Child Plan for Education and Marriage

What Are Child Plans?

Child plans are savings and insurance schemes that help meet the financial requirements of the child even in case of a parent's death/ disability/ loss of income. Through this scheme, lump-sum financial coverage is offered to meet the child's future requirements like higher education, marriage, college fees, etc. 

Benefits of Availing Child Plan

• The assured amount will be available even before the maturity period if in case the insured dies.
• Tax benefits under section 80C of the Income Tax Act (IT Act)
• The benefit of premium waiving: The Premium will be waived in case of the insured's death. There is no need to pay the premiums after the insured's death, and the maturity benefit will be payable on the maturity date.
• Flexibility in paying the premiums, as there are many payment periods available to the insured.
• Choice of availing loans against the child plans.
• These plans pay out the maturity benefits to the children even after the parents die. 

Child Plans

As many child plans are available in the market, parents will get confused about which plan to opt for. Then they have to search and inquire about the best plans available in the market, which will meet all the criteria of the parents and the children. 

Some of the best plans are given below:

1. Aviva Young Scholar Advantage Plan:

   It is a non-participating ULIP, mainly featured to provide coverage to the child's higher education. In this plan, the parent will be insured for the child's benefit.

   1. Features: 

      • Flexibility in partial withdrawal at any time.
      • The insurer will guarantee the maturity amount to the child on the parents' death with no liability of paying future premiums.
      • The child's entry age (nominee) should be 0-12 years.
      • Premium payment term (PPT) for the child whose entry age is 0-8 years is 13 minus child's age. PPT for the child whose entry age is 9-12 years is five years.
      • There are seven funds available for the insured; he/she can choose any to invest.
      • Riders are available such as Accidental death benefit rider, Dread disease rider, and Term plus rider.
      • Sum assured is ten times the yearly premium or 0.5 times the policy tenure x yearly premium (whichever is higher).

   2. Benefits:

      • Can avail guaranteed loyalty additions.
      • Tax benefits under IT Act.
      • Partial withdrawals can be made for the first five years.
      • The switching option is available with free 1st twelve switches; the insured can switch with a minimum of Rs. 5,000/-.

2. Birla Sun Life Insurance Vision Star Plan:

   It is a traditional money-back policy that provides life coverage to the children against any unfortunate events with limited premium payment choices.

   1. Features:

      • Insured can avail of money-back benefits in the form of assured payouts, which are made available to the insured in two options (i.e., option A and Option B).
      • Flexibility in choosing the sum assured.
      • Bonuses are paid out regularly.
      • Mode of premiums is monthly, quarterly, and annual plans.

   2. Benefits:

      • Sum assured is ten times the yearly premium or 0.5 times the policy tenure x yearly premium (whichever is higher).
      • Maturity benefits = accumulated bonuses + terminal bonuses (if any)
      • Death benefits = sum assured + assured payouts + bonuses. 
      • Secured loans are available under this policy with a minimum of Rs. 5000 and maximum is 85% of the policy's surrender value.
      • Limited premium payment options.
      • Tax benefits under IT Act.

3. Bajaj Allianz Young Assure:

   It is a traditional participating endowment child scheme that provides life coverage to the child and bonuses that are payable as a percentage of the guaranteed maturity benefit. The child's maturity benefit will be paid at regular intervals at the end of the policy tenure. On the death of the insured, the sum assured will be paid to the child. 

   1. Features:

      • Premium payment can be either regular or limited.
      • Premium payment tenure is 5 / 7 / 12 / 15 / 20 years. 
      • Assures guaranteed maturity benefit.
      • On the insured's death, the remaining premium payments will be paid by the company itself to provide a guaranteed maturity benefit to the child.
      • Various premium payment and policy tenure options are provided to the insured.
      • Insured can avail Accidental Permanent Total Disability add-on in this policy.

   2. Benefits:

      • Maturity benefits include guaranteed maturity benefits + terminal bonus + add-ons + interim bonus + vested bonus.
      • Insured can choose to get maturity benefits on completion of 3, 5, 7 years for the child's needs.
      • Additional riders are offered in the policy.
      • Tax benefits under IT Act.

4. Exide Life Mera Aashirvad:

   It is a savings plan where parents are insured to meet the child's future requirements. Payouts will be provided for the child's education, marriage, etc.

   1. Features:

      • Non-participating child plan.
      • Offers limited PPT. 
      • PPT depends on the age of the child.
      • Maturity benefits will be provided in two options (A and B). 
      • Availability 15 days of free look period.
      • 30 days as a grace period is made available for premium payments.

   2. Benefits:

      • Tax benefits under IT Act.
      • Premium can be waived on the Insured's death, and the sum assured will be paid ten times the annual premium payments. 
      • Maturity benefit = sum assured + additional bonuses.

5. Future General Assured Education Plan:

   It is a non-participating and non-linked insurance plan which offers payouts for a child's educational purposes. In this plan, four guaranteed annual payouts are offered during the policy term.

   1. Features:

      • Provides high maturity benefits with discounts.
      • Insured can choose to avail reduced payment benefits.
      • Premium can be waived in case of the insured's death.

   2. Benefits: 

      • Insured can avail the facility of loan
      • Tax benefits under the IT Act.
      • Riders are available, which can be opted by insured according to their requirements. 
      • Ensures the education of the child even in the unfortunate events of the parents.

6. HDFC Life Young Star Udaan:

   It is a money-back child scheme for their education and marriage expenses. On the parents' death, this plan provides the maturity benefit with the guaranteed add-ons to the child, and the company will pay the future premiums.

   1. Features:

      • Three maturity benefit options are available according to the child's needs; Aspiration, Academia, Career.
      • On the death of the parents, there are two choices available to the children and their families. One is Classic Option; in this option, the policy will come to an end on payment of death benefits. Another is the Classic Waiver option, on payment of death benefit, the policy will continue, but the future premiums will be waived.

   2. Benefits:

      • The money-back option can be availed by the insured
      • Tax benefits under IT Act.
      • Accumulated bonus paid on the maturity date.
      • In the first five years of the policy tenure, guaranteed add-ons are paid.

7. ICICI Prudential Smart Kid Solution:

   It is a ULIP, which gives various options for investment for the child along with the Smart benefit, which accumulates the funds in the absence of parents. 

   1. Features:

      • Partial withdrawal can be made anytime for a child's education after five years of the policy term.
      • Can invest money in 10 different funds.
      • Insured can choose the policy period.

   2. Benefits:

      • Tax benefits under IT Act.
      • The lump-sum benefit with higher sum assured.
      • Death benefit=150% of the total paid premiums.
      • Smart benefits can be availed by the regular pay policies, not for the one pay policies.

8. LIC Jeevan Ankur:

   This is an endowment child plan with specialized features to meet the child's educational and other needs. The premium has to be paid till the end of the policy tenure. The sum assured would be paid to the child and the loyalty additions even if the parents are dead.

   1. Features:

      • The sum assured will be paid immediately on the insured's death, and 10% of the sum assured is paid every year during the policy term.
      • The policy will be revived within five years from the date of 1st unpaid premium.

   2. Benefits:

      • Loyalty add-ons are paid on the maturity date.
      • Accidental benefit riders and critical illness riders are paid.
      • Tax benefits under IT Act.
      • Maturity benefit = sum assured + loyalty additions.

9. Max Life Shiksha Plus Super:

   It is a savings plan designed to help children with their education and marriage expenses.

   1. Features:

      • Partial withdrawal of funds is allowed in case of unfortunate events.
      • Insured can choose the policy tenure and PPT.
      • Insured can avail five different funds with different degrees of risk.
      • A free look period is allowed for 30 days.
      • The policy offers family income benefits along with future funding premiums.

   2. Benefits: 

      • Tax benefits under IT Act.
      • Loyalty add-ons are paid along with the maturity amount.
      • The investment options available for the insured give the maximum returns.
      • Can avail family income benefits.

10. Reliance Nippon Life Child Plan:

    This is a Traditional Money Back plan where 25% of the sum assured will be paid in the last four years of the policy term. It ensures the guaranteed benefits to the child for their future needs.

    1. Features:

       • Guaranteed regular interval payments.
       • 25% of the sum assured is paid every year in the last four years of the policy term.
       • Insured can avail three riders: critical illness rider, total disablement rider, permanent disablement rider, accidental death benefit, and family income benefit rider. 

    2. Benefits: 

       • Accrued benefits are paid on the maturity date.
       • Maturity benefit = 25% of sum assured + bonus.
       • Tax benefit under IT Act.

Conclusion

Every parent wishes to fulfill their child's future life goals either of their higher education or marriage.  Opting for the child’s plans is the best way to fulfill them. These plans ensure financial coverage even in unfortunate events. So, it is essential to opt for the child's plans to paint colors for the child's future and avoid future financial burdens.

FAQ's