Planning for the future of children becomes the moral responsibility of every parent. The need of the hour is taking a suitable insurance plan so as to provide our children an energised environment to grow and emerge as "achievers" in various spheres of life. While there are many insurance plans which are centered on children, in this issue we present the Young Achiever Plan offered by Aviva Life Insurance Company.

Young Achiever is a regular premium life insurance product designed to meet the financial needs of the child. This policy helps in building a monetary buffer for the child's future.

• This plan can be purchased on any one parent with the child as the nominee. The age of the parent should be between 21 years and 55 years while the age of the child should be between 0 - 17 years.
• This plan can be purchased for any amount ranging from a minimum sum assured of Rs.36,000 (subject to a minimum premium of Rs.6,000) to a maximum sum assured of Rs.10,00,000.
• The policy term depends upon the age of the child. In case the child is between 0-13 years of age the policy term is 21 minus age of child at entry. In case the child is between 13-17 years the policy term is 25 minus the age of child at entry. But the minimum policy term is 8 years.
• This plan offers two investment fund options - a "With profits fund" and "A unit linked fund. The investment objective of the "with profit fund" is to provide stable and sustained growth. The normal allocation of portfolio is
  • 0 - 20% is equities
  • 70% - 100% in debt securities
  • 0% - 10% in money market funds.
• A final bonus will also be payable at the time of death or maturity as the case may be. But the bonus is not guaranteed
• The unit linked fund aims at providing more progressive capital growth. Hence the allocation is
  • 0 - 45% is equities
  • 50% - 90% in debt securities
  • 0% - 10% in money market funds.
• Additional premium may be paid. Presently the minimum additional premium that needs to be paid is Rs.10,000.
• Another USP of this plan is that it offers indexation benefit to counter inflationary pressures. The company will determine for each calendar year starting from 1st January an inflation adjustment increase taking into account the percentage increase in the CPI for the period of 12 months ending six months prior to 1st January. Such indexation will be subject to a minimum of 5% per annum and a maximum of 15% per annum. In case the person opts for the indexation benefit the premium will be increased correspondingly.
• Maturity benefits - The policy value is paid to the policyholder. The policy amount is the total of the initial and accumulation units multiplied by the selling price of the units. OR the policyholder has the option of continuing the account for a maximum of five years with a reduced administrative charge
• Death benefits - The sum assured plus the policy value is payable to the nominee and the policy is terminated. OR the units can be held till maturity and these can continue to earn investment returns. In this case units are purchased for an amount equal to the sum assured. These are added to the policy value and returns accrue on this higher sum.
• Four years prior to maturity partial withdrawals are possible provided the minimum amount that is retained is Rs.20,000. The limits of partial withdrawal are:
  • 4 year before maturity 25% of sum assured.
  • 3 year before maturity 50% of sum assured. (including amounts earlier withdrawn)
  • 2 year before maturity 75% of sum assured. (including amounts earlier withdrawn)
  • 1 year before maturity 100% of sum assured. (including amounts earlier withdrawn)

The premiums payable under this plan will be eligible for a deduction under section 80C up to a maximum of Rs.1,00,000. All sums payable under this plan will be exempt from tax under section 10(10D) of the Income Tax Act. However, this rule is applicable only as per the existing Finance Act, and is subject to change. Another point that needs to be noted is with reference to the EET method of taxation. Under that system, amount that is contributed will be eligible for a tax benefit