Demystifying the Concept of Child Plans

For every parent, his child is his most precious asset and his biggest responsibility at the same time. Every parent wants his child to get the best in class education and a comfortable life. While we all often read about the benefits of having a child insurance plan, yet parents have some misconceptions about the features and benefits of child plans.

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Investing in your child's future:A wise decision & a loving choice
  • Insurer pays premium in case of loss of life of parent

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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

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As a beginner, you would know child insurance plans as insurance-cum-investment products that ensure the security of your child’s future in your absence.

Here are a few points that would help parents clear their doubts around this product:

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Myth 1: A child insurance plan insures your child’s life

Fact: A child insurance plan is not to secure his life but his future. Instead, a child plan covers the parent’s life and the child is the nominee or beneficiary in case an unforeseen eventuality or the parent’s untimely death occurs. In a child plan, your child is the beneficiary who gets the benefits twice in case of the parent’s death. A child plan is basically designed to help/manage the skyrocketing education costs and the growing needs of your child. It ensures financial support at various stages of your child’s life, such as higher education, marriage, or while setting up a new business.

Myth 2: Your child will bear the burden of premiums post your demise

Fact: In case of parent’s sudden demise, this policy does not terminate and neither does it require the premiums to be paid by the child or the family of the deceased. This is made possible by the ‘waiver of premium’ feature offered by most insurers. As per this rider, the insurer pays a lump-sum amount to the child, post the policyholder’s demise. Also, the remaining premiums of the policy are taken care of by the insurer on the parent’s behalf so as to ensure that the child receives the maturity amount as pre-decided in the policy.

Myth 3: Lump-sum is paid only if your child pursues higher education or gets married

Fact: Your child can claim even if he doesn’t study further or doesn’t wish to get married. A child plan ensures financial security of your child and the maturity amount can be claimed when the policy ends.

Myth 4: The payout can be withdrawn only after the plan ends

Fact: It is not required to wait for the plan to end in order to avail the benefit of the policy. A child plan enables you to withdraw a specific percentage of the fund value once 5 years are over from the date of purchase. However, in the event of sudden demise of the policyholder, the insurance provider discontinues the plan and pays the lump-sum to the child.

Myth 5: Child insurance plan is only an insurance tool

Fact: A child insurance plan along with providing insurance benefits works as an investment instrument. Starting early with a child plan can fetch you reasonable returns. If you timely invest in a unit-linked insurance plan, then your money would get enough time to grow as your child would not require the funds immediately and eventually would receive the funds with a growth benefit.

Remember, it’s never too early to buy a child insurance plan, whether you have become a parent or planning a child. The early you invest, the better returns you fetch.

*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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