Kotak Life launched two traditional child plans

Private insurer Kotak Mahindra Old Mutual Life (Kotak Life Insurance) today launched two traditional plans aiming at securing financial requirements of children and adolescents.

Kotak Child Edu Plan addresses the future financial requirements of children aged between 0 (newborns) and 10 years and Kotak Child Future Plan aims at catering to the financial needs of adolescents aged between 11 and 15 years, the company said in a statement.

The Child Edu Plan provides defined benefits at specific milestones - 'Edu Boosters' at 15, 17, 19 and 21 years to support the child's education and skill development.

Kotak Child Future Plan too provides defined benefits at specific milestones - 'Future Boosters' at 23 and 25 years to financially support the child's pursuit of career or life goals without any worries.

The child plan has a fixed premium payment term of 10 years from the date of entry.

Both plans also offer enhanced protection in the unfortunate event of death of life insured (parent, grandparent, etc).

The plans have optional riders, which provide additional protection in case of death, accidental death and permanent disability.

When the child is premium

Why is Aviva Life Insurance focusing so much on Sachin Tendulkar the parent in its latest advertising campaign? “We are probably the only company showing Sachin as a parent in all our brand campaigns, and not as a cricketer,” says Gaurav Rajput, Director, Marketing, Aviva India.

For that matter, why is Max New York Life spending so much time, energy and money on creating interactive platforms on social media and YouTube for parents, where they can blog, tweet, upload videos and chat with each other? And why is ICICI Prudential Life Insurance going all out to forge father-child relationships across the country, organising contests where dad and kid can participate and win prizes?

Well, simply because insurers view “the child space” as the hottest point of connect with their customers. With market research results showing a growing shift in why Indians buy insurance, insurers are raising the advertising and marketing decibel level around parents and children.

They are also promoting educational initiatives in a big way. If Aviva has a Young Scholar Hunt and sponsors a Young Scholar Bookaroo, Max New York Life claims to have spent Rs 2 crore on scholarships for 4,000 children.

The shifting umbrella

In 2004, when private insurer Max New York Life first tracked the question of why people buy insurance, it found that protection of family was the number one reason. Ninety-two per cent of the policy holders it surveyed had bought policies for that reason; security placed second with 81 per cent of the respondents; saving tax was the third most compelling reason with 73 per cent of the sample.

By 2010, when it conducted the survey again, people's reasons for buying insurance had undergone a sea change. Protection of family as a reason had lost 12 percentage points; the second most important reason people shopped for insurance was to accumulate a lump sum for their child's future — a whopping 69 per cent policy holders had bought insurance to meet the educational needs of their children.

Aviva Life Insurance, which claims to be the first in India to have launched a child strategy, corroborates this finding.

Gaurav Rajput of Aviva describes how, in a survey of 2,250 people conducted by Aviva in 2009 across 10 big cities, 67 per cent mentioned that planning for a child's future took priority over retirement and protection. It found that 50 per cent of parents begin to invest before the child turned three years old.

The numbers were enough to make Aviva change tack and go after the child space. “Till two years ago, no one spoke about child plans or the child space but now we believe that we have created a category called the ‘Child Space',” boasts Rajput.

In just two years, Aviva's game plan seems to have paid off. While there are no industry figures, as ‘child space' is not yet reported as a category by the insurance regulator, the contribution of child plans in Aviva's portfolio alone has increased from 2 per cent in 2008-09 to 12 per cent in 2010-11, says Rajput.

Others insurers such as Max New York Life, HDFC Life and ICICI also report similar growth in the child space. “Within a year of launching, Child Plans became a significant business contributor as compared to a pure savings portfolio - and has been a significant contributor to all companies' toplines since then,” says Sanjay Tripathy, EVP and Head, Marketing and Direct Channels, HDFC Life.

Click here to know about LIC Child Plan

Easier to build a connect

Most insurers point out how marketing financial products is a tricky proposition. There are a tough set of rules and regulations. Then there are sensitivities. Protection, tax savings and retirement planning are all planks that insurance marketers have tried out, but say have not yielded as strong an emotional connect as the child space.

As Madhivanan Balakrishnan, Executive Director, ICICI, Prudential Life, says, “The child's education is a very emotive and strongly felt need and allows insurers to offer a differentiated solution as opposed to a generic tax savings solution. This combination of “strongly felt need” and “differentiated solution” has led to a situation where insurance marketers are focusing on child education plans.”

Balakrishnan believes there is more comprehension of and better likeability for a brand when advertising is done with emotional connect.

HDFC Life's Sanjay Tripathy agrees. “Of all the consumer needs that we know of, saving for the child scores over everything else. It's a highly universal and emotional need, transcending all SEC class barriers. Even more so in the Indian context, where a child's requirements are placed before anything else,” he says.

A look at some of the numbers shows how the child space is already netting the insurers a bigger base to talk with.

nmMax New York Life's Chief Marketing Officer Anisha Motwani says that its iGenius platform (a parent-child nurture forum and relationship tool it launched in 2010) on various social media networks has already got 1 lakh members. She says 10,000 parents are already blogging on ‘Khushiyon Ka Planning', a brand new space created in July for parents to discuss a child's well-being.

Aviva, whose tag line these days is ‘Education is Insurance', managed to create a huge customer connect with its book drive. In 2009, it created a Great Wall of Education (98 feet long, 5 feet high and 6 feet wide) using books donated by thousands of citizens. Over 1.23 lakh books were collected. Today, Rajput says, from a single city event, it has become a national event and over 9.5 lakh books have been collected. “The entire initiative succeeded in Aviva being seen as human by customers,” he says.

In addition, Rajput says micro-marketing templates such as Colour My Dreams helped the insurer reach out to close to 1.75 lakh kids and, subsequently, their parents.

Leaving no stone unturned

Apart from promotions, contests, initiatives such as the Great Wall, and relentless advertising on TV, insurance marketers are now finding ever newer and innovative ways to connect with parents and children.

The school is an obvious starting point. Max New York Life is tying up with schools, being there during parent-teacher meetings. Ditto Aviva.

Both are educating their agents to get better acquainted with this parental need and have the skills to answer their questions.

Aviva, for instance, recently launched Child Future Planning Experts (CFPE). “Over 10 per cent of Aviva's sales force will get training as CFPEs in 2011, with a defined objective to increase their productivity by 40 per cent,” says Rajput. He says in the pilot itself, the 300-odd advisers trained as CFPE have recorded a growth of 78 per cent in business generated by them.

For Max New York Life, iGenius is an important initiative. “It's a tactical engagement tool with parents,” says Motwani.

Given that two-thirds of India's population of 1.1 billion is under 35 years of age, child plans spell big opportunity for insurers. The umbrella is, thus, going to tilt more and more towards a younger audience.

Gyan Kosh from Tata AIG Life Insurance

Tata AIG Life Insurance Company has launched Gyan Kosh, a nonparticipating unit-linked endowment insurance plan. The plan has been designed to provide financial protection for children's education, marriage, providing funds for setting up a business and so on.

A parent has two protection options: Security Net, with inbuilt waiver of premium, and Family Income Benefit and Safety Net, with inbuilt waiver of premium benefit. Both the options provide dual benefits, ie, pay death benefit to the nominee in the case of death of the insured and policy benefits will continue. The company will waive all future regular premiums in the case of death or total permanent disability of the insured.

Besides, the Security Net option provides your family with a readjustment income of 1% of the basic sum assured for 100 months or till the end of the policy term, whichever is earlier, on death or total permanent disability. Choose & Compare Best Child Plan

The investor (parent) has a choice of seven funds options. Under waiver of premium option, the policy holder can choose to receive either 100% of future premium in the policy, or 50% of the premium in the policy, with the remaining 50% to be paid to the nominee.

CHARGE STRUCTURE: Premium allocation charges: The premium allocation charges in the first three years vary from 2% to 3% depending on the size of the premium. From the fourth to the 10th year, the charge will be 2%, while from the 11th to the 15th, it will come down to 1%. There is no premium allocation charge from the 16th year to the 20th year.

POLICY ADMIN CHARGES: The charges are kept comparatively high. It is Rs 70 per month for premiums between.`20,000 and Rs 29,999; Rs 100 per month for premiums between Rs 30,000 and Rs 49,999; and Rs 150 per month for premiums of Rs 50,000 and above. The charges will increase by 5% compounded every year. For instance, if a policy holder buys a term of 20 years and chooses to pay an annual premium of Rs 50,000 in the first year of the policy, he will pay Rs 1,000 (2% of Rs 50,000) towards premium allocation and Rs 1,800 (Rs 150 x 12) towards policy admin charges. The total, Rs 2,800, is 5.6% of the annual premium.

There will be no premium allocation charge in the 20th year of the policy, but the policy admin charges will come to Rs 4,776, which is 9.55% of the annual premium of Rs 50,000. All the features and choices of funds available in the plan are good, but the policy admin charges are comparatively high. The management charge will be at least 0.65% and can go up to 1.20%. FMC is the highest in the equity fund option and lowest in case of liquid fund.

WHY YOU SHOULD BUY: There is a good spread of fund options covering investors with different risk appetites.

WHY YOU SHOULD NOT: The cost structure is comparatively high.

Tata AIG Life to launches unit-linked child plan, Gyan Kosh

Private insurer Tata AIG Life Insurance Company today announced the launch of its unit-linked child plan - Tata AIG Life Insurance Gyan Kosh- with in-built benefits to ensure financial protection.

"Tata AIG Life Insurance Gyan Kosh with its two protection options and inbuilt benefits is designed to help parents not only assemble their desired savings but also protect it in case of any exigencies," Tata AIG Life Insurance Company Managing Director and CEO, Suresh Mahalingam, said in a statement here.

"The plan ensures that in the unfortunate event of the death or disability of insured, the journey of their loved ones towards success and happiness is not hampered by any financial constraints," he added. Choose & Compare Best Child Plan

Gyan Kosh is the company's first ULIP child plan after the September guidelines.

This plan is a non-participating ULIP endowment insurance plan with in-built benefits to ensure financial protection and financial goals for children like education, marriage and funds for setting up a business, among others.

"We expect this product to be popular and contribute 10 per cent to the total overall portfolio monthly from July onwards," Tata AIG Life Insurance Company Senior Vice President - Marketing, Product Development, Agency Sales Training and Corporate Communications - Vijay Sinha, told PTI.

The private insurer has three traditional children plan, Assured Carrier Builder, Assure Educare and Star Kid and a multi-purpose product, which includes child benefit called MahaLife Gold.

MahaLife Gold is a very popular product, he said adding that it contributes about 35 per cent to the over portfolio of the company.

How important is life insurance for your child

You must have come across many ads stating that the best gift to give your child is financial security. The protection and promise for a secured future in presence as well as your absence through a life insurance (child insurance). They even have assurance of lower rates and growth of policy coverage.

They even lure you with the fact that since the child is young, there is an increased chance for good rates. But remember that a 30-year old who is in good health is still going to qualify for a good rate, so there's no need to rush out and buy a life insurance policy for a 5-year-old.

This does not mean that you should not invest in child insurance. Child’s education has become very costly now-a-days and is going to increase even further, an insurance can help you provide for it. But life insurance is meant to pay the bills if something happens to the bread winners in the family. It is a support in case you are no longer around to provide.

So it is for you to decide if as a parent you wish to secure your child’s future. By the way, many children's life insurance policies are whole life, generally, the most expensive way to buy life insurance.

Children plan in life insurance business posts quick development

The children plan segment in the domestic life insurance industry is growing fast due to increasing awareness among consumers.

Today, the segment accounts for 20-25 per cent of the life insurance space in India.

“There is a growing realisation among people that education in the future would be quite expensive, so people are investing in children plan to ensure their quality education,” private insurer Max New York Life Insurance Senior Director and Chief Distribution Officer Ashish Vohra told Business Standard. “Five years back, the proportion of children plans in life insurance industry was half of today’s volume,” he informed.

Vohra said the segment would continue to grow rapidly, since the education sector had also witnessed the entry of private players in a big way and it has been well accepted that quality education in the future would come at a price. Commenting on the likely effects on life insurance industry due to the proposed Direct Tax Code (DTC), he said according to the disclosures made so far, there were not many incentives for the segment. “However, DTC would encourage long-term life insurance policies with minimum cover of 20 years,” he added.

Meanwhile, Vohra said the growth rate of life insurance industry was likely to dip by 15 per cent for 2010-11, due to certain regulatory issues that had cropped up. “During 2009-10, the new business premium for life insurance segment was about Rs 80,000 crore, which is likely to dip to under Rs 70,000 crore for 2010-11, he said.

He was in town to announce the company’s scholarship programme igenius 2011, which kicks off tomorrow. The programme promises 1,000 scholarships worth Rs 1 crore to students, selected through multi-level pan-India evaluation process.

Aviva Life launches child plans in Uttar Pradesh

Private life insurer Aviva today announced the launch of three child plans in the Uttar Pradesh market.

While, Aviva Young Scholar Advantage is a Unit Linked Insurance Plan (Ulip), Aviva Young Scholar Secure is a traditional plan.

The third plan, Aviva i-Life, which is an online term plan, would be available from next week, Aviva Life Insurance director Munish Sharda said, “We are looking at both the rural and urban markets for our various insurance products”.