Economic Times - Endowment Plan review

Friday, March 23, 2012

BakulChuganTongia

Product Details 

Like other endowment plans in the market today, Aegon Religare Endowment provides cover to life and return of sum assured to the policyholder as survival benefit on maturity. The product has the added feature of providing double the amount of sum assured to the nominee in the event of the death of the policyholder during the policy term 

Key Features

It offers an extended life cover of five years after maturity of the original policy term. If the policyholder chooses 25 years as policy and premium paying term, the actual life cover pro-vided in this plan will be 30 years while the premium term will be 25 years. But, if the policy-holder dies during the extended life cover period, the nominee shall receive only the basic sum assured and not double the sum assured as in the case of death during the original policy term. 

Surrender Value 

The policy can be surrendered after the first pol-icy year in which case the policyholder shall receive 90% of the MSA and guaranteed monthly additions accrued till the date of surrender MSA is determined as a percentage of single premium (SP), ranging from 92.98% to 61.24% of SP for males and 92.93% to 69.83% of SP for females depending upon the entry age and policy term. 

Return Analysis

Assuming the age of the policyholder to be 30 years and the policy and premium paying term of 25 years each, the death and maturity benefits that will accrue under Aegon Religare Endowment Plan are illustrated herewith... 

Our View 

Notwithstanding the fact that two key features of Aegon Religare Endowment Plan - the double death cover and extended life cover of five years - are impressive, one has to keep in mind that being an endowment plan, the scheme has high premium charges, especially in comparison to a pure term plan. The premium charged by Religare Term Plan for double the amount of death cover and taking Into consideration the extended life cover (as provided by the endowment plan) are illustrated herewith... 

Investors may thus choose to buy a pure term plan at bare minimum costs to ensure cover to life and invest in other avenues to earn suitable returns from their investment.

Note:

• We have considered the Religare Level Term Plan for a policy term of 30 years to compare with Me extended life cover provided tor by the endowment plan.

•The premium paying term (PPT) in Religare Term Plan is 30 years. Investors can choose among 5. 7, 10 and 25 years as the PPT under Religare Endowment Plan for Policy terms of 15,20 and 25 years.

Year: 
2012

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