About Child

Child Plans Plan Your Child's Future: Secure your child's future and build stronger financial security with the double-edge sword called child insurance. PolicyBazaar offers a range of child plans from top insurers.

Compare Best Child Insurance Plans in India

A wise mom once said "Your child will keep building castles in the air; you better start buying bricks for the castle today." Loving your child is what comes naturally but as a responsible parent you have certain obligations towards your child. Getting a child plan is one such obligation, infact the most important one. If you are reading this, you've already proved that you are a concerned parent finding ways to secure your child's future. Let us help you out in understanding what exactly a child plan is and the need to go for the best one.

Child Plan is insurance cum investment plan that serves two purposes

  • Financially secure your child's future
  • Finance the turning points in his life such as higher education and marriage

So, like a double-edged sword, the best child plan is designed to protect the future of your child in case of your unfortunate demise and at the same time, builds a corpus over a term to be utilized to finance prime moments in his life.

Best Child Education Plans in India

Child education plan gives you various benefits such as life cover, building a corpus for the child's future needs and the option of adding specific riders. Go ahead and invest in an education plan, but always compare quotes before you finally sign on the dotted line.

How is it Different from a Term Plan?

---- Term Plan Child Plan
In case the Policy Holder dies Death benefit is paid and the policy comes to an end Death benefit is paid and the policy continues as the insurer pays rest of the premiums.
In case the Policy Holder survives No Maturity Benefit Maturity Benefit

Do you Really Need a Child Education Policy?

Yes, you do! Here's why - at the present rate of inflation, the ever soaring costs of education worry us all. Today, a typical MBA course from a top business school can cost anything between Rs 5 to Rs 8 lakh. Taking into account the present inflation rate, the education cost will only rise in the future.

So, 10 years from now if your child wishes to pursue MBA, you will need at least Rs 25 lakh to start with. Apparently, the cost will be unbearable until you start planning for your child's education today. That's where a child plan acts as a savior and helps you out.

Features and Flexibilities of a Typical Child Plan

Work out the detailed specifications of the needs you are looking to fulfill through a child plan. Here are the key parameters you should look for

    • Premium Amount- It more or less depends on the sum assured and maturity amount you choose.
    • Mode of Premium Payment
      • Regular premium- As the name implies, the premium is paid on a regular basis. This can be yearly, half yearly or even quarterly.
      • Single premium - The premium is paid as a single payment.
    • Sum Assured -The thumb rule to follow is that the sum assured should be around 10 times your present income.
    • Policy Term - An ideal policy term for a child plan is the time you think your child needs to get on his feet. If your child is 10 years old, your policy term should be 8 years.
    • Maturity Amount - Sit with your financial advisor and take into account the inflation rate and other such factors, work out a maturity amount that you would require at the end of the policy term. Maturity amount can be received as a lump sum or in a frequent period of 5 years.
    • Waiver of Premium - This is a kind of rider that comes inbuilt in child plans. However, if this is not a part of the policy, it is always advisable to opt for the same. In case of death of the insured, this rider enables the policy to continue by passing off the financial burden to pay the rest of the premium to the insurer.
    • Partial Withdrawals - Some parents prefer withdrawing chunks of maturity amount at pre-fixed intervals instead of getting a lump sum amount at one go. The intention to opt for this feature is to meet financial needs of a kid at key moments in his life.
    • Riders and Benefits - These are the add-ons that make your coverage financially and qualitatively more valuable -
      • Premium Waiver Benefit
      • Accidental Death and Disability Benefit
      • Critical Illness Rider Benefit

Types of Child Plans - Take Your Pick

      • Child ULIPs - A fraction of the premium flows into debt instruments and the rest into equity instruments. The decision of switching between funds remains in hands of the insured. Since it's a market linked plan, the return is decided by the net value of the assets at the maturity period.
      • Child Endowment Plans - The premium flows into debt instruments, the decision of which is at the discretion of the insurance company. Return is decided by bonus payable on maturity.

A Word of Caution

It is important to choose a trusted appointee for your child plan. An appointee should be someone who shares a deep relationship with you and can be counted on to take care of your child in your absence. An unfortunate eventuality passes on the claim amount to the appointee who takes care of the child, till the child becomes capable of handling the money himself. If the appointee turns out to be cunning or careless, it thickens the chance of the money getting spent on anything but the child or the amount being exhausted till the child reaches at an age he needs it most. So it is best to be double sure before you choose an appointee for the policy.

A Case Scenario

Mr. Ketan buys a Child Plan for his 8 year old kid with a policy term of 10 years, aiming to get a maturity benefit of Rs 20,00,000. He opts for a life cover of Rs 25,00,000. He suffered a heart attack after 4 years the policy began. The insurer is liable to pay the appointee a sum of Rs 25,00,000 and also to borne the premium to be paid for the rest of the policy term left i.e 6 years. The child will also get the maturity benefit of Rs 20,00,000 once he reaches the age of 18 years. The same has been illustrated:

Child Plan

Quick Tips

Start early - Buying a Child Plan earlier will enable you to collect the corpus for a longer term, thus adding substance to your maturity amount.

For a longer policy term i.e >10 years, prefer Child ULIPs. Investment Gurus suggest that best child plans to invest in are the Child ULIPs, as the focus should be on equity instruments for the initial periods of the policy term to tap the maximum market profits and as the policy term reaches its end, the funds should be transferred to debt instruments to stabilize the profits thus made.

Let Us Help You

At PolicyBazaar, we take pride in helping parents like you to ensure a bright future for your children. Every child is unique and so are his insurance needs. Who knows, your children might turn out to be future Einsteins or Tendulkars. Make sure you financially equip your child to tap the opportunity when it knocks.

There are many variants of Child Plans as per your budget and needs, thus it is always advisable to compare insurance quotes from various insurers. An online comparison makes it easy for you to match quotes with your specific needs and go for the best plan.

FAQ's

Can grandparents buy life insurance policy for grandchildren?

Ans:

Yes, grandparents can buy child plans for grandchild as a gift. Policies like LIC Jeevan Kishore, Komal Jeevan, Aajeevan Sampatti (Bharti Axa),  Mera Aashirvad (Exide), YoungStar Udaan (HDFC), etc; are some of the plans which are either bought by parents or grandparents.

How to choose the right child insurance plan?

Ans:

It has been seen that most parents start planning for their child's future quite late. The need to meet the rearing priorities usually leads to overlooking the financial planning. In order to reap the benefits of insurance plan, it is strongly advised to start planning for the child's future during his/her formative years, i.e, between 3-8 years to ensure that sufficient funds are available when the child is ready to embark on a career path. There is no dearth of good child insurance plans in the market. If chosen carefully, a child's plan can become a solid long term vehicle to manage the future of a child. So, how do you choose the right child insurance plan? Below are some tips to guide you-

 

  • Know your goals= Planning is the first step to be taken before starting out investments for a child. We should understand how much money would require for child’s education, marriage, etc. The other vital factor to consider is the expected inflation rate and its effects on value of investments. So, you should quantify your objectives with a reputed financial planner and choose an apt child insurance plan.
  • Invest in child plans that offer premium waiver benefits= On the death of a parent, insurer waives all future premiums and continues funding the policy till its maturity. The premium waiver benefit ensures that the maturity benefit that was set for the certain age remains intact.
  • Carefully read product brochure and understand costs involved in the product= Insurance companies levy various charges that a customer needs to pay. There are various insurance companies operating in the market and therefore, you need to be sure that you have picked the most suitable one. Compare all available child insurance plans before picking the one.

What if I am investing for a minor child and the appointee dies? What extra care should I take?

Ans:

If you wish to invest in the name of a minor then you may need to fill a third party declaration form. Only parents and grandparents are permitted to invest on behalf of the kids. Documents that establish the blood relation with the child have to be submitted. While filling the policy document, it is mandatory to fill the name of the appointee who will take care of the policy amount on the behalf of a minor till he/she becomes adult. An appointee can invest on behalf of a kid.

What documents do I need to buy child insurance plan?

Ans:

Generally, all insurance companies ask for the following documents-

  • Age Proof
  • Identity Proof
  • Address Proof
  • Income Proof
  • Duly filled proposal form

Do I get any tax benefits?

Ans:

As per section 80C of the income tax act, the premiums paid for child plans are deductible from your total income thus lowering your taxable income. As per section 10(10D) of the income tax act, the lump sum amount you get as a survival benefit at maturity period is tax free.

What are the types of child plan?

Ans:

Child ULIPs- The premium paid by each insurer flows into a collective pool of funds that is invested both in debt and equity instruments. Being a market linked product, the potential for returns is high. This type of plan is ideal for longer policy term (more than 10 years). 

Child Endowment Plans - The premium paid by each insurer flows into a collective pool of funds that is invested only in debt instruments. The returns are steady, but not so high. This type of plan is ideal for shorter policy term (less than 10 years.

Who is beneficiary? Why it is important to have a beneficiary?

Ans:

A beneficiary is a person or entity entitles to receive claim amount and other benefits upon the death of the policyholder.  A proper nomination is required to ensure that your loved ones get all benefits of a policy without any hassles. It allows fast claim settlement in the hours of needs.

What is the difference between beneficiary and nominee?

Ans:

Beneficiary is a person who is entitled to get all benefits from the policy, including bonus, death benefits, etc., irrespective of the fact that whether the policyholder is alive or not. However, a nominee gets only death benefit. For instance, in child plans, a kid for whom the policy is bought by parents is a beneficiary. He will get all benefits after the death of a parent.

What are the features of a child plan?

Ans:

A child plan comes loaded with following features. Have a look at major features-

 

  • Flexibility to choose the policy term which can be anywhere between 5-25 years
  • Freedom to opt for a premium amount suiting your pocket as well as sum insured as per your preference
  • You are allowed to choose any mode of premium payment- monthly, quarterly or yearly installments
  • Partial withdrawal benefit is available

What factors need to keep in mind while buying child plans?

Ans:

You should pay attention towards following factors-

  • The time when the requirement of funds will arise, which in most cases is when your child attains 18 years
  • The amount you think is sufficient enough to meet education and marriage costs

While computing the amount, take into account the current inflation rate. A typical MBA program from a reputed business school which costs around Rs 6 lakh today will become threefold costlier from 10 years now.

When is the right time to buy a child plan?

Ans:

As soon as your child comes to the world, you should think of buying a child insurance plan.

What makes child plan so unique?

Ans:

The most unique attribute of a child plan is that in case of any eventuality, death benefits are paid to the child (or appointee) and the rest of the premium is waived off. The insurance company bears the premium cost.  There is no lapse in the policy and the child gets maturity amount at the end of policy term. There is no other insurance plan which has this unique feature.

What is a child plan?

Ans:

Child plan is a type of insurance cum investment that helps an individual to build a corpus for finance child’s education and marriage. Also it gives a sum assured to the child in case the insured dies. So the child plan gives dual benefit. If the insured dies, life coverage is given and if he survives, child gets surviving benefits.

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