In these uncertain times, it is essential to keep your future secure from any kind of unforeseen situations. And when it comes to securing the future of your child, nobody tends to take any risks. Child plans not only to safeguard the future of your child but also helps them to achieve their dreams even if you are no more around to look after them.
Read moreInsurer pays premium in case of loss of life of parent
Create wealth for child’s aspirations
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Insurer pays premium in case of loss of life of parent
Create wealth for child’s aspirations
Tax Free maturity amount+
12+ plans available
Nothing Is More Important Than Securing Your Child's Future
Invest ₹10k/month your child will get ₹1 Cr Tax Free*
In this article, we will know about how one can withdraw money from a child’s plan before maturity. Let us begin by knowing a little about child plans, types, features, benefits, and everything related.
A child plan is an investment plus insurance plan offered by many companies for the safety of your child’s future dreams and goals. It offers life cover and provides flexible playouts during all the crucial steps in your child’s life. A child plan is one of the best ways to save a good amount of money with regular investments for your child’s future.
Broadly these are the Child plans available in India
Child ULIP comes with 3 pronged advantages broadly. They are as follows:
High insurance coverage
Disciplined investments
Participation inequity market
It means that
Sum assured is provided to the nominee child on the death of the parent or legal guardian
Future premium is waived off after the demise of the parent
Maturity value is paid during the time of maturity.
Child ULIP ensures that your child’s future dreams are fulfilled with or without you
The payouts at the time of maturity of ULIPs are determined by the market. This is a great plan for long tenures, say, more than 10-15 years. Companies provide options between different investment funds, allowing you to receive more money than you invested. There are some plans under ULIPs where profits are directly transferred from equity to debt instruments
These are simple plans that provide stable returns in the form of bonuses over the sum assured. Generally, under Traditional Endowment Plans, bonuses are paid from the 2nd year onwards.
The policyholder pays a lump sum amount in the form of a single premium for the entire policy term and stays worry-free from remembering the due dates of premium payment. You’ll not have to come across any hassles of arranging finances for the premium payment. Some insurance providers additionally offer appealing discounts or reduce the premium on child plans.
Unlike a single premium child education plan, a regular premium child policy offers you flexibility on payment of premium. You can pay the premium monthly, quarterly, half-yearly, or yearly.
Withdrawals can be made partially under Child Plans only after the completion of the lock-in period. Here are few withdrawal choices available when you invest in Unit Linked Insurance Plans under Child Plans.
Normally, every ULIP comes with a 5-year lock-in period. If the amount is withdrawn partially or entirely by surrendering the policy altogether, or by discontinuing the premium payments, funds accumulated can only be received after the ULIP investment completes 5 years. The maturity amount will also be paid in a lump sum and consequent charges are applied after the discontinuation of the policy.
As the ULIP life cover becomes null and void after the withdrawal before the lock-in period, you will have to repurchase life insurance online.
Generally, it is advised that instead of withdrawing the whole amount, the policyholder should make partial withdrawals once your ULIP crosses the lock-in period. By partial withdrawals, you can overcome your financial emergencies without dissolving your whole policy or breaking your fixed deposits, or taking loans.
Depending on the policy terms and conditions offered to you by the company, certain restrictions are levied upon withdrawals. Some of them are stated as under:
Withdrawal limits differ from one insurance company to another. While some companies allow 10% of the premium paid, others may allow 20% or so. The limit could also be based on the remaining fund value post withdrawal. Sometimes, if you withdraw a huge amount from ULIP, chances are you are liable to face policy termination.
If a top-up investment is made to your child’s plan and you are planning to withdraw an amount, the insurer will settle it from the top-up amount. It is to be noted that the withdrawals can be claimed from top-up only if it has been completed 5 years.
Understand the withdrawal terms and conditions properly
Pay premium before or on time to avoid termination of the policy
Partial withdrawals can be made only after regular premium payment for 5 years
Partial withdrawals lead to a reduction in the Sum Assured for 2 years from the time money is withdrawn
Here is an illustration of the Child Plan withdrawal criteria
Details | Child Plan |
Premature Closure Penalty | No Charges |
Premature Closure Criteria | No Criteria |
Rate of Return | 12% to 14% |
Safety of Returns in Case of Demise of a Parent Before Completion of Payment Term | Yes |
Time When Amount Can be Withdrawn | Entire Amount Any time After 5 years |
One Time Payout for Child In Case of Demise of the Parent | Yes |
Guaranteed Regular Income for Child Education In Case of Demise of Parent | Yes |
A Child insurance plan comes with many useful features to ensure a rewarding return and protection for your child. Here are some key features of the best Child Insurance plans in India:
Capital guarantee
Waiver of premium
Partial payments
Partial withdrawals
Sum assured
Tax benefits
Immediate financial protection
Loan benefits
Certain riders are available, which give you more than just a simple life insurance policy. These riders are available in three sub-categories:
The Accidental Death and Disability Rider Benefit pay the extra sum assured in the event of your unfortunate mishap causing death or disability
This rider may be already added to the best child education plan, so check your policy document in this regard
Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases
Flexible payment of funds
Secured loans are available
You can choose from either ULIP or Endowment plan
Flexible premium payment options
Funds available on the demise of the insured or after the maturity of the policy
If a person has to enjoy partial withdrawals from a child plan, all he has to do is pay the premiums on time. If premium payment dates are missed out, then the policyholder is restricted from using withdrawal benefits and also the policy would be terminated. So, if you are planning to go for a child plan withdrawal, make sure your previous premiums are duly paid to avoid termination.
*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
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
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