As the name suggests this is an unit-linked insurance plan (Ulip) offering financial security for your child's future.

There are two options offered under death benefit — Single Life Option and Joint Life Option. Under the Single Life Option, in case of an unfortunate death of life insured, the sum assured is paid to the nominee of the policy. Subsequently, the insurer waives off the future premiums and an amount equal to this corpus (sum of all future premiums) is added to the fund value. The policy continues to be alive and the insurer will pay off the accumulated fund value at maturity.

Joint Life Option: Under this option as well, the insurer waives off the future premiums and an equivalent amount is added to the fund value. But this option kicks in the event of death of any one of the policyholders. On the death of the other parent, sum assured is paid to the nominee. If both the parents die at the same time, both the benefits are paid to the nominee.

Guaranteed Additions: They are added on 10th year and every 5 years thereafter till the end of the policy term. Guaranteed Loyalty Additions will be a percentage of the average fund value depending upon the premium amount. For premium slabs in the range of . 25,000-. 100000, the guaranteed loyal addition is pegged at 3.15% of average fund value.

CHARGE STRUCTURE

Premium allocation charges:
3.15% of annual premium for first 5 years. No allocation charges thereafter.

Fund management charge:
0.75% to 1.35% of the fund value. Policy administration charges: 6.30% of annual premium for the first 5 years and 3.15% thereafter. Mortality charges: These are charges deducted as a part of life cover provided and are recovered through cancellation of units.

CHOICE OF FUND

IDBI Federal has six funds which address conservative as well as aggressive investors. You can opt for aggressive fund with equity exposure if you have a high risk appetite and are planning to lock into the fund for 10-15 years. If you have limited investment period, you should go for the conservative fund which invests in money market instruments.

DISADVANTAGES

Given the cost structure, you cannot invest in this plan for a short term. Also if the interest rates flatten out in a couple of months, the debt fund option offered in this plan may not be that rewarding. If the sole purpose of investing in this plan is financing your child's future, you can invest in diversified large-cap equity funds and buy a simple term cover for the protection element.