Aegon Religare’s ‘Rising Star Plan’ to tap child ULIPs market

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.

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