Child Plans

Frequently Asked Questions

• What is a Child Education Plan?

  A Child Education Plan is a financial product designed to help parents save and invest money to fund their child's education expenses. It is an investment plan that provides a disciplined approach to building a corpus to meet future educational needs. These plans offer features like regular savings, investment growth, and protection benefits to ensure that the child's education goals are met, even in the event of an unfortunate incident.

• What is the tax benefit of the Child Education Plan in India?

  In India, the tax benefit of a Child Education Plan depends on the type of plan you choose. If you opt for a child insurance plan, the premiums paid towards the plan may be eligible for tax deductions under Section 80C of the Income Tax Act up to a maximum limit of Rs. 1.5 lakh per financial year. Additionally, the maturity or death benefit received from such plans for investments up to Rs. 2.5Lacs/year is tax-exempt under Section 10(10D) of the Income Tax Act.

• Which plan is best for child education in India?

  Here is a list of the best child education plans in India*:

  • TATA AIA Fortune Pro

  • Bajaj Allianz Smart Wealth Goal II

  • Max Life Online Savings Plan

  • Edelweiss Tokio Wealth Secure Plus

  • ICICI IPru Smart Kid Plan

  • Aviva Young Scholar Secure

  • Bajaj Allianz Young Assure

  *This is just a list of available plans, not in any descending or ascending order. Policybazaar doesn’t promote any specific plan.

• What are the Documents Required to Buy a Child Insurance Plan? 

  Documents Required	Acceptable Documents
  Proof of Age (Any one of them)	Birth Certificate Class 10 or Class 12 report card (Marks sheet) Passport
  Proof of Identity (Any one of them)	Aadhaar card Passport PAN Card Voter ID
  Proof of Income	Document showing the income of the insurance buyer
  Proof of Address (Any one of them)	Telephone bill Electricity bill Ration card Passport Driving License
  Proposal Form	Duly filled proposal form

• What is unique about the child plan? 

  A child plan is an investment product that helps create a corpus for the future of your child, over a policy term. These policies pay a lump sum payment upon maturity that can be used to pay the education fees or wedding expenses of your child. It also acts as a life insurance plan for your child in case something unforeseen happens to you during the policy term. All these features make a child plan unique. 

  Mutual funds, on the other hand, are investment vehicles with no specific child-centric features. Child plans provide a more focused and tailored approach for long-term financial security for your child.

• What is a child's life coverage? 

  Child life coverage is a pre-specified lump sum payment that the nominee/policyholder gets in case of the policyholder's death within the policy term.

• Are child plans more secure than mutual funds?

  Child plans often come with an insurance component, providing a safety net in case of unforeseen events. Mutual funds, being market-linked, do not offer this level of financial protection.

• Can I customize a child plan to suit my specific requirements?

  Yes, child plans offer customization options based on factors like premium amount, policy term, and payout structure, allowing you to align the plan with your child's unique needs. However, mutual funds are not customizable.

• Do child plans provide a guaranteed maturity amount compared to mutual funds?

  Yes, many child plans offer guaranteed benefits, providing a clear and defined amount that will be available for your child's future needs.

• How important is it to buy a child insurance plan?

  Any parents who do not wish to compromise on the bright future of their children and want to secure their financial future should look into buying a child insurance plan. Listed below are some of the key reasons why a child should be equipped with such a policy.

  • Use as the Collateral: In case a parent needs to avail of an education loan for the child in the future, then the child plan can be used as the collateral.
  • Fund Higher Education: The corpus built through a child education plan can be used to fund private tuitions, hostel accommodation, studies in a foreign nation, etc.
  • Medical Treatment: In case the child gets admitted due to an accident or any other medical condition, the child's insurance plan permits to withdrawal lump sum amount from the yet-to-mature policy.
  • Tax Benefits: The premiums paid towards the child plan remain tax exempted under Section 80C of the IT Act. The maturity benefits also remain tax exempted as per Section 10 (10D).

  Note: Tax benefit is subject to changes in tax laws

• When can one withdraw money from the child plan?

  One can easily withdraw the entire sum at any point after 5 years of the policy and before the end of the policy term. Partial withdrawals are also allowed with child plans that you can use towards your child’s liquidity needs.

• Are the proceeds from the child plan tax-free?

  Yes, the money withdrawn from the child plan and the money received on death or maturity is entirely tax-free under section 80C and 10(10D) of the Income Tax Act, 1961.

• When to buy a child education plan?

  Ideally, you must buy the best child education plan as soon as your kid is born. Nevertheless, buy a child education plan only when you understand the variable given below:

  • Knowledge – Inflation is an antecedent of rising costs and such surging costs do not allow savings. Even if you manage to save, such savings are eventually used in financial contingencies when your savings are not allocated to meet specific causes.
  • Type of Plan – Child plans come in both kinds of insurance variants namely, unit-linked insurance plans, and traditional plans. It is up to you to decide whether you want to experience market risks and reap better returns or want a traditional plan for guaranteed returns.
  • Benefits – Once you've decided the type of plan you'd like to buy, you must compare the benefits of the plan. Do thorough research and find out what the policy's death benefits and maturity benefits are. Also, find out if the plan comes with any bonus if it's a traditional child policy.

  Figure out if there is any feature of guaranteed additions in the ULIP plans. Guaranteed additions and bonuses play an important role in enhancing the financial corpus accrued and must be given due consideration.

• Can I purchase a child insurance plan for my 15-year old kid?

  Yes, you can buy a child plan for your 15-year old kid via two modes – offline and online. In the offline mode, you need to schedule a meeting with an insurance agent of the insurer or visit the insurers' office. Or you can simply visit the website of insurance web aggregators and insurers.

• What is the difference between a nominee and a beneficiary?

  As the name suggests, a nominee in a child policy is a person who is appointed or nominated by the insured to take care of his/her assets, financial records, etc. after his demise. The nominee becomes responsible for disbursing the profits or earnings among the legal heir. A beneficiary in a child education plan is a person who has a financial interest in the policyholder's life. The beneficiary can either be a financial institution like a bank that provides finance/loans to the insured or legal heirs. In some cases, the beneficiary and nominee can be the same individual.

• Why is beneficiary or nominee important in a child plan?

  Beneficiary plays a crucial role in a child's plan. When the parent dies, all the money goes to the beneficiary. Hence, it is really important that you know and understands the role of the beneficiary properly. Once you are aware, choose a beneficiary wisely if you want the proceeds to go to your child and not be misused.

• How can I choose the right child education plan?

  You must choose the right and the best child education plan after carefully considering the factors mentioned below:

  • Premium Waiver Benefit
  • Your monthly saving
  • Number of children
  • Adequate cover
  • Rate of inflation
  • Market conditions

• How much does it cost to insure a child?

  The amount of premium will be based on several factors such as the term of the policy, age, the sum assured, etc.

• What is the meaning of child life coverage?

  Child life coverage is the sum assured on death that is offered to the nominees in the event of the policyholder’s death.

• Who should you buy a child insurance plan?

  If your kid is aged between 0 and 15 years, you must buy a child plan for your child. Moreover, any individual who wishes to create a financial corpus to fund your child's education and beat inflation via regular investments must opt for a child insurance plan.