Max New York Life College Plan is a traditional money back plan which offers bonuses and pays the money back to policyholder at pre-defined stages of the child’s life. This plan ensures premium payment term is completed during the school days and money back start at the age of 18, 19, 20 and 21 when it is needed most for higher education.
Key Benefits & Features
Fund your child’s college education To help fund your child’s college education, there will be guaranteed payouts from age 18-age 21 of your child. A total of 120% of sum assured, as guaranteed payout will be paid out as –
Child’s Age Money Back (% of S.A.)
21 40% + Accrued reversionary bonus + Terminal bonus (if any)
Protect your child’s college fund against any eventuality:
In Max New York Life College Plan, a Money Back Life Insurance Plan, the policy continuance is assured in case of Payor (Payor means a person/ policyholder who has purchased a policy on the life of juvenile below the age of 18 years) meeting with death or Total and Permanent disability through the Payor rider. This guarantees your child?s college fund and helps protect it against all emergencies.
Limited Premium Term
The plan comes with a limited premium payment term up to child’s age 18, so you pay premiums only till he/she turns 18 and get guaranteed payouts for their college education from age 18-21.
From the 2nd year of policy, your child’s college education fund will get a further boost with bonus amounts added each year into the policy corpus which in turn gets compounded every year. In addition to this, the company may declare a further bonus (called “Terminal Bonus” applicable for policies in force for at least 10 years or more) on this amount to increase your child’s college fund even more.
The product is bundled with dual bonuses – reversionary bonus and terminal bonus. Reversionary bonuses are declared every year from the end of the second year onwards. The insurer may also declare a terminal bonus after the 10th policy anniversary as a percentage of reversionary bonus. But this bonus is payable only once during the policy lifetime.
If life assured age is less than 7 years, total premiums paid with annual growth of 3.5% and reversionary bonus will be paid.
If life assured is more or equal to 7 years old, Sum Assured plus reversionary bonus plus terminal bonus will be paid.
Let us assume a 35-year-old father buys this plan for a sum assured of Rs 1 lakh for his five-year-old daughter. The base premium works to Rs 9,067 as per the company’s premium table. But since the insurance is on the child’s name, the father has to opt for the rider which gives him an insurance cover and the cost works to Rs 335.88. Further, the company has specified a formula to calculate the premium, which includes an addition of Rs 900 to the base premium. After factoring in all the charges, the premium works to Rs 10,302. Given the child is five-years old, the premium payment term works to 13 years and the total premium outgo for a Rs-1 lakh policy works to around Rs 1,33,937 lakh. Sure, there is a guaranteed pay out of 120% of sum assured. Still, it is an expensive affair.
The Bottom line
1– College Plan provides guaranteed returns at 120% of Sum Assured. It is products for those who don’t prefer to take risk while saving for their child’s education.
2– Being a traditional plan, there is no exposure to risky market and your investment is secured.
3– The basic cover is on the child’s name which defeats the whole purpose. The parents cover has to be bought at an extra cost.
4– Payor Rider– In case of unfortunate demise of payor, the insurance company will make sure policy is operating until the maturity of the policy. Max New York will pay all due premiums on the behalf of life insured until policy maturity to boost education fund. Payor rider is something which you should opt for added security.
Avoid this plan and buy a plain term insurance plan for earning parents and invest remaining amount in PPF, MFs, Gold etc.; you will get better return than this policy.