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Product Review: Bharti-AXA Life’s Monthly Income Plan



The last few months have seen several life insurance companies launching traditional endowment plans, unlike earlier, when Ulips (unit linked insurance plans) were more popular. Bharti-AXA Life has joined this list by recently launching a traditional participating plan. The key feature here is its monthly pay-out scheme.

Features

Bharti AXA Life's Monthly Income Plan carries a limited premium-payment term, after which the policyholder will be entitled to monthly income that will last until the maturity of the policy. The policy holder will have the option of choosing from three premium paying terms — 7 years, 10 years and 15 years. The policy tenures offered are 15, 25 and 30 years. The period of monthly income is the policy tenure minus the premium-paying term. That is, if you opt for a 15-year-policy tenure, your premium-paying term will be seven years and your monthly income will flow in for eight years. The maximum age for entry into this plan is 65 years. If a 30-year-old healthy male buys the policy with a 15-year-term for a sum assured of 5 lakh, he will have to shell out an annual premium of 56,700 for seven years. After the premium-paying term gets over, the policy holder will receive 5,208 per month for the next eight years.

Returns and Maturity

In addition to the monthly income, the policy holder may also receive an annual reversionary bonus during maturity. This bonus is not guaranteed but can be declared depending on the performance of the participating insurance fund. You will not be entitled to a lump-sum sum assured like in the case of other savings cum-insurance plans. Also, you will not be eligible for any bonus if your policy has not completed at least three years.

Protection Cover

While no lump-sum sum assured is handed out to the dependents of the insured, they will start receiving the guaranteed monthly income immediately after the insured's demise. The period for the monthly income will be 96 months for a 15-year policy and 180 months for policies with tenures between 25 and 30 years.

Surrender Value

The plan will acquire a surrender value once three years' annual premiums are paid. The minimum guaranteed surrender value under the policy is 30% of all the premiums paid till the request for surrender is made, excluding the first year's premium and any extra premium paid. The company may also choose to declare a surrender value that is higher than the guaranteed surrender value.

Loans And Riders

You can also seek a loan from the company against this policy, provided that it has acquired the surrender value. Two rider benefits – critical illness and premium waiver – are also offered along with this plan.

Upside

Those seeking a regular stream of monthly income for a specific period can consider buying this product.

Downside

Returns are not guaranteed but depend on the performance of the participating insurance fund. It is also not free from the other limitations of a traditional endowment plan – lack of transparency in charges and predominance of debt investments that can constrain the return-generating ability, etc.

 
 

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Also, know how to buy mutual funds online:

 

1) DSP BlackRock Mutual Funds:

http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html

 

2) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html

 

3) Reliance Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-hdfc-mutual-funds-online.html

 

4) Sundaram Mutual Funds:

http://prajnacapital.blogspot.com/2011/07/buying-sundaram-mutual-funds-online.html

 

5) Birla Sunlife Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-birla-sunlife-mutual-funds.html

 

6) UTI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-uti-mutual-funds-online.html

  

7) SBI Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-sbi-mutual-funds-online.html

 

8) Edelweiss Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-edelweiss-mutual-funds-online.html

 

9) IDFC Mutual Funds:

http://prajnacapital.blogspot.com/2011/06/buying-idfc-mutual-funds-online.html

 

 

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