Is Bharti-AXA kids plan good ?

[usmanishahid]

I am planning to buy Bharti-AXA's kids plan.

I just wanted to know whether this plan is good. If not please suggest.

Thanks.

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[Rahul]

Few queries, before I answer your question -
1- Why Bharti-Axa Life child plan, any specific reason?
2- Which child plan you are interested in - Bharti AXA Life Bright Stars EDGE or Bharti AXA Life Power Kid Insurance Plan?
3- Why child plan only?

[usmanishahid]

1) The Sum Assured was greater.
2) I am planning to buy Bharti AXA Life Power Kid Insurance Plan.

[Rahul]

Charges on Child Insurance Plan - Power Kid -As per Bharti-Axa website
Premium Allocation Charge:
Policy Year # 1 ; Charges (% of Annual premium) # 8.00%
Policy Year # 2 to 5 ; Charges (% of Annual premium) # 5.5%
Policy Year # 6 onwards ; Charges (% of Annual premium) # Nil

Fund Management Charge (FMC): 1.00% to 1.35% depending on the fund selection

Policy Administration Charge: The monthly charge is Rs 90 which begins from 6th year escalating at 5% per annum.

Benefits on Child Insurance Plan - Power Kid
Maturity Benefits:
1.The remaining fund value after pay outs is paid to the policyholder
2. Career Development Allowance:15% of the residual fund value will be paid at the beginning of each of the last 5 years.
3.Loyalty Bonus:1% of the average fund value at the end of 15th policy year and subsequently after every 5 policy years.

Death Benefits:
- In the event of death of life insured, fund value is paid to the beneficiary.
- Emergency Allowance: If two years premium have been paid, an emergency amount equal to Rs 100,000 is released to the nominee within 48 hours of submitting the claim documents. This amount is deducted from the Sum Assured when the final amount is paid.
- Education Allowance: This can be opted with the plan. If the life insured passes way, 10% of the Sum Assured will be paid on subsequent policy anniversary.
- Accidental Death Benefit :If the death is caused by the accident, addition lump sum amount equal to basic Sum Assured will be paid.

[Rahul]

Bharti AXA Life Power Kid Insurance Plan is a unit linked plan and in initial years you need to pay lots of charges (as above - PAC => 5.5 % + FMC => 1 % + PAC => 0.4% (if you opting to pay minimum premium of 26000)) so total charges you pay in initial 5 years = 7%

Means out of total premium = 26000 x 5 = 130,000 ; you will be paying 9100 as charges (to me it's lots of money).

Lets calculate Return -
Premium = 26000; Sum Insured = 650,000
If we invest the same amount for next 20 years for a 30 year old then as per Bharti - Axa life's 10% return would be = Rs. 10,69,876 (see attachment for more info)

If we invest the same amount in term and MFs or other investment mode -
Lets take term plan and invest remaining money in Mutual Fund -
1- Take Term Plan -
Bharti AXA Life eProtect- Online term insurance plan Premium = 3,075 Sum Insured = 25 lakh (in Kids Plan sum Insured is only 650,000); Term Cover = 20 years
2- Invest in Mutual Fund or any other investment with fixed return of 10%
(26000-3075) = Rs 22925/- annually ; you will get Rs. 14,44,332/-