LIC Child Plans

LIC Child Plans are child insurance policies offered by one of the oldest and the most trusted insurance companies in insurance sector of the country - the Life Corporation of India (LIC of India).

LIC of India came into existence on September 1, 1956 through the Life Insurance Corporation Act passed by the Indian Parliament. The state-owned insurer enjoyed monopoly power in the life insurance sector due to absence of other insurers in the play.

In January 2002, the Indian Government relaxed the regulations that govern the insurance industry and allowed private insurers to enter the insurance marketplace.

At present, the insurance company has a vast customer base of over 250 million lives. It strives to maintain the same service and the pricing of the products in the ever-competitive insurance sector.

LIC offers a huge bouquet of insurance products including Child Plans, Protection Plans in the form of term plans, Savings and Investment Plans that are available in both ULIP or conventional form and pension plans.

What is a Child Plan?

A child insurance plan is a life insurance product offered by different insurance companies to cater to different needs of the child of the insured even if the policyholder is not around.

A child policy not only allows daunting parents to secure the future of their kids financially, but also acts as a guardian if the actual parent dies.

LIC Child Insurance Plans comfort the parents of their ability and capability to be a liable provider for their kids and promises a financially steady future.

Waiver of Premium (WoP) option comes tagged along with LIC policy for child that is an inherent rider of the policy. This feature applies in case the insured dies in a specified period. In such situations, the insurance company pays the sum assured to the nominated beneficiary, while the due premium for the rest of the term of the policy is paid by LIC.

When the LIC Child Plan matures, the nominated beneficiary is entitled to get the desired maturity amount as mentioned in the document of the policy.

A child plan is developed on the concept of providing financial support to the family for the child’s future if the parents meet with an unfortunate death. Insurance plans designed for the child do not usually insure the child. The life insured under these plans are the parent who has a minor child to provide for. The underwriting is done on the life of the parent and the details of the child are to be provided in the policy.

LIC Child Plans: Key Features

LIC Child plans come loaded with wide range of salient features catering to the needs of parents in the country. The key features of these plans are as follows:

• Waiver of Premium - This is the in-built and the most important feature of every LIC Child Plan. It makes sure that the policyholder - the child - qualifies for the pre-decided sum assured together with the accumulated interest in the event of sudden demise of the policyholder during the term of the policy. This is not it, the plan will continue unaffected, and the benefits as promised under the plan will accrue as and when they fall due.
• Deferment Feature - There is a concept of ‘deferment’ in some of the child plans. Deferment means postponement and is usually applied if the child is the person insured. Under the deferment clause, the risk coverage under the plan starts after the expiry of a couple of years. In case the child dies during the deferment period, the premiums paid until the date of death are returned because the life cover is not applicable during that period.
• Vesting - Another concept is ‘Vesting’, which means the age of the child when the policy vests in the name of the child and he becomes the policyholder. The Vesting age is usually 18 years when the child attains majority and becomes the policyholder of the plan.

Why choose LIC Child Plans?

Child Insurance plans have become very important because they specifically provide for your child’s future even in your absence. The inbuilt premium waiver rider ensures that the plan continues even after the parent’s death and the benefits accrue and when they are payable so that the benefits can be utilized for the purpose for which it was initially planned, i.e. for the child’s future.

Let’s understand this with an example:

Mr. A with a child currently aged 5 years buys a child plan with 20 years of tenure. The child policy promises money-backs at the 15^th, 17^th, and 20^th policy anniversary. Mr. A planned the money back periods to coincide with the child’s educational milestones. He would receive the funds when the child reaches 20 years, 22 years and 25 years. The funds will be utilized to take care of the higher education of his child.

If Mr. A dies, the plan will not be terminated. Future premiums will be paid by LIC and the money-backs will be paid as and when promised. Thus, the money will be utilized only for the child’s education which was the actual rationale for buying the  child education plan.

LIC Child Plans - Product Portfolio:  

The Life Insurance Corporation of India offers two distinct types of child plans, which are under the Money Back variants. Let us take a detailed look at the types of LIC child plans offered and the features and benefits of each.

LIC’s New Children’s Money Back Plan 

This plan is a participating, non-linked, traditional, money-back plan. This policy is tailor-made scheme that caters to the needs of marriage, educational, and other needs of growing kids via Survival Benefits. Moreover, it offers for the rick-cover on child’s life during the term of the policy and for the survival benefits on the survival to the end of the stipulated durations.

Benefits of LIC’s New Children’s Money-Back Plan:

This policy offers the following benefits:

• Death Benefits - On the demise of the Life Assured before the specified Maturity Date if the policy is active, then:
• On the demise of the Life Assured before the commencement date of risk - Return of premium (s) exclusive of extra premium, rider premium, and taxes, if any.
• On the demise of the Life Assured after the commencement date of risk - Sum Assured on Death and the vested Final Additional Bonus and Simple Reversionary Bonus (if any), shall be payable.
• Survival Benefits - In case the life assured survives the term of the policy coinciding with or right away following the accomplishment of ages 22, 20, and 18 years, 20 per cent of the Basic Sum Assured on every occasion shall be paid, if the policy is active.
• Maturity Benefits - In case the life assured is surviving the specified maturity date if the policy is active, the SA on maturity (that is 40 per cent of the Basic SA) together with vested Final Additional Bonus and Simple Reversionary Bonus, if any, shall be paid.

Key Features of LIC’s New Children’s Money-Back Plan:

LIC’s New Children’s Money-back policy comes loaded with distinctive salient features. They are:

• LIC’s Premium Waiver Rider is available under the LIC child plan, which promises waiver of future premiums in case of death of the proposer.
• It is a participating plan, which is eligible to earn bonuses and the premium is paid for a limited term of the plan.
• For children aged less than 8 years, there is a deferment period under this LIC child plan. The risk cover will begin one day before the completion of 2 years of the policy commencement or one day before the policy anniversary,which coincides with or follows the completion of 8 years of age.
• TheLIC child plan policy will vest in the name of the child who is the life assured and will then become the policyholder on the policy anniversary following the completion of 18 years of age.
• Loan can be availed under this LIC child plan.
• Under this LIC child plan, rebate is given in premium rates if the policyholder chooses to pay yearly or half-yearly premiums @ 2% and 1% respectively.
• Rebates are allowed in premium for choosing a high Sum Assured level of Rs.2 lakh and above under this LIC child plan.
• Tax benefit is available under the LIC child plan on the premium paid and the claim received. The premiums paid are exempt from taxation under Section 80C of the Income Tax Act and the claim received in exempt under Section 10(10D) of the Income Tax Act.

 Eligibility Details

	Minimum	Maximum
Entry Age	0 years	12 years
Maturity Age	-	25 years
Policy Term	25 years - entry age of the child
Sum Assured	Rs.1 lakh	No limit
Annual Premium Amount	Rs.24, 000	No limit
Premium Payment Term	10 years, 7 years or (term - 5) years
Premium Payment Frequency	Yearly, half-yearly, quarterly, monthly

 

Sample Rates of Premium

The following table shows the sample rates of premiums payable by individuals under the LIC child plan at different ages and at different levels of Sum Assured.

Age	Sum Assured = Rs.1 lakh	Sum Assured = Rs.5 lakhs
0 years	Rs.4415	Rs.22, 075
5 years	Rs.5700	Rs.28, 500
10 years	Rs.8060	Rs.40, 300
12 years	Rs.9390	Rs.46, 950

 

LIC’s Jeevan Tarun

The LIC child plan is a traditional child plan which is a combination of an Endowment Plan and a Money Back Plan. The features of this LIC child plan are as follows:

• It is a participating LIC child plan and as such is eligible to earn bonuses depending on the company’s profit experience. Simple reversionary bonuses and a final bonus at the end of the plan, if any, is payable under this LIC child plan.
• LIC’s Premium Waiver Rider is available under the LIC child plan, which promises waiver of future premiums in case of death of the proposer.
• The premium under the LIC child plan is to be paid for a limited term only.
• There are four options to avail of the survival benefits and maturity benefit under the LIC child plan as per the choice of the policyholder.
• Under the first option of this LIC child plan, no survival benefit is payable and only on maturity, 100% of the Sum Assured is paid to the policyholder.
• Under the second option of this LIC child plan, 5% of the Sum Assured is paid every year as money back for 5 years and thereafter-onmaturity, 75% of the Sum Assured and the vested bonuses are paid.
• Under the third option of this LIC child plan, 10% of the Sum Assured is paid every year as money back for 5 years and thereafter-onmaturity, 50% of the Sum Assured and the vested bonuses are paid.
• Under the fourth option of this LIC child plan, 15% of the Sum Assured is paid every year as money back for 5 years and thereafter-onmaturity, 25% of the Sum Assured and the vested bonuses are paid.
• Under this LIC child plan, the money back benefits will start to be paid only from the policy anniversary,which coincides or follows the completion of 20 years of age of the life insured and are payable for 5 years until the insured attains the age of 25 years.
• For children aged less than 8 years, there is a deferment period under this LIC child plan. The risk cover will begin one day before the completion of 2 years of the policy commencement or one day before the policy anniversary,which coincides with or follows the completion of 8 years of age.
• Under this LIC child plan, the policy will vest in the name of the child who is the life assured and will then become the policyholder on the policy anniversary following the completion of 18 years of age.
• Under the LIC child plan, in case of death of the insured during the deferment period, i.e. when the risk has not begun, only the paid premiums are returned.
• Under this LIC child plan, in case of death post the deferment period, the Sum Assured on death, which is higher of 125% of the chosen Sum Assured or 10 times the annual premium, vested simple reversionary bonuses and a Final Additional Bonus, if any, is paid subject to a minimum of 105% of all premiums paid till the date of death.
• Loan can be availed under this LIC child plan.
• Under this LIC child plan, rebate is given in premium rates if the policyholder chooses to pay yearly or half-yearly premiums @ 2% and 1% respectively.
• Under this LIC child plan, rebates are allowed in premium for choosing a high Sum Assured level of Rs.2 lakh and above.
• Tax benefit is available under the LIC child plan on the premium paid and the claim received. The premiums paid are exempt from taxation under Section 80C of the Income Tax Act and the claim received in exempt under Section 10(10D) of the Income Tax Act.

Eligibility Details

	Minimum	Maximum
Entry Age	0 years	12 years
Maturity Age	-	25 years
Policy Term	25 years - entry age of the child
Sum Assured	Rs.1 lakh	No limit
Annual Premium Amount	Rs.24, 000	No limit
Premium Payment Term	10 years, 7 years or (term - 5) years
Premium Payment Frequency	Yearly, half-yearly, quarterly, monthly

 

Sample Rates of Premium

The following table shows the sample rates of premiums payable by individuals under the LIC child plan at different ages and at different options for a Sum Assured of Rs.50, 000.

Age	Option 1	Option 2	Option 3	Option 4
0 years	Rs.4480	Rs.4580	Rs.4680	Rs.4780
4 years	Rs.5595	Rs.5750	Rs.5900	Rs.6055
8 years	Rs.7565	Rs.7800	Rs.8040	Rs.8275
12 years	Rs.11, 270	Rs.11, 665	Rs.12, 060	Rs.12, 460

 

 

Applying for a LIC Child Plan from the company

You can apply for LIC Child Plans in both - online and offline mode.

Online

The company offers specific LIC child plans, which are available online only. The customer only needs to log into the company’s website, choose the required LIC child plan, choose the coverage, and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card, or net banking facilities and the LIC child plan policy will be issued.

Intermediaries

LIC child plans, which are not available online, can be purchased from agents, brokers, banks, etc. where the intermediaries help with the application process.

Benefits of LIC Child Plans  

Child plan is relatively a long-term product. Such a plan can be taken as soon as one comes to know that one is going to become a parent or the day the child is born. The sooner one takes child insurance; the better it is for the offspring. The benefits of child policies like the LIC child plans accrue over long term, especially when the child needs them the most.

A child plan helps to secure the future of the child, whether boy or girl. This type of life insurance assists in fulfilling the needs and dreams of the child at the right time so that they can lead a life of their choice.

A LIC child plan offers several advantages to the child and family as a whole. The important ones are discussed below:

Supports Child’s School Fees

A child plan can help pay the child’s school fees. In the event that the parent is no more, the insurance company immediately pays a certain percentage of the sum assured like say 10%. It will also begin periodic annual payouts to the tune of 10% or so of the sum assured until the end of the policy term. These payouts help to comfortably take care of the school fees in the absence of the breadwinner parent. 

Assists Child’s Extra Curricular Interests

LIC child plans, by way of partial withdrawals also assist in nurturing a child’s talents and extracurricular interests. Singing, painting, dancing, sports and other such talents can be developing with the help of funds from partial withdrawals from a child plan. In fact, some plans disburse periodic amounts to meet expenses incurred on such activities. 

Helps Fund Higher Education

The cost of education is rising consistently. Coupled with inflation, college and higher education fee can become a burden on the family. If a parent plans well and takes a child plan when the child is small, the money back under an LIC child plan can be planned to coincide with the child’s higher educational requirements. That way the child will be able to pursue a career of his/her choice even if the parent expires during the interim period. Such an unfortunate circumstance does not terminate the plan. The insurance company pays remaining future premiums and allows the plan to continue such that money back is paid as promised. The child can comfortably pursue professional courses like engineering, medicine, law, chartered accountancy, architecture, commerce, arts, etc. He or she may even go abroad for further studies. One does not have to resort to loans to pay for cost of higher education. 

Helps Finance Child’s wedding

Child plans are a great way for the parent to fulfill their responsibility of their child’s wedding. One may plan in a way that a lump sum amount is available when the child becomes of marriageable age. That way the parents’ dream of a perfect wedding comes true without them having to worry about the finances. 

Avoids Capital Erosion

Market volatility may lead to capital erosion. Dynamic Fund Allocation and Systematic Transfer Plan (STP) offered under child plans help make the best of the invested amount during different life stages.

Dynamic Fund Allocation balances equity and debt exposure in the portfolio by automatic allocation of fund value as per predetermined percentages - higher allocation to equities in the initial policy years for generating potentially higher returns, and later, higher allocation to debt as the policy nears maturity to protect the maturity value.

Systematic Transfer Plan or Systematic Fund Transfer automatically switches a pre-defined amount to another fund to make the best of market volatility. 

LIC Child Plans - FAQ

Q. How to pay premium for a LIC child plan? What are the modes of payment available for LIC child plans?

The Life Insurance Corporation of India Ltd. offers six modes of premium payment for LIC child plans namely:

• Cash/Cheque/DD payment at the branch and cash counters
• Payment at the Axis Bank
• Payment at the Corporation Bank
• Online Payment
• NEFT
• ECS
• AP Online
• MP Online
• Suvidha Infoserve
• Easy Bill Pay
• Premium point by empowered agents
• Life Plus SBA
• Retired LIC Employee Collection
• Phone Banking
• Authorized Service Provider (in selected cities)

For the online payment mode, the policyholder can pay via;

• Credit Card
• Debit Card
• Net Banking 

Q. How can I check policy status for LIC child plans?

For online registered users, they can check LIC policy status of their child plan by logging into the e-portal.

Alternately, visit the branch personally to know the policy status of your LIC child plan. 

Q. What is the policy renewal process for LIC child plans?

For renewing the LIC child plan online, follow these easy steps;

Step1: Enter your Client ID and Date of Birth to login into e-portal

Step2: Choose the LIC child plan policy and payment option (Net Banking/Debit/Credit Card)

Step3: Print/save the premium deposit receipt on successful payment completion

Q. What is the company’s process to settle claim for LIC child plans?

For LIC child plan claim settlement, nominee can visit the branch personally and the customer service desk will help you there. 

Q. What is the policy cancellation process for LIC child plans?

For the cancellation of the LIC child plan policy, you can visit the branch personally.