Tata AIG Life United Ujjwal Bhawishya seems to be a good bet considering its low cost structure & varied investment options
LAUNCHED in September 2010, Tata AIG Life United Ujjwal Bhavishya (UUB) is a unit-linked insurance child plan. Child plans are little different from that of regular Ulips as the sum assured in these plans is paid to the child (nominee) immediately after the demise of the parents, and then the policy continues till its maturity. The insurer also pays the premium till maturity of the policy, due to an inbuilt "waiver of premium" feature. Tata AIG United Ujjwal Bhawishya offers diversified variety of investment options (funds) including largecap funds, mid-cap fund, debt and balanced fund.
COST STRUCTURE:
Generally, cost structure of children's Ulip is high due to an added cost of the "waiver of premium" feature. However Tata AIG Life United Ujjwal Bhawishya's cost structure is economical compared to its peers. The premium allocation charge in the beginning is only 3%. Also, though the policy administration charges look high in the initial year, considering the inflation factor over the term of the policy, absolute charge looks reasonable. Fund management charge is also low compared to its peers. The mortality charge of Tata AIG Life is just about 5% higher than the LIC table, whereas its peers have over 30% higher mortality charge.
BENEFIT:
The most vital benefit that differentiates this plan from the rest of Ulips is an inbuilt waiver of premium feature. The policy also offers four riders for 'added protection'.
PERFORMANCE:
Tata AIG United Ujjwal Bhawishya has comprehensive basket of funds that has been in existence for over one year now. The performance of most of the funds has been sound. Its three-year-old large-cap equity fund has generated absolute returns of 20.5% as against a decline in the Nifty, its benchmark. The mid-cap fund is a risky preposition. This fund performs in cycles, so in 2010 it generated 22.4% returns, highest in the fund's basket, however, on a period of three years, the fund failed to outperform its benchmark. Further, Super Select another equity-oriented fund, has outperformed its benchmarks by generating 20.6% return, the fund's portfolio does not include banking and financial services sector. Whole life stable growth and whole life aggressive growth fund are balanced fund for risk-averse investors. Whole life aggressive growth fund, a hybrid equity-oriented fund, has also performed better. The income fund includes whole life income and whole life st fixed income. These invest in government and corporate bonds. These are low-risk return funds; it's better to switch to
these funds towards the maturity of the policy to safeguard the fund from market-related risks.
PORTFOLIO:
The portfolio of every fund in Tata AIG Life United Ujjwal Bhawishya scheme is different due to the varied nature of each of the fund. For instance, Whole life mid cap equity fund has majority of midcap stock holding. However, a comprehensive glance of the portfolio suggests it to be a diversified portfolio. The equity funds (except mid-cap fund) portfolio comprises majority of the Nifty stocks. Banking, IT and financial services form almost 30% of the portfolio. On the debt side also, the portfolio is well balanced with most of the debt maturity being spread over diverse time period. An intersecting thing about the portfolio of Tata AIG Life is its high cash holding, which may not be rewarding for the company in the long run.
DEATH/MATURITY BENEFIT:
Unlike type I and type II Ulips, which cease on payment of the death benefit, Tata AIG Life United Ujjwal Bhawishya (unit-linked child plan) continues even after the death of the insured. On the unfortunate demise of the insured (the parents) the child/children (nominee) receives the sum assured, generally known as the death benefit. The policy doesn't cease here, it continues till maturity. The insurance company pays in the regular premium till maturity and then the available fund value is given to the child. However, upon maturity of the insured, the accumulated fund value is given away.
OUR VIEW:
Tata AIG Life United Ujjwal Bhawishya seems a good investment considering its low cost structure and varied investment options. However, one should select the fund under the plan as per the risk appetite. For high risk return investors large-cap equity and super select equity funds can be a good investment option. Those who have a limited risk appetite can select whole life aggressive growth fund.
