Child Plans

Child Plans

A Child Plan is a life insurance policy that combines a savings component with life cover, built to fund a child's future costs- education, marriage, or a first home, through a fixed maturity payout. Parents pay premiums for a chosen term (typically 10–25 years); at maturity, the insurer pays a lump sum directly usable for these goals. If the parent dies during the policy term, two things happen automatically: the insurer pays the full sum assured to the child immediately, and all future premiums are waived, so the plan still matures on schedule with the full corpus intact.

How Does a Child Plan Work?

When you buy a child plan, you pay premiums for the selected time period. This specific time period becomes your ‘policy term’. Once the policy term ends, the insurer provides a lump sum amount in the form of a maturity benefit. You can then use this amount to cover your child’s education or marriage expenses. If an unfortunate event happens to you during the policy term, the entire life cover amount of your plan will be given to your nominee, who will be responsible for taking care of your child’s future. The insurance provider will waive all future premium payments for the remaining policy term to ensure that your children’s future is always secure.

For a better understanding, let’s consider the example below:

Example of a Child Plan

Mr. Kumar has a 6-year-old child and wants to invest in a child plan for his ward’s higher education. He decides to invest in a child plan for 14 years with a sum assured of ₹10 lakhs. He pays 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. The plan stays active for the rest of the years. At the time of maturity, the plan will provide a maturity benefit of ₹10 lakhs to Mr. Kumar’s child or claimant.

Why Is a Child Plan Important for You and Your Child?

Parents take care of everything related to their child and want to ensure that all their child’s needs are met without compromise. This is where child plans come into the picture. By investing in a child education plan, you will collect enough funds in the future to take care of future expenses related to your child. This is because a child education plan offers comprehensive life insurance coverage along with maturity benefits to secure a child’s future.

By buying a child education plan, you can rest assured that even if something unfortunate happens to you and you are no longer around, your children’s needs will be well taken care of.

Benefits of Child Plans

To understand the importance of Child Plans, let’s dig deeper into their benefits. Child education plans offer numerous benefits. Here are some of the key advantages:

• Build a Corpus

  It helps you build a corpus for your child’s education and assists you in saving enough for the future. By paying premiums timely, the plan provides a lump sum that will help the child meet educational expenses without any financial burden.

• Medical Treatment

  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.

• Support for the Child in the Absence of Parents

  The death of a parent can cause severe trauma to a child and leave their future uncertain. The plan offers a lump sum amount as promised at the time of purchase. Additionally, if the insured opts for a premium waiver rider, the company will waive future premiums if the parent passes away during the policy tenure.

• Income Benefit

  Some child plans provide a regular income to children, typically 1% of the sum assured.

Best Child Plans in India

Before buying a child education plan in India, it is crucial to consider factors such as the cost of education, inflation rate, and premium amount. Given the wide range of child education and savings plans available in the insurance market nowadays, it is natural to feel confused about which one you should select for your child. To simplify your decision, our team at PolicyX.com conducted extensive research on life insurance providers, comparing them based on their claim settlement ratio and market share. Based on our evaluation, we have selected the top life insurance companies and listed the best 5 child plans in the table below.

*Note: Premiums in this table are calculated for a fixed sum assured of ₹1,00,000.

Premium Comparison of Different Child Plans

1. LIC New Children’s Money Back Plan

   This is a non-linked, participating, individual life assurance money-back plan designed to help customers meet the educational, marriage, and other needs of their growing children through survival benefits. LIC New Children’s Money Back Plan also provides the death benefit to the life assured’s beneficiary during the policy term, provided the policy is in force.

   Eligibility Criteria

   Eligibility Condition	Minimum	Maximum
   Entry Age	0 years	12 years
   Maturity Age	-	25 years
   Premium Payment Mode	Monthly, quarterly, Half-yearly, yearly

2. HDFC Life YoungStar Udaan

   This is a participating endowment and money-back plan ideal for parents who wish to make provisions for their child’s future financial needs. The plan comes with three maturity benefit options and a classic waiver option, allowing customers to align with their child’s key aspirations.

   Eligibility Criteria

   Eligibility Condition	Minimum	Maximum
   Entry Age	30 days	60 years
   Maturity Age	18 years	75 years
   Premium Payment Mode	Monthly, quarterly, Half-yearly, yearly

3. SBI Life - Smart Champ Insurance

   SBI Life Smart Champ Insurance is an individual, non-linked, participating life insurance savings product that helps customers secure their child’s future educational needs. In addition to life cover, this plan provides coverage against life and accidental total permanent disability throughout the policy term.

   Eligibility Criteria

   Eligibility Condition	Minimum	Maximum
   Child’s Entry Age	0 years	13 years
   Life Assured’s Maturity Age	42 years	70 years
   Premium Payment Mode	Monthly, quarterly, Half-yearly, yearly

4. ICICI Pru Smart Kid Solution

   Smart Kid Solution is a unit-linked insurance plan offered by ICICI Prudential Life Insurance Company, part of its best-seller plan, ICICI Pru Smart Life. This plan is designed to help parents grow their investments and secure their children’s educational milestones.

   Eligibility Criteria

   Eligibility Condition	Minimum	Maximum
   Entry Age (Parent)	20 years	54 years
   Maturity Age (Parent)	30 years	64 years
   Premium Payment Mode	Annual, Half-yearly, and Monthly

5. Axis Max Life Future Genius Education Plan

   The Future Genius Education Plan is carefully designed by Axis Max Life Insurance Company to help customers manage their child’s higher education costs through disciplined savings. The plan comes with a variety of useful benefits, including guaranteed money-backs, maturity benefit, death benefit, premium waiver benefit, and more.

   Eligibility Criteria

   Eligibility Condition	Minimum	Maximum
   Entry Age (Parent's)	21 years	45 years
   Life Assured’s Maturity Age	-	66 years
   Premium Payment Mode	Monthly, quarterly, Half-yearly, yearly

Types of Child Plans

Different insurance companies offer various types of Child Plans in India. Here are some common child plans available in the market:

• Single-Premium Insurance Plan

  A Single-Premium Child Plan requires a one-time investment and may be subject to discounts and other benefits.

• Regular Premium Insurance Plan

  A Regular-Premium Plan requires you to pay premiums at prefixed intervals. The frequency of premium payments may be monthly, quarterly, half-yearly, or annually (as agreed upon).

• Child Endowment Plan

  In choosing a Child Endowment Plan, you authorize your insurance provider to invest in debt instruments. Endowment Plans provide capital appreciation while steadily adding to the fund’s growth with returns from investments.

• Unit-Linked Insurance Plan (ULIP)

  A ULIP (Unit-Linked Insurance Plan) combines investment and life coverage. Premiums are invested in equity and debt instruments. Although the plan carries some risk, it can yield higher returns than endowment plans in the long term. Policyholders also have the option to switch between funds after a certain waiting period.

Key Features of Child Plans

Child plans are excellent investment options, offering multiple features like wealth generation, tax savings, and more.

Listed below are some of the significant features of child plans:

• Waiver of Premium

  Child plans often include an in-built premium waiver, applicable if the parent passes away. This feature may vary from insurer to insurer.

• Sum Assured

  The sum assured for a child plan is typically 10 times the policyholder’s gross earnings, paid out upon the parent’s demise or at maturity.

• Partial Withdrawal

  Child investment plans offer the option of partial withdrawals during the policy term. In emergencies, such as a child’s hospitalization due to illness or accident, you can make partial withdrawals. A child plan can also complement one’s health insurance.

• 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 to switch between funds after a certain period.

• High Returns

  Child plans can offer returns as high as 12%, which is often above the rate of inflation in the long term. Therefore, it not only protects your investments from inflation but also contributes to the steady growth of the fund.

• Tax Benefits

  Child plans are characterized by the Triple Exempt Benefit (EEE exemption), meaning the investment (premium) is eligible for tax deduction, the interest earned is tax-exempt, and the income generated is also tax-exempt.

Types of Riders Available in Child Plans

Child plan riders are additional benefits that can be added to your existing policy by paying a small extra premium.

Here is a list for the same:

1. Child Term Rider

   A Child Term Rider provides death benefits in case of the child’s demise (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 medical exams.

2. Accidental Death & Disability Benefit Rider

   This rider provides an extra sum assured in case of an unfortunate event leading to the death or disability of the insured.

3. Critical Illness Rider

   A Critical Illness Rider offers coverage for a predefined set of critical illnesses.

4. Premium Waiver Rider

   In case of the policyholder’s demise, outstanding premiums are waived, and the beneficiary receives the benefits at maturity.

5. Income Benefit Rider

   This rider makes the child eligible to receive 1% of the rider sum assured every month in the following situations:

   • Death of the parent
   • Permanent disability of the parent due to an accident
   • Parent being diagnosed with any of the critical illnesses specified in the policy

Things to Consider Before Buying a Child Plan

Buying a child plan is a significant decision. Several factors must be considered when choosing the best plan for your child. To assist you, we’ve outlined a few important points to consider when buying a child plan.

• Look for Essential Features

  Look for essential features and rider benefits to secure your child’s financial future.

• Claim Settlement Ratio

  Always check the Claim Settlement Ratio (CSR) of the insurance provider. A high CSR indicates a higher probability of your future claims being settled.

• Plan Tenure

  Carefully decide the policy tenure, ensuring your child receives all benefits at the right age. For instance, if your child is below 10 years, they have ample time to decide their education and career goals. Therefore, the plan tenure should be around 10-15 years.

• Fund Allocation

  Wisely choose fund allocation based on your child’s age and needs, such as healthcare, education, or wedding. Many policies offer different fund options with diverse risk profiles. You can invest in equity and debt funds for better returns for your child.

How Much Should You Invest in a Child Plan?

One of the biggest challenges customers face when buying a child plan is deciding the ideal coverage amount. If you’re facing this challenge, read this section thoroughly to understand how much you should invest in a child plan.

To decide the right coverage, it is vital to understand the growing expenses in the education sector. The cost of higher education is rising at 10-12% annually. Normally, a four-year engineering course can cost around ₹7-8 lakhs. In the coming six years, the cost is likely to reach ₹14 to ₹25 lakhs. By 2027, it could cost around ₹28 lakhs.

You need adequate investment to counter these expenses. Building a corpus of ₹1 crore may seem difficult, but it’s not impossible. You can achieve this with an SIP of ₹9,000 for 18 years in an equity fund, assuming a 15% annual return. Given the high inflation rate in the education sector, compounding needs to work for you over a longer tenure.

Buy the Best Child Plans from PolicyX.com

As a parent, your primary duty is to secure your child’s future. To ensure your child has a bright future and lives their dreams, it is important to start investing in a child plan early.

The PolicyX.com team is ready to assist you. We help customers find the ideal plan for their child by instantly comparing different child plans, evaluating features according to their needs, and identifying the best option. Additionally, our team of insurance experts is available 24/7 to address customer queries.

If you want to save time and experience a smooth buying process, trust PolicyX.com.

How to Buy Child Plans from PolicyX.com: A Step-by-Step Guide

1. Enter details in the ‘Free Quotes From Top Companies’ section at the top-right corner of this page.
2. The next page will display all available quotes from top insurance companies in India. Choose the desired plan and click ‘Invest’ at the right corner of the chosen plan.
3. Check your details and click ‘Proceed to Buy’.
4. Enter your ‘Email ID’ and click ‘Submit’.
5. You will be redirected to the company’s official website. Make the payment using the available payment options.

After making the payment, you will receive a confirmation along with the policy documents at your registered email address.

Note: For any queries, feel free to connect on our toll-free number (1800-4200-269) or email us at [email protected].

How to File a Child Plan Claim?

It is advisable to purchase a child insurance policy from a company with a higher claim settlement ratio. This ensures a smooth and hassle-free claim process and resolution. Most insurance companies follow a similar claim process:

• Intimate the company about the claim.
• Submit the claim form along with other required documents.
• The insurance company will verify the documents.
• After claim approval, the benefit amount will be transferred to the registered bank account within 30 days.
• In case of claim rejection, the insurance company will notify you via calls, SMS, or email.

Documents Required to Buy a Child Plan

You will need the following documents when purchasing a child investment plan:

• Passport-size Photograph
• Address Proof (PAN Card, Voter ID Card, Electricity Bill, Driving License)
• Age Proof (Birth Certificate, Voter ID Card, Aadhaar Card, Passport, Driving License, PAN Card)
• Photo Identity Proof (Aadhaar Card, Passport, Voter ID Card, Driving License)
• Income Proof (Salary Slip, Form 16)
• Bank Proof (NEFT Details, Cancelled Cheque)