HDFC Standard Life launches new child ULIP

Mumbai: Cashing in on parents' desire of providing for their children's education, life insurers have been actively promoting child unit linked plans (ULIPs). Recently, HDFC Standard Life launched its new child ULIP - Youngstar Super.

The minimum premium for this policy is 15,000. The policyholder can choose the sum assured (5-40 times of the annual premium) and seven fund options. They can also choose between double benefit and triple benefit options. Under the double benefit option, if the insured (parent) dies, the sum assured is paid to the nominee while the company directs 100 percent of the premiums payable to the policy.

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In case of the latter, 50 percent of the future premiums is paid to the nominee every year to ensure the regular flow of income, while the balance goes into the policyholder's account. The policyholder can also avail of the critical illness benefit rider in this policy.

Those with 10-year term policies will get 50 percent of the first-year premium at maturity, and 100 percent of this amount for staying invested in longer tenure policies. The first year premium allocation is relatively high at 85-92 percent (for premiums ranging from 15,000-20,00,000 plus). Currently, most ULIPs levy charges as high as 30-40 percent (premium allocation of 60-70 percent) in the first year. Post Insurance Regulatory and Development Authority (IRDA) guidelines on capping charges, other child plans too could reduce their charges to a comparable level before January 1.