It's an insurance scheme with a difference. It may not exactly fit into the oft-conceived notion of a child plan. But when offered in a combo, Bharti AXA Life Bright Stars Edge takes on a superman status. The soft spot is it comes at a cost, and the overall show of the funds might just let you down
BHARTI AXA Life Bright Stars Edge is a type II unit-linked insurance product (ULIP). Though classified as a child plan, the plan is not much like the usual child plans. To give it a child plan flavour, it is sold in a combo, including premium waiver and family income riders. The combo is known as Bharti AXA Life Bright Stars Power Plus.
COST STRUCTURE:
Bharti AXA Life Bright Stars Edge cost structure is high compared with some of its peers. The premium allocation charge (PAC) of the product is very high. Cumulatively, almost 68.5% of the annual premium is paid as PAC over 12 years. The product doesn't have an option of top-up or additional premium. The mortality charge of Bright Stars Edge is low. However, unlike other child plans, the premium waiver rider is not in-built and has to be bought at an additional cost.
PERFORMANCE:
Bright Stars Edge offers six investment options to policyholders to choose from as per their risk-return appetite. Although the fund basket is diverse, the performance of the funds is not very impressive. For instance, all three equity funds including Grow Money Plus, Build India, and Growth Opportunity Plus, have underperformed their respective benchmarks. Build India, which is just about a year old, has generated only 5.6% returns against 17.63% returns of benchmark CNX 100. The debt funds -- Steady Money and Save n Grow -- have marginally outperformed the benchmark. Overall, performance of the fund basket is not so encouraging.
PORTFOLIO:
Bharti AXA Life Bright Stars Edge portfolio is heavy on largecap stocks, with not more than 15% exposure in mid-cap. As far as sectoral composition is concerned, like most other insurance companies, Financial and Oil &Gas sectors have high weightage.
Exposure in some of the high-performing low-beta sectors such as fast-moving consumer goods and healthcare is low. As a result, overall beta of the portfolio increases. Beta measures a portfolio or a stock sensitivity to market movement and a portfolio with high beta rises and falls in tandem with market movement. This makes it risky and vulnerable to market risks.
MATURITY/ DEATH BENEFIT:
For Bright Stars Power Plus upon maturity, the policyholder receives the amount accumulated in the fund, along with proceeds paid for the family income rider. In the case of demise of the policyholder (parent), the nominee (child) receives the sum assured and also gets a waiver in all future premiums. The insurance company pays premium till maturity, and the fund accumulated is given to the nominee (child).
For instance, say a 30-year-old healthy male invests 20,000 a year in Bright Stars Edge for his 10-year-old child, for a tenure of 20 years with a sum assured which is fixed at 20 times the annual premium. Assuming the rate of return of 6% and 10%, the fund value will grow up to nearly 5,93,662 and 9,42,838, respectively, receivable at maturity. In case he dies in the fifth policy year, then the child will receive 40 lakh, plus the company will waive the premium and pay a certain sum of money to the family on a monthly or yearly basis.
OUR VIEW:
Bright Stars Edge is a plain unit linked product, which when bought in a combo of premium waiver and family income riders is more beneficial. However, considering the cost of the scheme and performance of the funds, the plan doesn't seem very attractive. Investors looking for a child plan can also look at SBI Life Scholar, MNYL Siksha Plus, and ICICI Smart Kid for an informed decision.
