A child plan is a mix of investment and insurance that helps in the financial planning for a kid's future needs. The insurance aspect ensures that a child remains protected in the event of the unfortunate demise of a parent. The investment avenue allows you to create a sufficient corpus to secure your child’s future. More importantly, child plans come with flexible payouts at crucial milestones that can effectively fund a kid’s education at different stages.
Insurer pays your premiums in your absence
Invest ₹10k/month and your child gets ₹1 Cr tax free*
Save upto ₹46,800 in tax under Section 80(C)
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Invest ₹10k/month your child will get ₹1 Cr Tax Free*
A child education plan is designed to help children follow their educational pursuits in whichever field they choose. These plans come with a life cover and opportunities to maximize savings on the payment of due premiums. The lump-sum amount at the end of the policy term ensures that neither you nor your kid struggles for capital when it comes to financing higher education.
There are a number of options for you to look at when it comes to saving for your child’s secure future. The following table compares three different types of savings avenues.
Insurance for children should not be overlooked given the uncertainty of life. Children are dependent on adults to feed them and finance their educational pursuits, among other needs. On the death of a parent, a child should not be made to struggle for funds to survive and access the basic level of care and education. This is why insurance for children is a must if you are a parent.
In addition to the death benefit and the annual income benefit, insurance buyers often look for tax saving avenues. It is noteworthy that child plans come with tax benefits like any other insurance scheme. Policyholders can claim deductions on their taxable income through such policies under Sections 80C, 10(10D), and 80DD of the Income Tax Act, 1961. Note that all the proceeds including death and maturity benefits from a child plan are entirely tax free.
Sections of the Income Tax Act, 1961 | Tax Benefits |
Section 80C |
|
Section 10(10D) |
|
Section 80DD |
|
Section 80E |
|
* The tuition fees should not exceed the prescribed limit. Further, exemptions can be availed for two children only.
Plans | Entry Age | Maximum Maturity Age | Minimum Annual Premium | Minimum Sum assured |
AEGON Life Rising Star Insurance Plan | 18-48 years | 65 years | Rs 20,000/- | 10 times of the regular Annualized premium |
Aviva Young Scholar Secure | 21-50 years | 71 years | Rs 50,000/- | 10 times the annual premium |
Bajaj Allianz Young Assure | 18-50 years | 60 years | N/A | 10 times the Annualized premium |
Bharti AXA Life Child Advantage Plan | 18-55 years | 76 years | Depends on Minimum Sum Assured | Rs 25,000/- |
Birla Sun Life Insurance Vision Star Plus | 18-55years | 75 years | N/A | Rs 1 Lakh |
Edelweiss Tokio Life EduSave | 18-45 years | 60 years | Rs 6,968/- | Rs 2.25 Lakh |
Exide Life New Creating Life Insurance Plus | 18-45 years | 60 years | 5 Years PPT: 50,000 p.a; 8 Years PPT: 30,000 p.a; 10 Years: 25,000 pa | : 5 PPT: 2,05,020 (Monthly) and 1,85,280 (Annual) ; 8 PPT: 1,78,780 (Monthly) and 1,62,380 (Annual) ; 10 PPT: 1,79,590 (Monthly) and 1,63,120 (Annual) |
Future Generali Assured Education Plan | 21-50 years | 67 years | Rs 20,000/- | N/A |
HDFC SL YoungStar Super Premium | 18-65 years | 75 years | Rs 15,000/- | 10 times the annualized premium |
ICICI Pru SmartKid Solution | 20-54 years | 64 years | Rs 48,000/- | Rs 45,000/- |
IndiaFirst Happy India Plan | 18-50 years | 60 years | Rs 12,000/- | Higher of 10 or 7 times the annual premium or 0.5/0.25*term*annual premium |
Kotak HeadStart Child Assure | 18-60 years | 70 years | Regular pay – Rs 20, 0005 Pay – Rs.50, 00010 Pay – Rs.20, 000 | Higher of 10 or 7 times the annual premium or 0.5/0.25*term*annual premium |
Max Life Shiksha Plus Super | 21-50 years | 65 years | Rs 25000/- | Rs 2.5 Lakh |
PNB MetLife College Plan | 20-45 years | 69 years | Rs 18,000/- | Rs 2,12,040 |
Pramerica Life Future Idols Gold Plan | 18-50 years | 65 years | Rs 10, 800/- | Rs 1.5 Lakh |
Reliance Life Child Plan | 20-60 years | 70 years | Rs 25,000/- | Equal to Policy |
Sahara Ankur Child Plan | 0-13 years | 40 years | Single-Premium- Rs. 30,000/- | 5 times of Single Premium Paid |
SBI Life- Smart Champ Insurance | 21-50 years | 70 years | Rs 6,000/- | Rs 1 Lakh |
SBI Life- Smart Scholar | 18-57 years | 65 Years | Rs 24,000/- | 20/7 times the annual premium (regular pay) 1.25 times single premium (single pay) |
Shriram Life New Shri Vidya | 18-50 years | 70 years | N/A | Rs 1 Lakh |
Smart Future Income Plan | 18-55 years | 80 years | N/A | 100 times the chosen monthly income |
SUD Life Aashirvad | 18-50 years | 70 years | N/A | Rs 4 lakh |
TATA AIA Life Insurance Super Achiever | 25-50 years | 70 years | Rs 24,000/- | 10 times of the yearly premium |
Wealthsurance Future Star Insurance Plan | 18-54 years | 64 years | Rs 25,000/- | Higher of 10/7 times the annual premium or 0.5/0.25*term*annual premium |
Disclaimer: Policybazaar does not rate, endorse or recommend any specific insurance provider or insurance product offered by any insurer.
Insurance providers have been shelling out different kinds of child insurance plans, each serving unique needs of a concerned parent. Some of the popular ones are market-linked insurance policies, traditional endowment based policies, plans that offer periodic payouts, plans that come with lump sum payout, among others.
Given the range of options available pertaining to insurance for children, it is important that you carefully research and shortlist the ones that best suit you and your child’s requirements. The table below lists some of the best child insurance plans in India today.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
The purchase of insurance for children offers a wide range of exciting and unique benefits to the policyholder. It offers a comprehensive maturity benefit along with life cover to financially secure the future of the child.
Further, a child education plan will help you make sizeable savings for your child without having to run from pillar to post.
Let’s take a look at the benefits offered by the child education plan.
A child plan helps you save enough for the coming times and build a corpus for your child. The money available from a child education plan depends on the terms and conditions of the plan and on the amount one has invested in it by way of premiums.
All market-linked child plans offer returns above 10-12%. Most government schemes like Sukanya Samridhi Schemes offer much lower returns that do not beat inflation.
Further, a child education plan such as a ULIP plan enables you to choose the type of fund to invest (money market, hybrid, debt, and equity) in. You’re also given an option to choose from Dynamic Fund Allocation and Systematic Transfer Plan.
Child plans also allow the option of withdrawing money during the tenure of the child investment plans. Such partial withdrawals come in handy when the child is hospitalized due to an ailment, a minor accident, or a serious medical condition. The best child plan act as an add-on for one's health insurance plan.
Insurance companies offer a premium waiver if the parent (i.e., the insured) passes away during the policy term of a child education plan. With the waiver of Premium (WoP) feature, the sum assured will be paid out to the nominated beneficiary, while the due premium for the remaining policy term is paid by the insurance company.
At the maturity of the policy, the child is entitled to receive the maturity amount as a lump sum payout promised at the time of purchasing the best child plan.
The premium waiver benefit often comes inbuilt with the best child education plan.
Some child savings plans provide regular income to children, which is equal to 1% of sum assured if parents are not around to pay the premiums.
Higher education is expensive, whether one plans to send the child to a private college or university in India or abroad. A Child plan comes in handy if one intends to secure a loan for higher education as these are allowed to be used as collaterals.
They can also be used as collateral for other child-related borrowings.
A child's plan is a great education policy and the best investment plan for the child. The child education plan also instills discipline and helps form the habit of saving to secure the child's future.
If your child possesses a special talent like playing an instrument or acting, then you can encourage your child to pursue it further by making a partial withdrawal from the child education plan. Moreover, some of the plans offer the option of periodic pay-outs that can be used to encourage the child’s talent further.
All child plans fall under the highest bracket of tax exemption i.e. E-E-E category. This is the highest grade of tax benefit accorded by the Indian Tax Laws to schemes like PPF.
Certain riders are available, which give you more than just a simple life insurance policy. These riders are available in three sub-categories:
Accidental Death and Disability Benefit – The Accidental Death and Disability Rider Benefit pay the extra sum assured in the event of your unfortunate mishap causing death or disability.
Critical Illness Rider Benefit – Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases.
When you realize that your child should get on his/her feet is the best time for the policy to mature. Choose the policy term to meet the exact period.
The premium amount is subject to the sum assured and the amount of maturity benefit you opt for. You may opt to pay the premium amount at regular intervals or for a certain period. Most of the life insurance providers offer options such as annually, semi-annually, quarterly, and monthly mode of payment.
When it comes to the maturity amount payout, you can choose to receive it as a lump-sum payout or over 5 years or more, depending on the policy chosen.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Mostly all the insurance providers offer child insurance policies as a vital insurance product in the portfolio. These child plans may vary on different parameters basis the individual priorities and needs and come handy with customized and tailor-made features.
Different types of Child Plans in India are:
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, regular premium child policy offers you flexibility on payment of premium. You can pay the premium monthly, quarterly, half-yearly, or yearly.
Child ULIP plan gives you a three-prolonged benefit, along with higher insurance coverage, contribution in the equity market, and disciplined investments. Three benefits mean that the nominated beneficiary, i.e. the child receives the sum assured on the demise of the insured parent or guardian. The future premiums are waived off and the maturity amount is paid when the policy matures, making sure that the future dream of your children is fulfilled.
When it comes to the child endowment plans it is essentially a traditional life insurance plan that provides security and savings. It enables you to save over some time and on policy maturity receive the lump sum amount. A child endowment plan will act as a financial wherein the financial objectives for the benefit of your child will be fulfilled. The premium is invested in debt instruments while the decision is kept with the insurance company. The bonus payable at maturity decides the returns.
With inflation at an all-time high, the education sector has seen a massive rise in costs. Be it in India or elsewhere, the cost of education has deprived many passionate kids of quality learning. Therefore, the need for a child education plan cannot be understated and every parent should plan ahead and save for their children’s education.
Here are some important factors why parents need to invest in a child education plan.
In the case of death of a parent, child plans pay a lump sum amount in case of death of earning member who was paying the premiums for child plan. This money is completely tax-free and is usually sufficient to pay off any immediate debts so that child education is not impacted.
The education inflation in India currently stands at 11-12%. Now couple that to studying abroad, you will be left with a big dent on your savings if you don’t have a concrete plan. In fact, tuition fees alone for university education abroad have increased by 16% in the last 10 years.
A child education plan at an early stage should be an ideal choice for young parents. You should know that according to experts, by 2040, an engineering degree would cost nearly Rs. 45 Lakhs! Investing your savings in a child education plan can help you offset increasing tuition fees, private school education, or pursuing studies in a foreign nation.
The best child education plan not only pays a lump sum amount on death of the parent/guardian, but also continues investing on behalf of the insured.
Insurance companies believe that the premium waiver benefit in a child education plan is key as it does not let the demise of the insured derail the investment plan for the child.
At this stage, if you don’t want to compromise on your child’s education, you need to look for suitable options as soon as possible. Although the investment component allows you to create a decent corpus, in order for the power of compounding to work, you need to work with a longer-term, definitive timeline.
To answer this question, it is important to understand the importance of good education in India. India is rapidly moving towards a society where the gap between rich and poor is widening. A good education can be a foot in the door for your child to start earning a good livelihood and more importantly not become a liability on your earnings when you need your earnings for your retirement.
Cost of Education(Graduation course) in India in 2020 | Cost of Education in India in 2040 | Investment Amount |
15 Lakh | 45 Lakh | 10000 per month for the next 5 years |
A child education plan can work as an Endowment Policy, a ULIP, or money-back.
The money-back plan is so far the most sought after the plan. This scheme makes sure that your child will get survival benefit at regular interval of time. These plans are highly useful for individuals who need a lump sum money at regular intervals and help in life stage planning.
The disadvantage of using the money-back only is that sometimes the returns from this investment may not match the rate of inflation, especially when you plan to it for the education of your child. Cost of education is rising at around 12%. In comparison, money-back plans would give you approx. 4% - 8%, leaving you underfunded at the time of the goal.
Moreover, money back plans have steep premiums.
ULIPs are non-traditional plans and the returns depend on the market condition. In case of the demise of the parent, the sum assured would be received by the child as a lump sum. This will include the waiver of all the future premiums and the fund value upon its maturity.
Do not forget that ULIPs deliver a wide variety of funds ranging from aggressive too conservative. ULIP schemes give you an option of switching funds from equity to debt and vice versa without paying tax on it.
The third operational child plan instrument could be the Endowment Policy. This policy is where you will receive the lump sum amount on maturity along with bonuses. This is beneficial as it gives space for preparation of your child’s expenses like higher education, etc. However, this is different from ULIPs, since it allows for a least guaranteed payment.
Let us Take Examples and Understand the Working of all Kinds of Child Education Plan:
Imagine, Mr Sharma has a child of 5 years and he would need money when his child turns 20 for higher education. He, thus, purchases a child policy for 15 years.
Mr Sharma needs a financial corpus of Rs 10 Lakh. So, he purchases a traditional endowment plan with a Sum Assured of Rs 10 Lakh for 15 years and pays premium every year.
If during the policy term (i.e. 15 years), Mr Sharma dies in the 8th year, the policy would not end. The insurance provider would pay a death benefit (generally the SA of Rs 10 Lakh) immediately and waive off the future premiums. This policy would then continue for the remaining 7 years. After completing 15 years of the policy term, the policy would mature and pay maturity benefit of Rs 10 Lakh.
Hence, the child policy pays the financial corpus, which Mr Sharma would require after the completion of 15 years for the higher education of his child. M. Sharma’s dream gets fulfilled even when he’s not around.
Mr Sharma buys a money-back policy that promises to pay around 20 per cent of the Sum Assured after the completion of every 5 years. After completing the first 5 years of this child education plan, Mr Sharma gets Rs 2 Lakh (where SA is Rs 10 Lakh).
Henceforth, in the 10th year also, he receives another Rs 2 Lakh. In the 12th year, Mr Sharma faces an unfortunate death. This policy pays the total SA of Rs 10 Lakh regardless of the money-back benefits already paid. The insurer will waive off the premiums for the next 3 years and the plan continues.
Upon the maturity of the best child policy chosen by him, the guaranteed maturity benefit, i.e. 60 per cent of the SA is again paid.
Mr Sharma purchases a ULIP plan and pays a premium of Rs 1 Lakh every year for 15 years. In case of his demise during the policy term of the child education plan, the insurance company will give the death benefit. Moreover, the insurer will waive off the premiums and the child education plan would continue.
On maturity of the plan, the insurer will pay the fund value that would aid Mr Sharma’s family to send his child abroad for higher education.
Here’s a list of documents that will be required while buying a child policy:
Birth Certificate, 10th /12th Mark sheet, and Passport.
Aadhaar card, Passport, PAN Card, Voter ID
Proof of income showing the income of the buyer of the insurance.
Telephone bill, Electricity bill, Ration card, Passport, Driving License
Duly filled proposal form.
You must buy a child insurance plan for your child from an insurance provider that has a higher claim settlement ratio. This will make sure of the quick and smooth claim process and settlement in the times of crisis. Here’s the common claim process for almost every insurance provider:
In case of any situation for, which you need to file a claim, notify the insurance provider about the incidence ASAP. You can do this online by sending an email or by calling on your insurer’s toll-free number or simply by paying a visit to the nearest branch office.
Submission of the duly filled claim form is also necessary along with giving all the minute and necessary details such as the cause and the date of the incident, nominee’s name, etc.
Once you register a claim with the insurer, provide the necessary and supporting documents along with reports.
The insurance provider will appoint a surveyor to verify the case and the supporting documents.
If approved, and with no further inquiry, the insurance company transfers the claim benefit with 30 days of the furnishing documents.
You would require the following documents while filing a claim for child plan:
Duly filled claim form
Policy document
Medical certificate
Death certificate
Diagnostic reports, prescriptions
Post-mortem report (in case of unnatural demise),
FIR copy (in case of unnatural demise)
NEFT details
KYC of the nominee and the policyholder
The insurance provider does not offer coverage in the event of demise occurred under certain circumstances. They are known as exclusions. Child insurance plans do not include the following:
In case the policyholder dies due to drug overdose or alcohol abuse, the nominee does not receive any benefit.
The nominated beneficiary does not receive any claim amount in case of the death due to suicide within one year of buying the child policy.
In case the insured happens to take part in any adventurous or risky sports like skydiving, rock-climbing, racing, etc. that leads to death, the insurance provider does not entertain claims.
Any criminal or illegal act or act of war leading to the demise is also not covered under a child plan.
Assuming that the rate of inflation is the equivalent 10% going ahead.
Now having said so, in today’s time somebody who desires to pursue engineering in any of the premier colleges in the country it would cost about Rs 10,00,00. And, then in the coming years say 15 years it would be somewhere between 40 to 50 Lakh.
Likewise, if a private medical college charges Rs 25,00,00 then you can easily calculate that in the next fifteen years you need to have a corpus of about a crore.
India is one of the most opulent developing countries across the globe. Gone are the days when India was only limited to be known for its rich culture and traditions. Today, it has also earned a name when it comes to the educational sector.
Today, in India, we have a plethora of options available in terms of schools, colleges and universities and opting for the ones that suit your requirements. However, it is prudent to understand the factors, which affect the cost of education in India.
Read below!
Accommodation: Today most of the Indian universities/ colleges provide accommodation facilities within the campus both for the Indian and non-Indian citizens. In case, you are or intend yourself to enrol into a college, which does not have an accommodation facility there is nothing to be worried about. One can conveniently look for personal accommodation.
Depending upon the suitability, one can opt for a rented flat or a private hostel with sharing room facility. Opting for private accommodation has its advantages. One can easily find a room between Rs 10, 000 and calculated annually would be around Rs 1,20,000.
Additional Expenses (Every Week) Includes:
Outside Eating: Rs 1500 to Rs 4500
Public Transportation: Rs 50 to Rs 100
Private Transportation: Rs 500 to Rs 1000
Miscellaneous: Rs 200 to Rs 500
Leisure Activities: Rs 500 to Rs 1000
Undoubtedly, parenting a child is not an easy task. As the child grows, similarly the amount being spent on them also increases.
Primary Education: Generally, if a student is studying in the government school somewhere aged between 6 to 14 years the cost of education is almost negligible sometimes almost free. On the contrary, when it comes to private schooling the school mostly charges let's just say towards a lower end Rs 1200 to Rs 2, 000 every month.
Secondary Higher Education: The secondary higher education essentially covers children who are aged between 12 to 18 years. So, if a student is in a government school for 6 years at a stretch it would cost him approx Rs 30, 600 and in private schools, the parents would end up paying approximately Rs 3, 96,000.
In case, if the child is put up in a boarding school, the parents would end up paying Rs 18,00,000 for the coming 6 years. As per a survey conducted by Assocham, 169% has been the ascent in inflation in regards to both primary and secondary education from 2005 to 2011.
The Expense of Graduation and Post Graduation Education in India
Government College/ University: Rs 5,00,000 to Rs 6,00,000
Private College/ University: Rs 8,00,000 to Rs 10,00,000
International College/ University: Rs 1,00,00,000
The Expense of Medical Studies in India
Government College/ University: Rs 5,00,000 to Rs 10,00,000
Private College/ University: Rs 18,00,000 to Rs 20,00,000
International College/ University: Rs 1,00,00,000
The Expense of Commerce and Arts/Humanities in India
Government College/ University: Rs 2,000 to Rs 15,000
Private College/ University: Rs 2,50, 000 to Rs 5,00,000
International College/ University: Rs 50,00,000
The Expense of Engineering in India
The course of engineering is considered to be one of the most sought career options undertaken by a majority of students in India. Besides, it is also one of the reputed and well-paid jobs. The US Silicon Valley comprises of the Indian based- engineers.
For a four-year engineering course, a student ends up paying Rs 1, 25,000 to Rs 5, 00,000. And when it comes to India’s finest engineering colleges such as IIT, NIT, BIT’s Pilani, etc. the parents need to pay approximately Rs 10,00,000- to Rs 15,00,000 respectively.
For Post Graduation-
Just like the expense of engineering, you may consider the expense similarly.
One of the most cherished dreams for any medical aspirant is becoming a doctor. Becoming a doctor is something, which takes in a lot of hard work and sincerity and something to take extreme pride. In India, the medical seats are limited and the competition is high.
In terms of fees-structure and other expenses, the government colleges/ university have a reasonable structure with fewer than Rs 10, 00,000. However, in private colleges/ universities, the fees could easily go up to Rs 50, 00,000 for the equivalent.
And, if someone is interested in undertaking a postgraduate degree in the same field, then one should be mentally and financially stable to spend approximately Rs 30, 00,000 in a private institute.
As discussed earlier, raising a child is no meek man task and to raise a child in the best possible manner financial planning is of utmost importance. In case, as a parent you still wonder in regards to the importance of planning then we will help you.
The below table consists of the basic and essential educational expenses that are involved when it comes to raising one or two children:
Expense | Yearly Expense For Single Child | Yearly Expense For Two Children |
Basic Expenses Involved In School | ||
School Uniform | Rs 3,000 | Rs 6,000 |
Transport, Lunch and Tuitions | Rs 36, 000 | Rs 75, 000 |
School Shoes | Rs 3500 | Rs 7,000 |
Sports Kit | Rs 3500 | Rs 7,000 |
Bottles and Bag | Rs 1800 | Rs 3500 |
Coursebooks | Rs 4500 | Rs 8500 |
Computers | Rs 2500 | Rs 3800 |
School Club | Rs 2500 | Rs 4000 |
Stationary/ Newspapers | Rs 3000 | Rs 5600 |
School Trips | Rs 3800 | Rs 7000 |
Fair | Rs 3500 | Rs 5500 |
Building Fund | Rs 15, 000 to Rs 25,000 | Rs 30,000 |
Extra-Curricular Activities | ||
Primary Level | Rs 2,000 | Rs 4,000 |
Secondary Level | Rs 4,000 | Rs 8,000 |
Coaching/ Tuition Expenses | ||
Primary Level | Rs 3,000 | Rs 6,000 |
Secondary Level | Rs 8,000 | Rs 10,000 |
There are many child plans offered by insurance providers; however, certain things should be considered while choosing the best child plan to ensure the best future for your child. Below-mentioned tips help in making a wise decision to best meet the child's needs.
It is advised that you start investing as early as possible for the future of your child as it helps to build a larger corpus, which in turn, gives greater freedom in taking any financial decision.
Most child plans offer maturity benefit and start giving payouts at key milestones in life after the child turns 18 years old. The overall benefit of the best child education plan is higher if one starts investing early.
This tip cannot be stressed enough as most people do not realize that each additional year of investment means a bigger corpus. Starting the child education plan when the child says 5 years old or when he or she is 10 years old, may eventually translate into having to take a loan to pay off the tuition or college fees in the latter case.
Starting early helps as the investment returns between starting a couple of years later for the same plan and the same amount can mean a difference of a few Lakh.
It is important to understand that savings and investment for your child will be taken advantage of only in the forthcoming years. Multiple economic variables need to be factored in while deciding an appropriate sum assured.
Inflation, an increase in the cost of education and healthcare expenses, among other economic factors, if accounted for properly will provide adequate funds for the child in the future. The best child education plan can help you fight this.
You should scrutinize the fine print and understand the terms and conditions of the child education plans' policy document properly. The best child plan has unique features and it is important to interpret them correctly. This will prevent confusion at the time of maturity and/or in the payout.
It will also help in selecting the best education plan as per individual requirements, one that is best for the child's needs. It makes sense to use our site to compare the various plans in detail and pick the child education plan that best suits the requirements.
In the event of your unfortunate death during the policy tenure, insurance companies often offer to waive the premium. This is known as premium waiver benefit or self-funding of premium. It helps in continuing the policy without straining the family including the child for premium payments.
The child receives the full benefit at maturity, promised at the beginning while purchasing the policy. This feature is normally built into child plans; if not, then you should go for this rider.
Emergencies can happen at any time and the child may require financial aid to tide over emergency cash requirement situations. The provision of partial withdrawals allows withdrawal of partial sums of money from the best child education plan to meet unforeseen expenses.
This prevents any emergencies from causing any sort of financial instability in the family or the child's education or dreams. Partial withdrawals help in not disturbing financial planning and not resorting to regular income to pay off the requirements.
Child plans usually invest funds collected from policyholders in capital markets to earn a higher return. However, they offer the insured or policyholder, the choice to choose the type of fund to invest their money in depending on individual investment appetite and risk-taking ability.
Those who are risk-averse may want their funds to be allocated in debt, which offers more stability against market volatility. People who want to earn a higher return on investment may be fine with their investment being put into equity.
Investment Options like Systematic Transfer Plan and Dynamic Fund Allocation help in safeguarding investments against market instability. These child plans allow for higher return investments in the initial years by putting the money in equity-oriented firms and for stable growth in the later years by switching to the more secure debt funds.
Most insurance companies ensure that the allocation is automatic and the parents do not have to worry about safeguarding the important capital to meet the upcoming future expenses of their loved one.
These tips are only some pointers, which will help in choosing the best child plan. It pays to start early in securing the child's future. Also, reading up on child plans on our site and the insurance companies websites will ensure you know your ABCs before you pick the right plan.
It is important to choose a trusted appointee for the best child plan selected by you. Your appointee must be someone you share a strong relationship with and someone you can count on, as your child must be taken care of when you are absent.
In case of an unfortunate event, the claim amount is received by the appointee till the child gets matured and capable of handling the lump-sum payout of sum assured. In case the appointee fails to take care of the child and turns out to be excessively careless, there are chances that the amount of money being exhausted before the child reaches the age when he/she needs it the most.
So, it is best to be double sure before you choose an appointee for the policy.
You bought the best Child Plan for your 6-year-old child with 10 years of the policy term and expecting to receive the maturity benefit of Rs 20, 00,000. You opted for a life cover of Rs 25, 00,000. Unfortunately, you died after 4 years the policy began. The insurer is liable to pay the appointee a sum of Rs 25, 00,000 and also to bear the premium to be paid for the rest of the policy term left, i.e. 6 years. The child will also get the maturity benefit of Rs 20, 00,000 once he reaches the age of 16 years.
So, if you have a child who is 5 years old. Let us see the cost of delay if you start saving the money today as compared to the next year.
The following values are calculated at an expected rate of return of 9%.
Monthly Investment | Investment Tenure | Maturity Value | Maturity Value With Delay of One year | Cost of Delay |
10,000 | 10 | 1935143 | 1654832 | 280311 |
10,000 | 15 | 3784058 | 3345181 | 438877 |
At PolicyBazaar, we take pride in helping parents like you to ensure a bright future for your children. Every child is unique and so are his insurance needs. Who knows, your children might turn out to be future Einstein or Tendulkar. Make sure you financially equip your child to tap the opportunity when it knocks.
There are many variants of child plans as per your budget and needs; thus, it is always advisable to compare insurance quotes from various insurers. An online comparison makes it easy for you to match quotes with your specific needs and go for the best child education plan.
There are a number of options for you to look at when it comes to saving for your child’s secure future. The following table compares three different types of savings avenues.