Bharti AXA’s Secure Income plan is a traditional, non-participating endowment plan with a guaranteed monthly income. The premium payment term is 5/7/10 years for policy periods of 15/17/20 years. Sum assured is 11 times the annual premium for policy terms of 15/17 years, and 13 times the premium for a 20-year policy.
After the end of the premium payment term, the policyholder will receive a monthly income. This is guaranteed at 8 per cent of sum assured. Besides this, there is also a guaranteed addition to the policy annually, from the year after the premium payment term completes until the maturity of the policy. The annual guaranteed addition will be 7 per cent of sum assured for a 15-year policy, 8.5 per cent for 17-year term and 10 per cent for 20-year term.
On maturity, the policyholder gets the sum assured plus the guaranteed additions. In the case of death, the policyholder’s nominee gets higher on the sum assured plus guaranteed additions, or 105 per cent of premiums paid, or 11 times of the annual premium (13 times in case of a policy with a 20-year term).
LOW RETURNS
A guaranteed monthly income plus a guaranteed addition to the policy are the highlights of the plan. But, when we compare this to the premium one has to pay, the net returns under the plan come to 4 per cent — at par with other similar products in the market. A person who is 30 and takes a 20-year policy with Rs 50,000 as annual premium for 10 years, will receive an annual income of Rs 24,885 from the 11th year. Also, after maturity one might get Rs 6,22,122.
OUR OPINION
If you are in the age band of 30-35 now, note that the policy will end when you are around 50-55 years, and you would be without a life cover at a time when you will need it the most. For young investors, our recommendation is to take a plain term cover and put the balance savings in PPF or the National Pension System (NPS). With PPF too, one can get tax benefits — the principal, the interest and the maturity proceeds are tax exempt. For 2013-14, the PPF interest was 8.7 per cent— though this is subject to revision every year by the Government. In NPS, you can choose your investment vehicle with a maximum of 50 per cent in equity and split the rest between government securities and corporate debt instruments. Charges are very low, working out to just 0.6-0.8 per cent per annum. If you have a stomach for risk, you might also consider some balanced equity funds and start a systematic investment plan.
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