Unit Linked Child Plan
You can consider Canara HSBC Oriental Bank of Commerce Life's Unit Linked Child Plan if your goal is long term
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Similar Options
- Aviva Little Master
- Birla Sun Life Children Dream Plan
- HDFC Unit Linked Young Star II
- LIC Child Fortune Plus
- SBI Unit Plus Child Plan
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Canara HSBC Oriental Bank of Commerce Life's Unit Linked Child Plan is high on flexibility and has a good performance. Moreover, its stiff front load evens out over the long term. You can consider saving for your child through this plan if your goal is long term.
Features. This Ulip has five fund options to choose from. Equity fund is a pure equity fund. While growth fund and balanced fund have a large equity exposure, its debt fund and liquid fund are purely debt funds.
Special features. The policy offers loyalty additions in the shape of allocation of units twice during the course of the plan. One when the beneficiary attains 18 years of age and second when he turns 25 years.
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Features
| Type Of Policy | Unit-Linked Children's Plan |
| | |
| Insured | Premium-paying parent (18-60 years old) |
| Benefit | Sum assured on death of parent, fund value on maturity of policy, paid to the nominee child; If parent survives till maturity, only fund value |
| Waiver Of Premium | Inbuilt; All premiums till maturity are waived if the premium-paying parent dies before end of premium paying term |
| Maximum Sum Assured | 15x annualised premium if premiumpaying parent is 18-50 years old 5x annualised premium if premiumpaying parent is 51-60 years old |
| Term Of Policy | Ends when child becomes 25 years old |
| Minimum Premium (Regular Premium Option Only) | Rs 12,000 per year |
| Premiums Allocation Charges | Year 1: 24 per cent, Years 2-8: 5 per cent; |
| Policy Administration Charges | Rs 70 p.m., increasing at 5 per cent p.a. |
| Switching Charges | First six in a year free, Rs 250 per switch thereafter |
| Fund Management Charges | See Fund Options Table |
| Partial Withdrawal Charges | First four every year free; Rs 250 per withdrawal thereafter |
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Loyalty addition is a 0.2 per cent of the fund value multiplied by the number of years the policy has been in force. It is paid only if all the premiums have been paid.
Maturity Switchover. The plan also provides a maturity switch option, which is relevant mostly for those invested in the equity option. Under this, five years before the plan matures, the entire corpus is gradually moved into the debt fund option to keep the returns intact.
Indexation. While buying the policy, you can opt for the indexation option that increases your premium and sum assured by 5 per cent every year.
Exit and stoppers. The plan provides for partial withdrawal after five policy years provided all premiums are paid up. The minimum amount that one can withdraw is
Rs 10,000 and the maximum is such that the surrender value after withdrawal is 120 per cent of the first year's premium.
The plan also allows you to surrender from the first policy year itself. However, the surrender value is available only after three years since Ulips have a mandatory lock-in of three years. For surrenders after three years, the fund value is given immediately. The plan has no surrender charge if the premiums have been paid for five years.
On maturity, you can either withdraw the entire amount in a lump sum or stagger the payment over five years. Your funds would be actively managed even after maturity, if you choose to stagger.
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Performance
|
| Returns1 (%) | |
|
| Unit Linked Equity Fund | S&P CNX Nifty |
| | ||
| Last three months | -3.60% | -7.32% |
| Since inception2 | 7.49% | 1.62% |
Returns since inception are compounded annualised and returns for the last three months are absolute
1As on 25 August 2009 2June 2008
Fund Options
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| Equity Composition of Fund (%) | FMC* (%) |
| | ||
| Equity Fund | 60-100 | 1.75% |
| Growth Fund | 50-90 | 1.50% |
| Balanced Fund | 30-70 | 1.30% |
| Debt Fund | Nil | 1.00% |
| Liquid Fund | Nil | 0.80% |
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*Fund management charge
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Performance. On a cost-based analysis, the plan looks moderately priced. Assuming a 35-year-old who pays a premium of Rs 1 lakh and has a cover of Rs 15 lakh, the plan returns 8.36 per cent per annum if the entire fund is invested in the equity fund option.
In addition, the plan is also backed by a good fund performance. Its equity fund has beaten its benchmark, S&P CNX Nifty, since its inception in June 2008. The equity fund comprises sectors like banking, refineries, prime movers, industrial construction and financial institutions, among others.
Conclusion. Even though the plan has a stiff charge structure, it is flexible and a good buy if you keep a long-term investment horizon needed to reap benefits from it.
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