Now a days, there are repetitive ad campaigns run by ICICI for their Child Plans - the punch line being "Hum to hain hi nahin". Basically, this punch line suggests the anyone (parents, grandparents or others) can purchase ICICI child plans for any kids at home and even in case of demise of the adult who had purchased the plan, the plan will continue as the insurance company will continue to pay the premiums after the demise of the purchaser. So in essence, the message that is being attempted to be conveyed is "Whether you are there or not, your child (and his plan) is covered".
What's the reality of this claim, how realistic is it, what are the practical benefits of such child plans and whether they fulfill the needs as desired, what are the various child plans available from ICICI and what are the differences between them? Let's try to find answers to such questions in this article.
There are several plans available from ICICI under the banner of "Child plans". When I searched on Google with "ICICI Child Plans", I could find three on the official sites (one of ICICI Bank and other two on ICICI Prudential Life site). The ad campaign mentioned above is for the two from ICICI Prudential Life, but since ICICI Bank is also offering one such plan, I'll cover that as well.
The first plan that is listed is from ICICI Bank and is called the "Child Education Plan".
Investors should clearly note that this plan is offered by a BANK and NOT by an Insurance company or Mutual Fund house. Hence, it does NOT offer any kind of insurance to either the child or the parent. It only provides a structured way to invest your money in standard bank accounts (fixed deposits) based upon the tenure of investment you select.
Basically, the structure is into two phases - Investment Phase and Benefit Phase.
In short, during investment phase, you keep making deposits into this plan each month and bank will create Fixed deposits/ Recurring Deposits from these amounts till the end of investment phase.
After that, the benefit phase will start where you will be able to withdraw money either quarterly or annually to meet the expenses for your children education or others.
So, it's a straightforward and simple plan, you keep making regular savings during investment phase and then start withdrawing the money quarterly or annually during benefit phase.
The problem - you cannot make any partial withdrawal mid-way. However, bank is willing to offer loan up to 90% of the principal amount invested till that date during investment phase. During Benefit phase, loan of 75% of remaining amount will be available. But beware - loan is loan and it comes at a cost.
No insurance is available to either the child or parents. No exposure to stocks, simple structured way to save money in the bank.
Review of ICICI Child Plans
What are the other alternatives to this Bank based child plan? ICICI is not known to be the best bank for offering high interest rates on Fixed Deposits. Other banks usually score better, especially for some odd tenures like 1 year 15 days and so on.
A simple alternative is to create these FD's on your own as and when you desire. The only drawback is lack of discipline from investors which defeats the purpose. It is for such cases these bank saving plans help.
The next child plan on the list is from ICICI Pru life and is called ICICI Pru Smart Kid - Regular Premium. This is one of the plans for which ad campaigns are being run actively.
Head on to the next part to see details of this plan ICICI Children Plans: Review, Analysis & Details
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