Is Waiver of Premium Rider Essential While Buying Child Insurance?

A child’s upbringing is crucial in every stage of their life as it can impact how and what they become in adulthood. Not every parent is ready to deal with the financial situations that may arise as the child grows. To back up children’s dreams and goals, staying strong financially helps them go a long way. Child insurance plans help in such situations.

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Child plans are generally a mix of insurance and investment that helps in planning a better financial future for your children. These plans also help achieve the goals of your children like higher education.

Child Insurance and Its Benefits

Child insurance plans help build a corpus in lieu of children’s future financial requirements over time. The lump sum amount received upon policy maturity or reaching life’s significant milestones like higher education or marriage.

Most insurance policies also offer multiple add-ons to enhance basic coverage like waiver of premium and income benefit. It is one of the most frequently bought rider options with basic insurance coverage. Moreover, waiver of premium rider comes as an in-built option for most child plans.

Importance of Waiver of Premium Rider

Waiver of premium is an additional option offered under child plans to cover premium costs in case of any unfortunate events. 

For child insurance, parents are the primary policyholders who must pay regular premiums. Consider an instance where you, the primary policyholder, faces an unfortunate event that renders them disabled, injured, or deceased. This rider will ensure that future premiums are waived off while the cover continues its coverage in such a scenario.

Waiver of premium rider further ensures that the policy does not lapse and the child continues receiving the protection to achieve dream or goals. The child will receive a lump sum amount upon maturity of the policy.

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Benefits of Waiver of Premium Rider

It offers multiple benefits that you may consider while purchasing the plan and its riders:

  1. Protection against critical illnesses

    In case the parent is diagnosed with a critical illness and unfortunately does not survive the term, waiver of premium rider helps cover the remaining term’s premium costs. Some of the critical illnesses the rider offers protection against are cancer, heart attack, kidney failure, and vascular disease.

  2. Protection against disability

    If the parent is rendered disabled due to an accident or any other ailment, this rider will ensure that all future premiums are waived off. However, the disability must be for 6 months or more for this rider to work.

  3. Low premium costs

    Most child insurance plans offer policies with an in-built waiver of premium rider. In case of its unavailability, it can be added to the basic cover for a small additional premium.

  4. Flexibility in opting the rider

    Although most child plans have an in-built waiver of premium rider, most of the policies also facilitate its removal or addition as per convenience. However, keeping the rider option is only helpful during times of crisis.

  5. Tax benefits

    The premium paid against the term insurance including waiver of premium rider is exempt from taxes under section 80C of the IT Act 1961. You can claim tax exemption up to Rs 1.5 lakhs.

Exclusions Under Waiver of Premium Rider

Since parents are the primary policyholder, you must know about exclusions under this rider.

Following are the exclusions that most insurance companies have for this rider to work adequately:

  • HIV

  • Ailments diagnosed during the waiting period of the policy

  • Congenital infections

  • Injury or death caused due to riot, strikes, war, or invasion

  • Injury or death caused due to participation in a criminal act

  • Illness or death caused due to nuclear contamination

  • Injury or death caused by participating in extreme sports like martial arts, skydiving, bungee jumping, hunting etc.

Safeguarding Children’s Future

Child insurance plans are steadily gaining importance due to inflating costs of raising a child and giving them a good education or life. Buying comprehensive child insurance is one of the best gifts a parent can give their new born children that also safeguards their future.

These plans will help realise their dream irrespective of any eventualities. You can also buy the plan after comparing and carefully considering all the features.

Besides, waiver of premium rider offers additional benefits to the protection base policy offers. 

But before jumping to any conclusion, go through all the points above and consider adding waiver of premium rider to your base policy for enhancing protection.

*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.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^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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