Types of Child Insurance Plans: All the Important Aspects!

No doubts that parents’ happiness resides in the success and happiness of their children but successful parenting can never be a walk in the park. Oscar Wilde once said “The best way to make children good is to make them happy” and one of the most important aspects of happiness is securing your child’s future needs at the right age and time.

A Child Insurance plan is one such way that ensures your child’s future safety and ensures that they do not struggle financially even when you are no more around to look after them.

What is Child Insurance Plan?

A child insurance 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 insurance plan is one of the best ways to save a good amount of money with regular investments for your child’s future.

Types of Child Insurance Plans

Broadly there are 3 types of Child insurance plans available in India

Child ULIP

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

Unit Linked Insurance Plans

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

Traditional Endowment Plans

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 2^nd year onwards.

Single-Premium Child Plan

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.

Regular Premium Child Plan

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.

Key features of Child Insurance Plan

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
• Sum assured
• Tax benefits
• Immediate financial protection
• Loan benefits

Additional riders

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

Premium Waiver Benefit

This rider may be already added to the best child education plan, so check your policy document in this regard

Critical Illness Rider Benefit

Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases

Benefits of Child Insurance Plan

• 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

Here is a list of companies providing some of the best Child Plans in India. You can compare the policies and decide what will be best for your you and your child.

 Wrapping it up:

A child insurance plan is one of the best ways to secure your child’s financial future and of great help to you as well. Your child’s future safety is very important because, at the end of the day, it is all about your child and their happiness.