Name of the product: Max New York Life Insurance Co Ltd’s Shiksha Plus II
What you get
It’s a type II Ulip that promises both the sum assured as well as the fund value to the nominee on the policyholder’s death. A typical child Ulip offers the sum assured immediately on death and the fund value on maturity. This policy pays the sum assured twice. Once as a lump sum and for the second time, 10% of the sum assured every year. The policy also waives all future premiums, pays premiums on behalf of the policyholder and pays the fund value on maturity.
Apart from the choice of six funds ranging from debt to equity, you also get to choose between two investment strategies. The first — dynamic fund allocation — moves your investments from equity to debt portfolio as you near maturity in order to protect your capital. The second — systematic transfer plan — systematically transfers your premiums from debt to equity so that you get the benefit of rupee-cost averaging.
What are the costs
The premium allocation charge is applicable throughout the policy term and is 4% in case the premium is less than R1 lakh and 2% in case the premium is above R1 lakh. The policy administration charge is R600 per annum and will increase by 5% every year. The fund management charge ranges between 0.90% and 1.25% per annum. The mortality charge depends on the age, term and sum assured.
The benefits are very generous given that the sum assured is paid twice. If you have appropriate cover and other assets, you may not need twice the sum assured.