Claims And Exclusions In A Child Plan

Child plans, like any other insurance policy, come with certain scenarios wherein policyholders or the nominees cannot claim all the benefits. These are called exclusions and can be found clearly mentioned in the brochures. Let’s look at the common exclusions of a child plan and how to avoid these scenarios to claim the benefits of child insurance policies.

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Everyone buys a child insurance policy hoping that all the benefits are accorded to them as and when promised. However, you may have heard of a lot of insurance claims being rejected by insurers. Being aware of the grounds of rejection will help you cover all the bases before claiming the benefits promised to you and your child. 

But before you understand claims and exclusions in a child plan, you should first know the full extent of the benefits offered by it.  

How can you benefit from a child plan?

  1. Child support on parent’s death

    One of the biggest reasons why parents buy a child plan is to have a financial backup if anything were to happen to them. Therefore, it becomes doubly important for a parent to check the exclusions of a child plan so that the claims process is not compromised in any way. Premium waiver benefit, annual income, etc are some of the benefits offered by the best child plans in India.

  2. Grow savings for a child’s future

    In addition to the insurance protection, child ULIPs are an excellent option to invest in market-linked funds. Although a high-risk option, the returns tend to be higher than any other product. Parents can also keep in line with the inflation rate in the education sector. 

  3. Save on taxes

    You can enjoy some tax benefits with child insurance plans. This allows you to save a portion of your annual income from tax deductions under the Income Tax Act of India. Further, the premiums paid and the proceeds from a child plan are not taxable. So you are not only saving money for your child, but also reducing the tax burden while insuring your kids. 

Significance of claims & exclusions in a child plan 

Now for your child to enjoy all the benefits, you have to study the claim settlement of a company along with the exclusions of a plan. Here’s why.

  • Claim settlement ratio (CSR) of a company tells you how many claims were settled among the ones raised. If an insurer has a low CSR, it means that it has rejected a lot of the claims filed. Therefore, you would obviously want an insurer with a CSR that you can trust to fulfill the benefits promised. 

  • This brings us to an important question - why are claims rejected by a company? In most cases, the insurer refuses to pay benefits if the circumstances do not align with its terms and conditions. 

Exclusions are certain conditions under which any death claim will be rejected or limited. This is done so that the insurance company reduces its burden of insuring a person who is most at risk.

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What are the common exclusions in a child plan?

The following exclusions are common across most child education plans. If you are mindful about these, you can easily ensure that all your claims are covered by the insurance company.

  • Death of the life assured by suicide or self-harm

  • Being engaged in a risky sport or activity such as skydiving, motor racing, etc. 

  • Participating in war or riots

  • Indulging in alcohol or drug abuse at the time of death

  • Any illegal activity will lead to your claim being rejected. 

In addition to these, the insurance company thoroughly investigates every claim. If they find that important information has been withheld, they have the right to reject your claim. 

Exclusions mostly pertain to death claims. All the maturity proceeds from a child plan are usually paid off by the insurer without much fuss. 

How to claim the benefits of a child plan?

Filing a claim against a child plan involves the following steps - 

  • Inform the insurance company about the death of the life assured. Visit their nearest branch, mail them, or call on their customer support number for the same. 

  • Submit the claim form including information on the policy, cause of death, details of the nominee, etc. 

  • The company then starts processing your request and may ask for additional documents to confirm the validity of your claim. 

  • Once approved, the claim is processed and the beneficiaries will receive the amount in their bank accounts. 

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Documents required 

  • Policy document

  • Claim form

  • Bank particulars

  • Medical certificate

  • ID proof of the child beneficiary

  • FIR or death certificate in case of death claims

In case of maturity benefits of a child plan, the insurer will reach out to you themselves when the time comes. If not, you can reach out to them through their helpline number or other means of communication that you find on their website. 

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In Conclusion

Claims and exclusions in a child plan go hand in hand. Knowing about the latter will make your claims process smooth and faster. Therefore, make sure to read through the brochures before buying it. It could be helpful if you talk to your child or other family members and explain to him/her the terms & conditions should anything bad happen to you.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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