This new policy is not quite different from the old schemes we saw before 1st September
ULIPs for children have long played on the anxiety of parents to ensure financial security for their kids in their absence. Now, Aegon Religare Life Insurance has launched 'Rising Star Plan'.
Like most other child plans, it offers typical features including premium waiver and income benefit. In the premium-waiver rider, the company continues to pay the premium in the event of the parent's demise. Income benefit pays an amount equal to the annualised premium to the beneficiary, at the start of every policy year following the date of death, till the end of the policy term.
But this comes at a cost and increases the mortality charges in the plan which is ultimately paid by the policyholder. The brochure does not specify the mortality charges for different ages, though it is a very important aspect especially for child ULIPs. Be sure to understand its impact, as the higher mortality charges will reduce the funds that get into investments.
Child ULIPs are not necessarily the best way to secure your child's future. The charges in the plan are in line with other new ULIPs. The new ULIP charges are equal or more than that of the old ULIPs over a period and hence there is no real reduction of charges. Which is why a term insurance cover coupled with SIPs in a diversified equity mutual fund is likely to do the job better.
One of the investment options is called 'Invest Protect', in which premiums are invested heavily in equities in the initial years of the policy and partially switched to debt funds systematically in the last three years of the policy. There is no true 'investment protection' possible with this strategy.
Premium allocation charge: This is a percentage of the premium appropriated towards charges from the premium received. Year 1: 4.40%, Year 2-5: 3%, Year 6-10: 2% Year 11 onwards: 1%. The top-up premium allocation charge is 3%.
Policy administration charge: At the start of every policy month, from the first policy year, Rs60 will be deducted monthly through cancellation of units. This charge escalates at 3% per annum at the start of every policy year, from the second policy year. This formula remains fixed throughout the policy term.
Minimum annual premium: Rs20,000 per annum in annual mode, Rs30,000 per annum for other modes.
Policy term: 25 years minus the age of the child at entry.
Premium pay term: Equal to the policy term.
Minimum sum assured: (for age less than 45 years) is higher of 10 times of regular annualised premium or (0.5 x policy term x annualised premium); (for age greater than or equal to 45 years) higher of seven times of regular annualised premium or (0.25 x policy term x annualised premium).
Maximum sum assured: 30 times regular annualised premium.
Entry Age: Parent (life assured), minimum - 18 years, maximum - 60 years.
Child (nominee), minimum one day, maximum - 15 years.
Maturity age: (maximum) 75 years.
Premium payment frequency: Yearly, half-yearly, monthly.
Mumbai: The Reserve Bank of India (RBI) today relaxed debt restructuring norms for the microfinance sector to enable banks to provide liquidity support to the crisis-ridden microfinance institutions (MFIs), reports PTI.
Attributing the current problems of the MFI sector to external factors the RBI stated that the temporary measures being announced by the central bank would help in providing liquidity support to the MFIs.
The bank said it would facilitate operations till Malegam Committee submitted its report and measures are taken to bring about long term and structural changes in the functioning of MFIs.
Under the new norms, which will remain effective till 31 March 2011, banks would be allowed to treat the advances to MFIs as good assets even if such loans are not fully secured. The decision would allow banks to restructure loans provided to the MFIs without much difficulty.
The decision follows a meeting called by the RBI last month to assess the problem of the microfinance sector in Andhra Pradesh and other states and also to work out interim measures to deal with the situation.
In order to prevent the problem from fanning out to states other than Andhra, the Indian Banks' Association (IBA) urged the RBI to relax the debt restructuring guidelines for the MFI sector.
The problems in the microfinance sector erupted after the Andhra government imposed restrictions on activities of the MFIs following spate of suicide by harried borrowers.
Making a case for some interim measures to deal with the situation, the bankers had told the RBI that "collections by MFIs in Andhra Pradesh had deteriorated seriously and there were incipient signs of contagion spreading to other states."
Last October, the RBI constituted a high level committee under YH Malegam to study and suggest measures to mitigate the concerns on the functioning of microfinance institutions.
Kumar Mangalam Birla, Shashi Rajagopalan and UR Rao (all are on the central board of RBI) and deputy governor KC Chakrabarty are the members of the panel.
The committee was given the mandate to study the issues and concerns in micro finance sector, including ways and means of making interest rates charged by them reasonable. The panel is expected to submit its report by the end of this month.
The RBI regulates only those MFIs which are registered with it as non-banking finance companies (NBFCs). However, it does not prescribe lending rates for these institutions.
Although the registered companies cover over 80% of the microfinance business, in terms of number of companies they constitute a small percentage of the total number of MFIs in the country.
The United Progressive Alliance (UPA) government at the Centre-led by prime minister Manmohan Singh announced changes in the portfolio of some key ministers in the Cabinet.
As pert of the reshuffle, overseas Indian affairs minister Vayalar Ravi has been allotted additional charge of civil aviation. He replaces Praful Patel who gets heavy industries and public enterprises.
Beni Prasad Verma will be minister of state (MoS) with independent charge in the steel ministry while KV Thomas has retained consumer affairs, food and public distribution in the elevated position of MoS independent charge.
Union external affairs, environment, defence, home and finance ministries have not been touched.
Subodh Kant Sahay has been shifted from food processing industries to tourism. Pawan Kumar Bansal retains parliamentary affairs but has lost water resources, which has been allotted to Salman Khurshid.
Murli Deora, former oil minister has been put in charge of corporate affairs ministry
Kamal Nath has been given the post of urban development ministry
MS Gill has been shifted from sports and youth affairs to statistics and programme implementation
CP Joshi has been given road transport and highways. E Ahamed has been appointed minister of state for external affairs while Sriprakash Jaiswal given the coal ministry.
Vilasrao Deshmukh has been given gets rural development. Jaipal Reddy has been allotted petroleum and natural gas while Ashwini Kumar has been appointed minister of state for science and technology.
KC Venugopal has been assigned the MoS for power while Ajay Maken has been allotted MoS for youth affairs and sports. Gurudas Kamat gets MoS for home ministry
Jitin Prasada gets MoS for road transport and highways and Pratik Patel has been assigned as MoS for coal ministry.