Child Plan is a combination of savings and insurance that helps to design a secure financial future for your children. Such a financial corpus can be useful to meet your child's needs like education, marriage, etc.
The life of a parent is full of executing important duties towards the child. Right from raising the kid from infancy to seeing him/her relax with their very own families -there are important matters one needs to attend to. Parents take care of everything related to the child and want to make sure that their child's every want is looked after with zero compromises.
This is where child plans come into the picture. Just invest in one and it will collect enough funds in the times ahead to take care of future expenses related to your child. And even if something unfortunate happens to you, you are confident that the needs of your children are taken care of when you aren't around.
The types of Child plans vary from one insurance provider to another. Some are listed below for your reference:
Single-Premium Child Plan requires a one-time investment, which is also subjected to discounts and other benefits.
Regular-Premium Plan requires you to pay the premium at prefixed intervals. The frequency of premium payments may be monthly, quarterly, half-yearly or annually (as agreed upon).
In choosing a Child Endowment Plan, you authorise your insurance provider to invest in the instruments of debt. Endowments Plans provide capital appreciation, while steadily adding to the growth of the fund with returns from investments.
ULIP plan is a combination of investment plans and life coverage. They invest the premium paid in equity instruments and debt instruments. Although the plan carries some amount of risk, it yields more returns than endowment plans in the long term. The policyholder also has the option to switch between funds after a certain waiting period.
Child plans are one of the best investment options, as they are loaded with multiple features like the generation of additional wealth, tax-savings, and more.
Listed below are some of the significant features of child plans:
Waiver of Premium
The child plan has an in-built premium waiver, which is applicable when the parent dies. This feature may vary from insurer to insurer.
The sum assured for a child plan is usually 10x the gross earnings of the policyholder, which is paid out in the event of the demise of the parent or at maturity.
Plans offered by various insurance providers come with the option of partial withdrawals (as and when the child turns 18 years).
Choice of Funds
Child plans allow you to choose between different fund options such as equity, debt, money-market and hybrid. You also have the option of switching between funds after a certain period.
Here is a quick list to get you well-versed with the different criterion of some of the major insurance providers in the market:
|Plan||Entry Age||Maturity Age||Minimum Annual Premium||Sum Assured|
|Aviva Young Scholar Advantage Plan||21-45 years||60 years||Rs. 50000||Sum assured is 10 times the annual premium|
|Bajaj Allianz Young Assure||18-50 years||60 years||N/A||10 X Annual Premium|
|HDFC SL YoungStar Super Premium||18-65 years||75 years||Rs. 15000||10 X Annual Premium|
|Birla Sun Life Insurance Vision Star Plus||18-55 years||75 years||N/A||Minimum- Rs.1,00,000|
*The values may change as per chosen plan options.
A child education plan offers comprehensive life insurance coverage along with the maturity benefits to cater to the future needs of your child. In short, the plan helps you to deal with the surging cost of education by building sufficient capital.
The child education plan comes out with a bunch of benefits listed below.
It helps you to build a corpus for your child's education and assists you to save sufficient savings for the coming future. On paying premium time to time, the plan will provide a lump-sum that will help the child to meet the educational expenses without any financial burden.
These plans offer the convenience of withdrawals during the policy tenure. You can use this money for medical treatment in case your child falls ill.
The death of the parent can cause severe trauma to the child and can keep his/her future hanging. The plan offers a lump sum amount as promised at the time of purchase. Apart from this, if the insured opts for a premium waiver rider, the company will provide a premium waiver in case the parent passes away during the policy tenure.
A few of the child plans provide regular income to children that is equal to 1% of sum assured.
Search for all the essential features and rider benefits to secure the financial future of your child.
Always make a point to check the CSR of the insurance provider. With a high claim settlement ratio, there is a significant probability for the company to pass your future claims.
Decide the tenure of the policy carefully, ensuring that your child gets all the benefits at the right age. For instance, if your child is below 10 years, (s)he has a lot of time to decide his/her education and career goals. So, the plan tenure should be around 10-15 years.
Wisely choose the fund allocation based on your child's age and needs like healthcare, education, wedding, and so on. Many policies offer different fund options with diverse risk factors. You can invest in equity and debt funds to get better returns for your child.
Child plan riders are additional benefits that you can add to your existing policy by paying a small premium.
Here is a list for the same-
Child term rider provides death benefits in case of the demise of the child (before a particular age). However, after the child attains maturity, the term plan can be converted to a permanent insurance cover up to five times the original amount without the need for medical exams.
This rider provides an extra sum assured in case of an unfortunate event that leads to death or disability of the insured.
Critical illness rider offers coverage for a predefined set of critical illness.
n case of the demise of the policyholder, the outstanding premium gets waived off, and the beneficiary will get the benefits at the maturity.
This rider makes the child eligible to receive 1% of the rider sum assured every month in following occurrences:
You can log on to PolicyX.com to buy a Child plan. Below are the steps-
Note: In case of any query, feel free to connect on our toll-free number (1800-4200-269). You can also email us at firstname.lastname@example.org.
To know this, it is vital to understand the growing expenses of the education industry. The cost of higher education is rising at 10-12% a year. Normally, a four-year engineering course can cost around 7-8 lakhs. In the coming six years, the cost is likely to touch 14 to 25 lakh. By 2027, it would cost around 28 lakhs.
You need adequate investment to counter such expenses. Normally, building a corpus of 1 crore may seem difficult, but it's not impossible to save this amount. You can make it with the help of a SIP of Rs 9,000 for 18 years in an equity fund at the rate of 15% per year. As the rate of inflation in the education industry is so high, you need compounding to work for you over a longer tenure.
Mr. Kumar has a child of 6 years, and he wants to invest in a child plan for the higher education of his ward. He decides to invest in a child plan for 14 years with a sum assured of 10 lakhs. He plays the premium every year.
If he dies during the 8th year of the policy, the insurer pays a death benefit to the claimant, and all future premiums are waived off. The plan stays active for the rest of the years. At the time of maturity, the plan will provide a maturity benefit of Rs.10 lakhs to Mr.Kumar's child/claimant.
For any child insurance plan, there is no such strict entry age as it varies from insurer to insurer. However, the minimum age to avail of a child insurance plan is 18 years (for the parent).
Yes. A person gets a loan of 90% against the principal account balance of the Recurring Deposit during the investment tenure. During the Benefit Phase, a person can take a loan at 75% against the remaining FD balance.
There is no such restriction over the sum assured amount. However, the minimum premium amount starts from Rs. 500 per month. It may vary from insurer to insurer.
Yes, you can, but you need an appointee, who gets the benefits of the insurance on behalf of the nominee.
This is decided by the insured while investing in a child plan. The frequency is mentioned in the policy document.
For the same, you must first register at the e-portal of the chosen insurance company. After generating your password, you have to log in to your account and check all your policy details.
You can easily withdraw the entire amount after the completion of 5 years (anytime) before the maturity date.
Yes, you can invest in a child insurance plan for a kid of 15 years through both online and offline modes.
Yes. The money that you withdraw from the child plan during the policy tenure is tax-free. Even the death benefit and maturity benefit is also tax-free.
You should invest in a child plan as soon as possible. Ideally, it should be as soon as your kid is born. However, companies allow you to insure your child within the set guidelines of the entry age that varies from insurer to insurer.
Beneficiary or nominee plays a vital role in a child plan. If the parent dies, all the money and authorities will be handed over to the nominee/beneficiary only.
Last updated on 22-01-2021