Can You Design Your Own Customised Child Plan


Presentation Description

Bajaj Allianz Life Insurance Child plans and policies offer security against constraints like inflation and rising educational expenses.


Presentation Transcript

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Child Plans

Can You Design Your Own Customised Child Plan investments? :

Can You Design Your Own Customised Child Plan investments?

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It is good to see you reading this and probably you may also be wondering if it is a good idea to have a Child Plan based investment product from an Insurance Company to secure your child’s future and to free you from one of your biggest liabilities. If you have already made up your mind to go with such category of investment product, probably after going through this article you may want to have a second thought.

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What actually attracts people towards Child Plans from Insurance Companies The biggest attractive part of a child plan is the Power of Marketing – Yes I really mean it. In the current tough times faced by the Insurance Companies, they are using the biggest emotional arrow to sell their investment solutions – “Love & responsibility of a  Parent  towards their Child”. Who wouldn’t want to leave their children with a handsome pot of money to serve their needs in future ! Use these couple of sentences and I am sure that your listener will give you more focus than he earlier wanted to. There are other goodies too which are attached with the Child Plan which tries to attrack gullible investors like honey bees.

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What are you paying to get the benefit out of Child Plan ? To help you understand how this product works, we are assuming that : Your age is 30 years; You are after a sum assured benefit of Rs. 50 lacs to be paid on maturity; Maturity of the product is after 20 years You would have to pay an annual premium of approximately Rs. 206,750 for next 20 years. The total amount which you shall pay over 20 years shall be Rs. 41,35,000 (approx 41.3 lacs ). In return you would get the following : 1 - On death of the investor at any time during the policy tenure, Rs. 50 lacs will be paid to the nominee plus a regular income equal to 10% of Sum Assured, i.e. Rs. 5,00,000 shall be paid every year till the end of the policy tenure.

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2 - If the investor lives up to the maturity of the policy, he shall get the maturity amount i.e. Rs. 50 lacs along with loyalty additions. This addition is not fixed at the time of entering into the policy “ experience of the policy “. 3 - Loyalty Addition(LA) : If we consider the illustration provided by Insurer, based upon different scenarios, the LA can be any where from zero to more than the sum assured. Hence the actual amount can be either 0 to 50 lacs or more.

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What Alternatives Do I have   ? This is THE QUESTION which I would want all the potential investors of any child plan to think before locking themselves into a multi year investment product offering very limited flexibility to give the investments a room to grow. An alternative of a child plan can easily be designed and executed with very limited hassle. Every drop of hassle in this procedure is really worth it ! In order to understand how to design your customised child plan from the available instruments in the financial markets, I would like to break the benefits offered by a child plan into its actual components and then look into the ways to secure such benefits. In the below mentioned steps, I am assuming the same requirements as mentioned in the Child Plan assumptions above (Age 30 years, 20 years duration and 50 lacs requirement ). Invest In – Child Term Plans, Child Life Insurance Plans, Child ULIP Plans, etc.

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Total Cost of your Customised Child Investment Plan It is now a perfect moment to do a quick comparison between the Child Plan as per the Insurance Companies and your Customised Child plan to identify the differences and choose the best option.

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