cannot blame the general customer, as we are aware, and you would agree, that buying Health Insurance is far more long term than buying the latest Widescreen LED Television, and far more complicated than buying a standard term insurance.

 

The over exposure of products has been aptly termed ‘The paradox of choice’ by Barry Schwartz, a social scientist, in his book with the same name. He says, “Unlimited choice results in genuine suffering. The more choices we have to make, the less certainty we seem to have. When we have 285 kinds of cookies to choose from in the grocery store, how can we be sure we’ve picked the right one? And that’s just cookies. When faced with seemingly unlimited choices that have significant consequences like which stocks to invest in, which career to pursue or even which person to marry, many people become ‘maximizers’: people who relentlessly search for the best option. These people spend a great deal of time and energy on choices that will never satisfy them.”

 

Personally, as a buyer, it’s very clear and almost a fact for me, that more product offerings in the market, topped with more promotions, more advertising, are only complicating things, and delaying decisions specially and importantly, when buying products or services, I “need”, but don’t have a strong “want”.

 

So, coming to the million-dollar question, how does one sift through a minimum of 50 health insurance policies and variants and zero in on the best health insurance suitable for his/her family? My answer is quite simple; you need to first, right in the beginning, understand that buying a long-term product like Health Insurance is like getting married. The younger you are, you will have more choice, but there never will be a perfect match for your requirements. You cannot keep waiting for the best product, because there isn’t one.

What you need to look for is the most suitable product, rather than a perfect match, here’s how.

1.    Do a thorough need analysis:

To find a product, which is most suitable to your needs, you need to understand your needs first.

• The family members you want to cover. The more members, the higher the age, and the higher the coverage you need.
• The city where you live, and where you are likely to take hospitalization treatment. If these cities are in the northern or western metros (like Delhi, NCR, Mumbai, Ahmedabad etc.) you need more coverage.
• Your choice of type of hospitals you want. Would you prefer treatment in a neighbouring nursing home, which has a personal touch or would you always prefer a large corporate hospital for the smallest of treatments. If you are expected to use mega hospitals, for all kinds of smallest treatments, you would need a larger sum insured, for sure.
• Similarly, the choice of room you want, would impact the kind of policy suitable to you. If you are used to private, deluxe AC rooms. The best test for this is, if you had no insurance today, and if any of your family has unfortunately been hospitalized, would you take a private room, or settle for a shared room? This type of room is your real choice, without financing from an insurance policy.
• Your long-term plans would affect the kind of product, and coverage you would need. For instance, are you/any member in the family planning to migrate abroad etc.?
• What is the amount of expense on Healthcare you can bear on your own savings?

2.    Recruit a Good Advisor

There are too many general “tips”, “guides”, and other noise about Health Insurance today. If you are looking for unbiased advise to choose the best Health Insurance policy suitable to you, you need to take pain in finding a good health insurance advisor (preferably a broker, who can provide wide spectrum of product options), one who can provide you genuine advise, service the policy, and also has experience in managing health insurance claims. The claims management part is very crucial, as Health Insurance claims can have a lot of back and forth, and get tedious at times, and hence requires professional help. A good advisor plays the role of a linchpin in a complex service and product like Health Insurance, across the life of the policy.

(Full Disclosure: The writer of this blog post works for a Health Insurance Advisory Broker Firm)

 

3.    The younger you are, the more choices you have.

Like marriage, the younger you are, you have larger spectrum of choice, and hence you can get choosy about the most suitable product. The older you get your choices narrow. Once an ailment kicks into the health of any of your family members, the choice can become minimal to one or two products. If you were diligent enough, choosing and buying Health Insurance, when you don’t need it, would provide the widest health cover possible.

4.    There is no Perfect Match

As mentioned earlier, there is no perfect match, and hence, waiting for ever to find the perfect fit to your requirement, may prove hugely futile. After detailed understanding of your needs, and taking sound advise, you need to settle with a good but imperfect product. There is no point waiting for “that important feature” in the product. What’s more, if such product does appear in due course, you can always port the same, with proper planning in place.

5.    The Real thing – look beyond the looks

I am a great movie buff, and after some experience, I observed that today, with strong marketing geniuses around, all films look good, till one week after the release. That’s when the realities and reviews sink :). Health Insurance is no different. Packing old wine in new bottle is an art, many have mastered. Its important to do a core need analysis, and purchase a product/service, that meets these core needs. Anything over and above this is either packaging, or, bonus (if it comes at a similar price.)

6.    Look Long term

Look really long term. Understand that Healthcare inflation in India is rocketing through the roof, and hospital bills are becoming more and more unmanageable without financing solutions like Health Insurance. You need to realize that if you are 30 today, you will most probably need health insurance the most maybe in 15-20 years. You need to factor these inflated costs and then look at an optimum coverage.  Do not settle for a coverage or sum insured, based on current costs of hospitalization.

7.    Understand the *

I know it’s a tad boring to read the fine print, called the policy wordings document. But when you are buying a product, which is a solution, for 20+ years, you need to take that pain. If you cannot understand the legal and medical language, you can always ask a health insurance expert advisor to take you through every part of the policy. The wordings will give you a flavour of how the product actually works, and what problem it solves, and does not solve.

8.    Meet the Parents

It’s important to meet the parents, and understand the background. Knowing the basic reputation of the group and joint venture partner behind the product is critical for a long-term financial product. It reflects how the company will react, specially, in downturns in the industry or its own company.

 

Unarguably, Health Insurance is a critical piece in your financial jigsaw puzzle. Taking the above-suggested points into consideration, apply your own judgement and common sense, take a personal deadline, and take the proverbial “leap” of faith.  Believe me, you will not go wrong, till you act quickly, and take a call.

 

In case you have any questions, or feedback or comments, do share the same in the comments below. I am also available at the email address: [email protected]