Who’s Dead? Who’s Alive? Who’s Getting the Money?

by Vinaya HS on March 12, 2012

in Finance

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I seem to be writing quite a bit about insurance of late. But I’m also seeing quite a number of absolutely “WTF?” insurance products of late. For example, see this piece on Birla Sun Life’s Classic Child Plan

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To quote –

This joint-life, unit-linked, children’s plan covers both the child and the parent. Later, any time after the child attains majority, but before 27-years of age, he can become the primary life assured and the parent the secondary insured. The date on which this option is exercised is known as the Savings Date.

Prior to the Savings Date, on the death of the life assured (parent), the policy pays the Sum Assured (SA) to the nominee to take care of the child’s immediate financial needs. The future premium from the next policy year is borne by the insurer (called waiver of premium option). On the death of the child, the policy is terminated on the Savings Date and the Fund Value (FV) is paid. From the Savings Date onwards, upon the death of the child, the basic SA is paid. In both the cases, on the last death, of either the primary or the secondary life assured, the policy is terminated and the FV along with the commuted value of any future premiums (if any) is paid.

Seriously, what a complete mess! Why in heaven’s name would you want to be paid were your child to die? Have we as a race really become that cruel and insensitive? Let’s make money no matter how? I really wonder who designs such insurance plans. I so wish this plan dies a horrible death because there were exactly zero takers for it.




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{ 2 comments… read them below or add one }

Rakesh March 21, 2012 at 10:27 PM

Vinaya,

Great analysis. Not sure how they thought about this plan in first place. Why would someone buy it? Birla guys can go so low……

Vinaya H S March 22, 2012 at 12:12 PM

@Rakesh:

Simple. Anything that can generate cash is good enough.

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