We dream of a secure future for our children. But what happens to this dream, in case something untoward was to happen to the parent? To provide for the child’s financial needs at such times, insurance companies offer various insurance products. The latest offering in this category of children’s plans is LICs Jeevan Ankur Child Plan. Here is a quick snapshot of what the plan has in store.
Brief on the Plan
LICs Jeevan Ankur Child Plan is a conventional endowment plan. Its prime objective is to financially secure the child’s future even in the absence of the parent. It offers a risk cover on the life of the parent, and the child (or the nominee) receives a sum assured in case of the parent’s death.
The Basic Features
Entry age of parent: 18 years to 50 years.
Maximum maturity age of life assured: 75 years.
Entry age of child: New born to 17 years of age.
Policy Term: Maximum of 25 years of age of child.
Minimum policy term is higher of either 18 years of child’s age or 8 years of policy.
Premiums could be paid as a single premium or regularly at yearly, half-yearly, quarterly or monthly basis.
The policy would lapse if premiums are not paid within the grace period. Revival is possible from the date of first unpaid premium and before the date of maturity by paying all the arrears of premium together with interest within a period of five years.
For single premium, the Guaranteed Surrender value on the plan will be available only after the policy has completed one year. It is equal to 90% of the premium paid excluding what is paid for riders. In the case of regular premium policies, the Guaranteed Surrender value 30% of the premiums paid(excluding the first year premium and the premium for riders), and would be available, after completion of three policy years.
Benefits of the Plan
In case of death of parent (i.e. the life insured), an immediate Sum Assured is paid to the child. Apart from this, 10% of the Sum Assured would be paid out on every policy anniversary, till the end of the policy term.
On maturity of the policy, a benefit is paid out irrespective of whether the life insured is alive or not. This maturity benefit would comprise of the basic sum assured plus any loyalty additions.
Rebate on Sum Assured:
For Sum Assured equal and above Rs 200,000, there will be a rebate on premium available.
As per section 80C, the premiums paid are allowed as a deduction, up to a maximum amount of Rs. 1, 00,000. The benefit received on maturity is exempt from tax as per Section 10(10) D.
The plan offers two additional riders that could be opted for, the Accidental Benefit Rider that is available only for regular premium policies, and the Critical illness rider.
In case of death of child:
In such a case, the life assured has the option to nominate another person or child and the policy will continue under the same terms.
Reviewing Jeevan Ankur
So what makes it attractive?
Jeevan Ankur has its share of pros that make it worth investing in. The income benefit after the parent’s death ensures the child’s recurring financial needs are met. Loyalty additions are an added advantage on maturity. Plus the availability of riders and the large rebate on the sum assured make the plan an attractive option to secure the child’s future.
The loyalty addition is not guaranteed and depends on when the insurer makes a profit. Apart from this, the policy does not have the facility of a loan on it. So those seeking a refinance cannot do so. A policy surrendered in the first year will fetch you no surrender value. Even after this stipulated period, the amount received as Guaranteed Surrender Value is lesser than the amount of premium actually paid during the period.
Jeevan Ankur is a traditional endowment plan. Endowment plans offer a combination of both protection as well as savings. Thus the premiums and the mortality charges on such plans are much higher than traditional plans. Even if you hold the policy till the end of policy term, the yield on the plan works out to be pretty low. The plan is thus not for those investors who are looking purely at protection.