Reliance
Life has recently launched a new education plan for child’s education. The plan
is non linked non participating with assured pay outs after child completes age
of 18 years. Plan provided lumpsum pay out, waiver of future premium and full
pay out at maturity in case of death of parent (proposer). Plan also provides for
option to take part death benefit as income for upto 10 years. Age of entry for
child is till 18 years and age of entry of parent is from 20 years to 50 years.
Childs maximum age at maturity is restricted to 30 years. The term available in
the plan is 9 years to 20 years. The plan has limited premium payment term of 5
years, 7 years and 10 years. The plan has multiple payout options depending on
the need of the child for graduation, post graduation or to start a business.
You can opt for one lump sum amount or in two installments or four installments
or five installments at maturity.
The points to know
before investing in the plan. The
service tax of 3.50% in first year and 1.75 second year onwards is payable over
and above basic premium. The return is very poor as per sample benefit illustrated
below. The same can be understood with the help of following example. If a 30
year healthy male takes this plan for his less than 1 year son and chooses 18
year term with premium paying term of 7 years. His annual base premium will be
Rs. 35,000 and he will get sum assured of Rs. 2,49,270. His annual premium will be payable for 7 years
only. His annual premium will increase by applicable service tax. He will get
guaranteed amount after child attains age of 18 years as given in illustration.
The IRR is of the plan is only 3.96% which is calculated with the help of excel
and using IRR formula. The detail is as under.
PPF, NSC are better option in debt category compared to this plan. I really wonder why IRDA is clearing this type of plans which will erode people’s savings. My strong advise is please stay away from this plan. The plan is good for the company better for the agents and worst for the investors.
Years
|
Amount
|
1
|
(36,225)
|
2
|
(35,613)
|
3
|
(35,613)
|
4
|
(35,613)
|
5
|
(35,613)
|
6
|
(35,613)
|
7
|
(35,613)
|
8
|
-
|
9
|
-
|
10
|
-
|
11
|
-
|
12
|
-
|
13
|
-
|
14
|
-
|
15
|
-
|
16
|
-
|
17
|
-
|
18
|
-
|
19
|
139,591
|
20
|
49,854
|
21
|
49,854
|
22
|
49,854
|
23
|
199,462
|
IRR
|
3.96%
|
God please save us from life insurance products.
