Which Insurance Policies Can Help Secure Child Education and Marriage?

You should know that growing a child is no cheap affair if you are a new parent. Each step requires you to invest heavily from planning their education, college fees, and medical bills to their marriage. Without prior financial planning, you won’t be able to give your child the quality of life that they deserve. You need a combination of insurance and investment to secure their future financially.

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Along with investments to grow your savings, insurance schemes can help secure your children’s education and also fund their marriage (which is becoming costlier than ever now). These schemes are especially important because the proceeds from these policies can help your child fund their future capital needs in your absence. 

Let’s look at the types of insurance policies you can buy to secure your kid’s education and their marriage.

Types Of Insurance Policies To Secure Child Education & Marriage

The insurance space in India is replete with policies that offer fairly comprehensive coverage featuring important benefits. Given the numerous options available, it is important to filter out insurance policies that best serve your purpose. If your goal is to plan for your child’s future and create a corpus sufficient to fulfill their education and marriage-related expenses, investing in the following types of insurance plans can help you:

  1. Child Education Plans

    Child education plans are necessary insurance instruments for child planning. These child plans help you effectively cover the cost of education, from school tuition fees to college and even studies abroad. What makes child education plans an ideal investment is the life insurance component that is attached to them. In the event of the parent’s death, these plans offer a lump sum payout to the child that can be used in the future to serve expensive capital-related needs, including marriage.

    Key Features of Child Education Plans

    • The lump sum benefit amount receivable on the death of the parent is entirely tax-free. The amount can be used in whichever capacity the child deems fit, even if it is to pay for their own marriage or medical needs.

    • Further, coverage and benefits under a child plan continue till the end of the policy term, even on the death of the premium paying parent with the waiver of premium feature. 

    • There are several money-back insurance policies that offer periodic payouts to help cover certain milestones in the child’s educational pursuits. 

    • Child plans also serve as collateral for loan applications that one may avail to pay for higher education in a foreign nation. 

  2. Term Life Insurance Plan

    Term insurance is a type of life cover that offers protection for a specific term. These policies offer comprehensive coverage to the tune of Rs. 1 Crore at affordable premium rates. However, term life insurance policies are pure risk protection plans and, therefore, do not come with any maturity benefit. The death benefit amount that is offered to the family of the life assured can help secure important financial aspects such as child education and marriage. This ensures that a child’s needs are taken care of even in the absence of an earning parent. 

    Key Features of Term Life Insurance Plans 

    • On the death of the policyholder within the policy term, the death benefit amount payable to the nominees is either done as a lump sum payout or in installments. 

    • Policyholders are offered flexible premium payment options and even rebates on assuring a higher sum. 

    • Premiums paid for term plans are tax exempted under Section 80C of the Income Tax Act, subject to a limit of Rs. 1.5 Lakhs. 

    • The proceeds can be used by the nominees to pay off outstanding debts, pay for a child’s education and even finance the marriage of a child. 

    • Term insurance comes with riders that can be availed at nominal charges for extra cover against accidental death, disability/dismemberment, and critical illnesses. 

  3. ULIPs

    ULIPs are excellent options because they come with dual benefits of investment and insurance. The investment component invests a part of your premiums in market-linked instruments such as stocks and bonds, thereby ensuring higher returns. The insurance component offers financial security to your family in the case of your death within the policy term. In fact, you can name your children as beneficiaries of the policy, ensuring that only the child receives the sum on your demise. 

    Key Features of ULIPs 

    • These plans can help you create an additional corpus through the investments, which you can leave as a legacy for your children or pay for their education, and marriage.

    • Policyholders have the option to choose the investment strategy and funds according to their appetite for risk. 

    • There are some specially designed child ULIPs, wherein the child receives the death benefit on your demise, and the future premiums are waived off. 

    • In the event of your unfortunate demise, the policy continues till the maturity date; therefore, the investments keep growing. The accumulated fund value is paid to your child as the policy matures.  

    In addition to the above-mentioned insurance policies, you can also purchase traditional endowment-based child plans. These are ideal for people looking for a low-risk profile as these plans offer guaranteed returns on the death of the policyholder as well as on the maturity of the policy.

    Let’s look at some of the best child insurance plans to help your secure your child’s education and marriage.

    Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

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Standard T&C Apply *

Best Child Plans to Secure Their Education And Marriage

Insurance Policy Type of Policy Entry Age Annual Premium* Sum Assured
HDFC Life Youngstar Udaan Money-back Classic:  For Aspiration - 30 days to 60 years   For Academia and Career - 8 to 60 years    Classic Waiver: 18 to 55 years NA Min: Rs. 4 Lakhs
SBI Life - Smart Scholar ULIP Child: 0 years
Proposer: 18 years
Rs. 24,000 Limited Premium- 10 x AP    Single-Premium- 1.25x  Premium
ICICI Pru Smart Kid Solution ULIP 20 years Rs. 45,000 Min: 7 times annual premium
Bajaj Allianz Young Assure Plan Traditional Savings 18 years NA 10 times annual premium
LIC New Children’s Money-Back Plan Money-back 0-12 years NA Rs. 1 Lakh
HDFC SL YoungStar Super Premium ULIP 18 years Rs. 15,000 Max: 40 times annualized premium

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

Summing Up!

An insurance policy for a child should be bought to help her/him be financially secure after your death. Given that a child’s education and marriage are primary concerns for parents, the potential costs associated with each should be estimated prior to buying a policy. This will ensure that the sum assured against your death can be put to optimal use without disturbing the balance required to fund these events. The proceeds from your insurance policies should be allocated in a way that each of your goals are fulfilled without overlapping other needs.

*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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