child plan

Child Plan

Child Plan is insurance cum investment plan that serves two purposes - Financially secure your child's future & finance the turning points in his/her 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/her life.

Child Plan Buying Guide Infographic

compare child plan

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; in fact, 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 Plans for 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.

best child education plan

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?

Scenario 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 of child plan

Features of a Child Plan

Plan your primary needs that you need to get fulfilled without failure. Following are some key features that a child plan should offer:

  • Premium Amount- It is subject to the sum assured and the amount of maturity benefit you opt for.
  • Premium Payment Mode Sum Assured -The sum assured must not be less than at least 10 times your current income, says the thumb rule.
    • Regular premium- Under this mode of premium payment, you need to pay the premium on a regular basis, viz. annually, semi-annually, or quarterly.
    • Single premium - Under this mode of premium payment, the premium is paid only once.
  • Policy Term - When you realize that your child should get on his/her feet is the best time for the policy to mature. Choose the policy term to meet the exact period. E.g. If one of your children’s age is 10 years, then choose the policy term of 8 years.
  • Maturity Amount -Consult a financial advisor and remember the inflation rate and all other factors, plan the maturity amount that you would need at policy maturity. You can receive the maturity amount as a lump-sum payout or over a period of 5 years.
  • Waiver of Premium - This rider comes inbuilt into child plans. In case this is not part of the plan, it is advisable to include it without failure. If the insured dies, the nominee is entitles to receive the entire benefits of such a plan while no additional premium payment is required.
  • Partial Withdrawals - It is often seen that parents instead of holding back themselves for the policy to mature like to withdraw the sum assured in multiple fragments whenever they need it. This is often selected to fulfil the financial needs of the child at certain key moments.
  • Riders and Benefits - They add-on to the coverage offered by the plan and make it more valuable both qualitatively and financially –
    • Premium Waiver Benefit
    • Accidental Death and Disability Benefit
    • Critical Illness Rider Benefit

types-of child plan

Types of Child Plans - Take Your Pick

  • Child ULIPs -Certain share of the premium amount flows into debt instruments while the rest in equity instruments. The policyholder keeps control of switching between the funds. Being a market-linked plan, it comes handy with certain returns and that are subject to the net asset value of the company at the time of maturity.

  • Child Endowment Plans - The premium is invested in debt instruments while the decision is at the kept with the insurance company. The bonus payable at maturity decides the returns.

child plan caution

A Word of Caution

It is important to choose a trusted appointee for your child plan. Your appointee must be someone you share a strong relationship with and someone you can count on, as you child must be taken care of when you are absent. In case of an unfortunate event, the claim amount is received by the appointee till the child gets matured and capable of handling the lump-sum payout of sum assured. In case the appointee fails to take care of the child and turns out to be excessively careless, there are chances that the amount of money being exhausted before the child reaches the age when he/she needs it the most. So, it is best to be double sure before you choose an appointee for the policy.

A Case Scenario

You bought a Child Plan for your 6-year-old kid with 10 years of policy term while expecting to receive the maturity benefit of Rs 20, 00,000.  You opted for a life cover of Rs 25, 00,000. Unfortunately, you died 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 16 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 such a long policy term, i.e. >10 years, you should opt for Child ULIPs. Investment experts recommend that Child ULIPs plans are the best child plans to invest in, 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 Einstein or Tendulkar. 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.

why buy child insurance

Why Buy a Child Plan in the First Place?

People often remark that the high point of their life has been the birth of their child. Having children and seeing them grow into responsible adults is the dream of every parent. The responsibility of parents only begins with the child’s birth. They have to nurture the child, see to it that he or she imbibes good values, is schooled well, gets good college education and finally stands on his or her own feet to do well in the world. All this requires adequate funds at important junctures in a child’s life. As parents, it is their duty to see to it that the child is not left wanting for simple pleasures of life.

 

A good education is probably the single most important thing and the biggest expense in the transformation of a child into a teenager and finally into an adult. And good education does not come cheap. The cost of education has been consistently rising over the years. Every parent wants his or her offspring to study in the best school and reputed college, take vocational music or sports lessons, and get additional tutoring if required. Parents leave no stone unturned in ensuring that their child gets the best of everything. It is also invariable that the child will get sick from time to time. In such circumstances, one would want the best medical care given to the child so that he or she can bounce back with vigour and excel in life.

 

In short, the process of raising a child into confident young adults is a long and arduous one. There are bound to be occasional roadblocks along this journey and one can do justice to parenting only if one is financially secure. To ensure that this journey is smooth, one needs to have sufficient savings and have to plan finances well in advance. Only then will one be able to ensure that the child’s dreams come true.

 

Child plans offered by insurance companies are investment policies that help take care of the future needs of a child. They offer the twin benefit of insurance and investment. Child plans vary in duration depending on what one has selected at the beginning. These plans offer a lump sum amount at maturitywhich can be used for different needs of the child ranging from higher education expenses to expenditure on marriage. The payout received is generally at least 10 times the amount of premium paid over the policy period. Child plans also help in taking care of a child’s needs in the absence of parents.

advantages of child plan

Advantages of a Child Plan

Child plans offer a host of advantages, both short- term and long-term. Some of them are explained in detail below:

 

Corpus for Child’s Education

Even with minimum premium payment, child plans are able to provide as much as 10 times the amount paid in the child education plan. This lump sum amount in child education plans can be foremost utilised towards education expenditure. A child education plan is often enough to pay for college education, and even higher education in a foreign country. The money available from a child education plan depends on the terms and conditions of the plan and on the amount one has invested in it by way of premiums.

 

A Kitty for Medical Treatment of the Child

Child plans also allow the option of withdrawing money during the tenure of the child investment plans. This can be used for medical treatment of the child when he or she falls ill. Such partial withdrawals come in very handy when the child is hospitalised due to an ailment, minor accident or a more serious medical condition. The best child plan helps to reduce the financial burden caused by medical expenditure and such payouts act as an add-on for one’s health insurance plan.

 

Supports the Child in the Absence of Parent(s)

Death does not come with invitation and no amount of preparation can leave on ready for such an event. The consequences are more so for the innocent child. The death of the parent(s) causes severe trauma to a child and can leave his or her future hanging by a thread. The insurance company offers a premium waiver if the parent (i.e., the insured) passes away during the policy term of a child plan. The premium waiver benefit often comes built into child plans. If not, one should definitely opt for this rider. The child receives a lump sum amount promised at the time of purchasing the child investment plans and does not have to pay balance premium. The rider enables the policy to continue without any breaks and passes the financial burden of remaining premium to the insurer.

 

Income Protection for the Child

A child plan also protects the income of those children who start earning at a young age. It includes child actors, musicians, artists and performers among others. It provides the advantage of capital appreciation over the long term for the child.

 

Acts as a Collateral for Loans for Higher Education

Higher education is expensive, whether one plans to send the child to a private college or university in India or abroad. In fact, international education is significantly more expensive. Child plans come in handy if one intends to secure a loan for higher education as these are allowed to be used as collaterals. They can also be used as collateral for other child-related borrowings. 

A child plan is a great education policy and the best investment plan for the child. The child education plan also instils discipline and helps form the habit of saving to secure the child’s future.

tips to buy best child plan

Tips To Buy The Best Child Plan In India

The early years of parenthood are one of the best periods in the life of a parent. Watching the child grow from an infant into a toddler and then sending him or her to primary school and seeing him/her blossom during schooling years into energetic teenagers and finally into young enthusiastic adults makes for fond memories.

 

This period is ever more memorable when the parent has planned the finances well to adequately take care of expenses which come with having a child. It is the desire of every parent to give the best possible comfort and luxury to their child. Inflation, high cost of education and medical treatment, and eventually expenditure on marriage can all be managed well if one invests timely for a child’s future. This also takes care of any eventuality that may affect one’s lifestyle.

 

Though there is a slew of investment products available in the market, the best amongst them are undoubtedly child insurance plans. Unlike life insurance, the best child plan takes care of the child when he or she grows up and also in the absence of the parent. Child insurance plans serve the dual purpose of insurance and investment. They do this by:

  • Financially securing the child’s future and allowing them to grow up without the parents facing the hassles of having to worry about their children’s present and future expenses and how they will be met from the savings

  • Providing funds at important stages in the child’s life. For example, they provide money for the child’s higher education in India and abroad, his or her marriage and even provide financial aid for starting a business or pursuing a hobby and turning it into a career.

Child Plans – Tips to Make the Most of Them 

There are many child plans offered by insurance companies; however, certain things should be considered while choosing the best investment plan for a child. Below-mentioned tips help in making a conscious decision to best meet the child’s needs.

 

Start Early

It is advised that one starts investing as early as possible for the future of one’s child as it helps to build a larger corpus which in turn gives greater freedom in taking any financial decision. Most child plans offer maturity benefit and start giving payouts at key milestones in life after the child turns 18 years old. The overall benefit of a child plan is higher if one starts investing early. This tip cannot be stressed enough as most people do not realise that each additional year of investment means a bigger corpus. In fact, starting the child education plan when the child is say 5 years old or when he or she is 10 years old, may eventually translate into having to take a loan to pay off the tuition or college fees in the latter case. Starting early helps as the investment returns between starting a couple of years later for same plan and same amount can mean a difference of a few lakh. 

 

FactorIn Economic Variables

It is important to understand that savings and investment for one’s child will be taken advantage of only in the forthcoming years. Multiple economic variables need to be factored in while deciding an appropriate sum assured. Inflation, increase in cost of education and healthcare expenses, among other economic factors, if accounted for properly will provide adequate funds for the child in future. In case you are unsure how much you need to save, consider our illustrative calculations under the header “Do you Really Need a Child Education Policy?” to get an estimate of the future education costs. And this is only for India. If the child wishes to study abroad, you can easily multiply the Rs. 25 lakh mentioned for the MBA by a factor of 3 or 4 to get the amount you need for foreign education. 

 

Special Attention to Terms and Conditions

One should scrutinise the fine print and understand the terms and conditions of the child investment plans’ policy document properly. The best child plan has unique features and it is important to interpret them correctly. This will prevent confusion at the time of maturity and/or in the payout. It will also help in selecting a suitable child education plan as per individual requirements, one that is best for the child’s needs. It makes sense to use our site to compare the various plans in detail, and pick the child education plan that best suits the requirements.

 

Choose the Premium Waiver Benefit

In the event of the unfortunate death of the insured (parent) during the policy tenure, insurance companies often offer to waive the premium. This is known as premium waiver benefit or self-funding of premium. It helps in continuing the policy without straining the family including the child for premium payments. The child receives full benefit at maturity, promised at the beginning while purchasing the policy. This feature is normally built into child plans; if not, then one should definitely go for this rider.

 

Opt for Partial Withdrawals Clause 

Emergencies can happen at any time and the child may require financial aid to tide over emergency cash requirement situations. The provision of partial withdrawals allows withdrawal of partial sums of money from the best investment plan for child to meet unforeseen expenses. This prevents any emergencies from causing any sort of financial instability in the family or in the child’s education or dreams. Partial withdrawals help in not disturbing financial planning and not resorting to regular income to pay off the requirements.

Choice of Funds

Child plans usually invest funds collected from policyholders in capital markets to earn a higher return. However, they offer the insured or policyholder, the choice to choose the type of fund to invest their money depending on individual investment appetite and risk taking ability. Those who are risk averse may want their funds to be allocated in debt which offers more stability against market volatility. People who want to earn a higher return on investment may be fine with their investment being put into equity. Options like Systematic Transfer Plan and Dynamic Fund Allocation help in safeguarding investments against market instability. These plans allow for higher return investments in the initial years by putting the money in equity oriented firms and for stable growth in the later years by switching to the more secure debt funds. Most insurance companies ensure that the allocation is automatic and the parents do not have to worry about safeguarding the important capital to meet the upcoming future expenses of their loved one. 

These tips are only some pointers which will help in choosing the best child plan. It pays to start early in securing the child’s future. Also, reading up on child plans on our site and on the insurance companies’ websites will ensure you know your ABCs before you pick the right plan. 

How to Plan Right for the Child’s Future

All parents wish their child to shine the brightest in the world. As a loving parent, they want to make sure they leave no stone unturned to give their precious the best the world has to offer – the foremost education, finest facilities and amenities, and the best opportunities so that he or she can achieve his or her true potential.

 

The best child education plan and best child insurance plan help in achieving this objective. Child insurance plans can be tailor-made to meet the future financial requirements of children. They are available in two forms – unit-linked child insurance plans and traditional endowment plans to suit different individuals with varying risk profiles.

 

Systematic and regular investments can fashion a large corpus sum to secure the child’s future. Once the parents have identified and realised this need, they should take steps to select the right child education plan for the child. This can be achieved in the following ways:

 

Utilise the Services of an Insurance Advisor

There are professionals who specialise in advising on financial matters – whether it is choosing a life insurance policy or choosing the best child plan in India. Insurance advisors are experts in matters of financial investment and suggest appropriate insurance and investment plans. They are well versed with various options available in the market.They will be able to provide the best advice and to answer all queries related to the options they show. They can also guide the client in choosing a plan that best meets their requirement. It is advisable to use the services of an insurance adviser to make sense of different products on offer.

 

Choose the Right Sum Assured

The circumstances of every individual and every family are different and it takes someone to pragmatically assess and appreciate the individual requirements to come up with the right sum assured amount. One has to account for existing assets and liabilities, current and future income and decide the kind of lifestyle one wants to provide his or her child. Future education expenses of the child and money that will be required for the child’s marriage are some of the factors to determine an appropriate sum assured of the child plan. The sum assured amount should be such that one can comfortably pay the requisite premium without overburdening the finances of the family. 

Compare Plans

The market is flooded with a variety of plans offered by different insurance companies. Every plan is unique and comes with different features and terms and conditions. It is important to compare plans on relevant parameters to select the most appropriate one based on individual requirements. This can be done in the conventional offline way or can be done online. As an online insurance comparison portal, PolicyBazaar allows easy comparison of selected child plans being offered by the various insurance companies in India.

 

Goals of a Child Plan

Existing and would-be parents can opt for a child plan for a variety of reasons. The underlying objective, however, is always the same for everyone – to provide a better future for their children.

Child plans act as an instrument for insurance as well as investment. They provide a life insurance cover and offer payouts at important stages in the life of a child. A portion of money by way of premiums is invested in debt or equity as per the choice of the insured (generally the parent). This acts as an investment and provides returns based on how the debt or equity market performs.

It always pays to start investing early to have enough funds at key milestones in the child’s life. Education and marriage are some of the important areas for which substantial funds are required.

goals of child plan

The primary goals of a child plan are explained in some detail below:

Meeting Education Expenses

The most important duty as a parent is to provide good education to the child. Good education is important in ensuring a successful career. Education starts from the time the child enters pre-school and continues all the way to graduation and post-graduation. One has to plan well to have sufficient funds to meet the education requirements of the child.

 

The cost of education remains high and continues to increase every year. Inflation in education perhaps surpasses inflation in every other facet of life. Investing in a good education policy in India to educate the child is something every parent must consider. 

 

While considering this, the parents must consider all levels of education from school to university. It should also include tuition fees, competitive examination course fees, cost of school or college trips, application costs for foreign universities and so on. Parents must also consider some other factors such as the place they live in. For instance, the cost of education in the metros is much higher than smaller Tier 2 cities. Tier 3 cities in India are even lesser than the larger cities. Another thing to consider while doing the calculations is whether the parents want their child to go to a boarding school. This is an important factor to consider if the parent(s) have a transferable job. In such situations, if they do not opt for boarding schools, one of the parents who is not in the transferable job can stay at one place while the child’s school education is at least complete. This will mean additional expenses for setting up another house if the parents or their own parents do not own a house in that city or town.

 

Insurance companies offer a range of child education plans. The best child education plan offers periodic annual payouts to pay for child’s school fees in addition to providing a large sum of money for higher education. This is especially beneficial if one wants to send the child abroad for college or post-graduate courses.  Having a child education plan also ensures that one never faces a situation where there is not enough money to provide the best education to the child.

 

Having Sufficient Funds for Child’s Marriage

Marriage is another crucial event in the life of a child and parents always wish to celebrate this occasion in a grand way. A marriage is no more a simple affair these days. It has become prohibitively expensive. The rent for a banquet hall or marriage venue has increased substantially. The cost associated with catering and food is a major constituent of marriage expenditure. And the cost of destination weddings runs in lakhs of rupees. However, all this can be easily taken care of. 

 

In order to make this occasion unforgettable, the parents need to plan well in advance.  Child education plans also aid in meeting marriage expenses in addition to higher education. They provide a significant corpus to conduct a marriage in a lavish manner, without compromising on any aspect.

 

Buying a House for the Child

Parents also dream of providing a house for their children. Buying a house for the child is no mean achievement. With the overall increase in prices of goods and commodities, the price of a house is now more than ever. If not planned well, owning a roof remains only a dream. However, proper planning ensures that this dream is easily realised by the parents.

 

Child plans help in contributing towards the purchase of a house. At maturity, one can use the lump sum amount to buy the child a house. After years of paying the premium, the money at disposal is often enough for at least the down payment. The rest of the amount can be funded with a home loan and the EMIs can be paid off by the child or the parents from their regular income. 

 

Child plans play an important role in helping parents realise all their dreams for their child.

benefits of child plans

Benefits of Child Plans

The birth of a child brings immense joy to parents and the extended family. However, it brings with it a range of duties and responsibilities. It is a time to reflect and plan well so that the journey of parenting is smooth.

Parents want to provide only the best to their child. They want their progeny to have the best clothes, eat good food, study in the best school and then go to the best college. The best gift a parent can give their child is a bright and secure future and this is possible if they start financial planning early.

 

Timely investment planning allows sufficient funds at one’s disposal at key milestones in a child’s life. Even if something happens to the parent, the child will continue to live comfortably. The best child insurance plan offers a comprehensive life insurance cover along with the extra edge of financial support for the child’s future education and career.

 

There are two types of maturity benefits to choose from in child plans. One can either go for a money back option which offers guaranteed payouts every year after a few years or a lump sum payout at the end of maturity of the policy. Depending on one’s requirements, financial situation, and current and future income, one may choose among the two options. The lump sum payout gives a huge chunk of money which can be utilised towards higher education, marriage or buying the child a house.

 

A child education plan offers comprehensive benefits of life cover along with maturity benefit. One should choose a child education plan which offers enough returns to cover the educational expenses of a child. The returns should be enough to take care of the child’s future needs even when the insured (parent) is not around.

Child education plans have several benefits. Some of the important ones are explained below:

 

Pay for Child’s School Fees

Child plans assist in paying the child’s school fees in the absence of the insured. Insurance companies immediately pay approximately 10% of the sum assured amount in case the parent dies and also pay annual pay-outs which amount to around 10% of the sum assured till the end of the policy tenure. This way the child can study and continue to go to school uninterrupted.

 

Meet College Expenses

The cost of higher education has increased significantly in recent years. However,parents realise that their children must study in the best colleges to learn from the best in the world. The fees for some professional courses is increasingly becoming unaffordable, often forcing parents to take loans to see their child become an architect, chartered accountant, doctor, engineer, or lawyer. If one starts saving and investing for future expenses early in an education policy in India, one will have sufficient money to comfortably meet the child’s college expenses. A child education plan is the perfect investment instrument for this as it provides a corpus at the time of maturity in addition providing a life insurance cover. One can then be sure that they will be able to send their child to a college of his or her choice.

 

Money for The Child to Pursue Additional Activities

Child education plans allow partial withdrawals which can be used to pay for addition activities that a child may like to pursue. If the child has an inclination towards sports, one may get him or her special coaching by professional coaches. Children with the talent for music and arts can be nurtured by sending them to art and music schools. Some child plans also come with an option of periodic payouts that are very useful in paying for additional activities to develop the overall personality of the child.

 

Avoiding Capital Erosion

Dynamic fund allocation allows parents to make the best use of their investments. Such allocation helps safeguard the investment since it prevents any capital reduction due to any volatility in the securities markets. Child plans offer the choice of fund selection depending on one’s risk taking ability and investment appetite. To earn higher returns, the parents may choose a fund that invests in equity markets. On the other hand, for stability, they may choose a debt fund. Systematic Transfer Plan (STP) helps plan one’s investments in such a way that requires a sum of money is available at important stages in life. It also allows automatic switching of purchased units of funds to make the best of the market returns.

 

Rider Benefits

The best child plan offers to waive off the premium for the remaining tenure of the policy as part of the plan. Alternatively, it is also available as an additional premium waiver rider. This rider is extremely useful as it guards against any risk from the parent (the insured) passing away before the end of the policy term. Other riders like personal accident insurance rider provide similar benefits if the insured is severely injured due to an accident or dies during the policy term.

 

Tax Savings

Child plans also result in significant tax savings. The premium paid towards a child plan is eligible for tax deduction under Section 80C of the Income Tax Act 1961. Any income from the child plan is tax-free under Section 10 (10D) of the same act.

How choose best child plan

How to Choose the Best Child Plan In India

A child plan is undoubtedly one of the best ways to secure a child’s future. The child plans work at two levels – as insurance and investment. In addition to providing a life cover, they provide adequate funds to pay mainly for higher education and marriage expenses. In the unfortunate circumstance of passing away of the insured, they also help safeguard the child's future.

There are several plans available in the market offered by insurance companies. Although each plan is unique with distinct features, two important things should be kept in mind while choosing a child plan:

 

Expectations from Child Plan Should Meet Personal Requirements

The earlier one starts planning and investing for the child’s future, the better it is. Investing early in a child education policy in India ensures that required sums of money are available at important junctures in the child’s life. Even in case of difficult circumstances, the child can be raised comfortably if one has planned well.

 

Parents have to plan well for two important costs associated with a child – education and marriage. One has to plan in such a way that required funds are available when the child is ready to go to college and when he or she is of marriageable age. Other criteria such as inflation should be factored in adequately. One has to decide the kind of lifestyle one would like to provide the child by being realistic and at the same time considering present income and expected future income. There should be enough money to pay for the child’s extra-curricular activities. This planning exercise is quite a complex task and takes serious thinking.

The maturity amount of the child plan should be sufficient to meet one’s future needs.

 

Features of a Child Plan

Different child plans have different features. The policy features and benefits should be in line with one’s individual requirements.

 

Important features to consider are:

Flexibility of the Plan

The best child insurance plan allows partial withdrawals, which is useful to meet urgent requirements without disturbing regular income. In addition, the flexibility of switching investments from an equity fund to a debt fund and vice-versa lets one capitalise on market conditions at different stages of the policy tenure. This way, one can benefit and protect oneself from volatility in the market.

 

Premium Waiver Benefit

In case of death of the insured (parent) during the policy term of a child plan, the insurance company agrees to waive the remaining premiums until maturity. This allows the plan to continue without burdening the child for future premium payments. Insurance companies ensure that the child gets the maturity benefit. This benefit often comes built into child plans. However, if that is not the case, one should opt for an additional premium waiver rider.

 

Insurance Companies Offering Child Plans

Aegon Life Insurance Company

  • Aegon Life EduCare Advantage Insurance Plan: This child plan provides financial security for the child’s future education by covering the life of the insured in addition to guaranteed payouts in the last 4 policy years. Bonus begins to accumulate from the very first year of the child education plan, thereby increasing the total amount of benefit. One has the choice to decide the duration of child education plan and the option to add protection against accidental death, disability, and dismemberment. The minimum sum assured amount is Rs. 1 lakh.

  • Rising Star Insurance: The plan offers triple-benefit insurance cover on the parent’s (insured’s) life till the child turns 25 years old for his or her education. It systematically contributes money to create a corpus for the future financial needs of the child. One has a choice of fund options to suit individual needs and the option to withdraw partially after 5 years. Additional premium can be paid by way of top-up.

Aviva Life Insurance Company

  • Aviva DhanNirman: In addition to giving a guaranteed regular stream of income at the end of premium payment term, this plan also offers a bonus at the end of the policy term. There are 4 policy terms to choose from and the maximum sum assured amount per life is Rs. 1 crore.

  • Aviva DhanSamruddhi: This traditional life insurance plan helps meet short-term as well as long-term requirements by giving guaranteed cash back every 5 years in addition to a maturity benefit which is also guaranteed. It also offers guaranteed yearly additions up to 9% of annualised premium.

  • Aviva Life Bond Advantage: This is a medium to long term plan offering the option to switch between 7 different fund options to grow one’s wealth. In addition to a life cover, one can partially withdraw money after 5 years.

  • Aviva Live Smart: This unit linked insurance plan offers the flexibility of making personal investment decisions from 7 funds which have varying degrees of equity and debt exposure for long-term growth. If the need arises, one can partially withdrawal after 5 years without any penalty.

  • Aviva Wealth Builder: The plan offers the option of 3 policy terms and guarantees to double the amount of money paid by way of premiums at maturity. The maximum premium per life is Rs. 1 crore.

  • Aviva Young Scholar Advantage: This child education plan helps in securing the child's education and offers guaranteed additions for loyalty to enhance the value of the fund. It also offers to protect investments against a volatile market by two mechanisms – Systematic Transfer Plan and Automatic Asset Allocation.

  • Aviva Young Scholar Secure: This child education plan helps in securing key milestones in the child's education by offering – Tuition Fee Support (TFS), College Admission Fund (CAF) and Higher Education Reserve (HER).

  • Aviva i-Growth: This plan offers a choice of 3 policy terms and 3 funds, with total administrative charges being as low as 1%. It also allows partial withdrawals after 5 years to meet unexpected expenses.

  • Aviva New Family Income Builder: This savings cum protection plan guarantees returns as regular payouts for 12 years. The maximum annual premium per life is Rs. 1 crore and sum assured is 24 times the annual premium.

  • Aviva DhanVriddhi Plus: The unique attraction of this plan is that it offers 100% return on premiums paid at the time of maturity as guaranteed benefit. If there is any accumulated bonus, one also gets that to meet long-term needs. There are 3 payment term options and the premium has to be paid on an annual basis.

 

Other Companies Offering Child Plan in India

  • Bajaj Allianz Life Insurance

  • SBI Life Insurance

  • Bharti AXA Life Insurance

  • Birla Sun Life Insurance

  • Canara HSBC Oriental Bank of Commerce Life Insurance

  • Edelweiss Tokio Life Insurance

  • Future Generali India Life Insurance

  • HDFC Life Insurance

  • ICICI Prudential Life Insurance

  • IDBI Federal>

  • Kotak Life Insurance

  • LIC of India

  • PNB MetLife India Insurance

  • ICICI Prudential Life Insurance

  • Reliance Life Insurance

     

Plan Name Plan Features Entry Age - Min/Max Maturity Age - Min/Max Policy Term(PT) & Policy Paying term(PPT) Plan Benefits Sum Assured in case of Death
Smart Kid Solution with ICICI Pru Smart Life
  • Loyalty Benefits inform of Wealth Booster & Loyalty Additions.
  • Select from Fixed portfolio Strategy or LifeCycle based Portfolio Strategy, based on your risk appetite
  • Accidental Death Benefit rider offered with this plan
  • Partial Withdrawls allowed after 5 yrs of policy term.
  • Tax deduction is available under sec 80(C) when Sum Assured is atleast than 10 times Annual premium.
20 - 54 Years 64 Years PT: 10 - 25 Years
PPT: Same as policy term
Maturity Benefit:On maturity of the policy, you will receive the Fund Value with the option to take it as Lumpsum or in form of periodic installments. Death Benefit:The Lump Sum benefit is paid whch is higher of the two amounts:
• Sum Assured
• Minimum Death Benefit *Smart Income Benefit: Incase of Death the company pays remaining premium installments during policy term & fund value is paid to nimminee.
For entry age below 45:
Higher of
10 * Annualized premium
or
0.5 * policy Term * Annualized premium

For entry age equal or above 45:
Higher of
7 * Annual Premium
and
0.25 X Policy term X Annual Premium *Minimum Death Benefit = 105% of the total premiums paid including Top-up premiums, if any.
Aegon Life iMaximize Insurance Plan - Benefit option II
  • No premium allocation charge
  • You can choose from 3 Unit linked funds viz. Blue Chip Equity Fund, Debt Fund, and Secure Fund as per your investment objectives.
  • Option to boost your Fund Value through Top-Ups
  • Tax deduction is available under sec 80(C) only when Sum Assured is atleast than 10 times Annual premium.
18 - 50 Years 65 Years PT: 15, 20, 25 Years
PPT: 10, 15 Years or equal to PT
Maturity Benefit: You receive the Total Fund value (including the Top-Up Fund Value) as on the maturity date. Death Benefit * Option 2: The nominee receives the Maximum of Sum Assured or 105% of all premiums paid immediately. Company will pay all future premiums & pay fund value at end of policy term.An amount equal to the Annualised Premium will also be paid paid to the beneficiary at the start of every Policy year. For entry age below 45:
Higher of
10 * Annualized premium
or
0.5 * policy Term * Annualized premium

For entry age equal or above 45:
Higher of
7 * Annual Premium
and
0.25 X Policy term X Annual Premium
HDFC SL Young Star Super Premium
  • Yearly payments to your family in case of your unfortunate demise
  • Flexible Benefit Payment Preferences – Save Benefit or Save-n-Gain Benefit
  • Opportunity to invest in a choice of funds
  • Tax deduction is available under sec 80(C) when Sum Assured is atleast than 10 times Annual premium.
18 - 65 Years 75 Years PT: 10 - 20 Years Maturity Benefit: At the end of the policy term, you will receive the accumulated value of your funds. Death Benefit: * Save Benefit Option: The Sum Assured shall be paid to beneficiary immediately ,The company shall pay all future policy premiums & pay the fund value to the beneficiary at end of policy term. * Save n Gain Option: The Sum Assured shall be paid to beneficiary immediately. 50% of future policy premiums shall be paid by the insurer, the fund value shall be paid at end of policy term & 50% of the all future premiums shall be paid to beneficiary on an annual basis. Min:
For age less than 45 Years:
10 * Annualized premium
For age equal to 45 Years and above:
7 * Annualized premium
Max: 40 * Annualized premium
HDFC LIFE Young Star Udaan - classic waiver (traditional plan)
  • Participating endowment and moneyback plan with multiple options
  • 3 maturity benefit optons that will help you achieve key milestones of your child's aspiration.
  • Flecibility to choose from a wide range of Policy and premium payment term
  • Tax deduction is available under sec 80(C) when Sum Assured is atleast than 10 times Annual premium.
18 - 55 Years 33 - 75 Years PT: 15 - 25 Years
PPT: 7, 10 Years, Policy Term minus 5 Years
Maturity benefit options:
Option 1(Aspiration): 125% of sum assured
Option 2(Academia): 130% of sum assured
Option 3(Career): 140% of sum assured Death Benefit Option: It shall be higher of Sum Assured on Death or 105% of premiums paid.

For age less than 50 Years:
10 * Annualized premium
For age equal to 50 Years and above:
7 * Annualized premium

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.

Child Plans Videos

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