AEGON Religare Rising Star Child ULIP Plan Review
Let us today review AEGON Religare Rising Star Child ULIP Plan.
This is one more ULIP plan which claims that it will secure the future of your child. However, I personally don’t think so. This is because Insurance cum investment products (especially child future plans and other types of ULIPs) are the wealth suckers. They slowly erode your long term wealth by charging lots of charges of various kinds for you.
According to the plan, the minimum annual premium is Rs.20,000 per annum. The minimum age of entry for the parent is 18 years (1 day for the child beneficiary), with 60 years (15 years for the child) being the upper limit . The minimum cover, depending on the parent’s age at entry, is 7-10 times the annual premium, while the maximum is 30 times the amount.
The plan offers you 4 types of options.
01) Secure Fund
02) Stable Fund
03) Debt Fund
04) Accelerator Fund
What I personally don’t like about child future plans is their high level of opacity and lots of charges. Let me explain you this in detail.
Well, say for example, Accelerator fund invest 80-100% of your money in equity. But well, they have not mentioned anywhere that in which stocks they will invest? – Large cap, midcap or small cap or mixed and in how much proportion?
While in case of Equity Diversified mutual funds everything is clear. Not only this but if the fund manager leaves the scheme than also you can know and suppose if the fund manager changes his investment strategy than also you can know because everything is very transparent.
But well, this is not the case of ULIPs and child future plans. In case of mutual funds, suppose if the fund doesn’t perform well than you can any time exit from that fund and invest in some other fund. But in case of child future plans suppose if the fund performs bad, you can’t exit and if you exit, you will have to pay lots of charges.
Let us discuss various charges associated with this plan.
01) Premium allocation charge – 4.40% for the first year, 3% for 2-5 years, 2% for 6-10 years and 1% from 11 years onwards.
Thus, during the entire tenure of the policy, you will have to pay this charge while mutual funds don’t have any entry load or any other recurring charges other than fund management charges (That is maximum 1.5% per annum).
But well, here the story doesn’t end. Even after paying premium allocation charges, you will still have to pay fund management charges (FMC) in this plan.
02) Fund management charges – 1-1.30% depending on the type of fund you select.
Thus, there is no sense of paying two separate charges here. Another drawback of Child plan like this is that, it gives you just 10 times insurance cover than the regular premium so it means that for 20,000 of annual premium, you will get insurance cover of just Rs.1 lakh. This is really a low life cover.
Pure term life insurance plans offer much better cover than this.
My Opinion -
No need to go for this plan. If you really want to plan your child’s financial future than buy a term insurance plan and invest rest of money in 2-3 equity diversified mutual funds carefully selected from Valueresearchonline.com via SIP.
Term Insurance + Equity Diversified Mutual Funds (3-4) is the best combination to build some long term serious wealth for your child.
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