Useful Tips to Buy a Child Plan

Planning is a wise thing to do before welcoming a new addition to the family. As parents it is a must to secure the future of the child by investing right! Child plans arethe simplest manner by which to avert financial pressure in the future. In this way, you can ensure that your child's needs are taken care of, even if you are not around.

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Investing in your child's future:A wise decision & a loving choice
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Most insurance companies nowadays have child plans in their list of offerings. Some of these plans are market-linked policies and allow the policyholder to invest in both debt and equities, while the others are traditional plans that invest your premiums only in debt. Child plans offer greater returns than PPF or FDs, but to choose a suitable plan as per your child’s need is a tricky task.

Here is a list of a few quick tips that can help you choose the best child plan:

Consider the rising cost and the changing needs

Deciding the right amount of sum assured is the most important point while buying a child plan. You need to understand the changing needs of the new generation and consider inflation before deciding a suitable sum assured. All that you are saving for your child would be used in future; what costs Rs. 100 today might cost Rs. 500 when your child needs it. For a better visionabout the returns and premiums of plans, you can also compare plans on Policybazaar.com. For example, if a 40-year old buys a plan for his 7-year old child, then he would have to pay Rs. 4810 p.m., for his child to get Rs. 24 lacs on turning 27.

Go through the policy documents carefully

To prevent issues from arising in future you should read the fine print carefullybefore investing in a child plan. All plans come with some advantage or the other and to understand thefeatures of the plan in detail it is essential to go through the policy documents. To ensure an efficient and timely claim settlement process, it is important to check for all the important dates and timelines. The motive behind buying a child planis to cater to your child’s needs even in your absence, whereas, one hidden clause can leave your child helpless at the time when he would require it the most.

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Invest ₹10K/Month YOU GET ₹1 Crores* For Your Child View Plans
Invest ₹8K/Month YOU GET ₹80 Lakhs* For Your Child View Plans
Invest ₹5K/Month YOU GET ₹50 Lakhs* For Your Child View Plans
Standard T&C Apply *

Look for Waiver of Premium Rider

Some insurers offer Waiver of Premium Rider or self-funding of premium in case of death of the applicant during the tenure of the child plan. This keeps the policy continued without the need of any other family member having to pay the premiums. On the demise of the policyholder, a child insurance plan pays a lump-sum amount to the nominee and the policy continues. All the due premiums thereafter are waived off and the insurance company continues to invest the premium money on policyholder’s behalf. This option will save the policy from getting lapsed and also the child would get complete maturity benefit.

You may also Like to Read: SBI Sukanya Samriddhi Yojana

Check for Partial Withdrawals

Some plans allow partial withdrawal of the maturity amount in pre-decided chunks and on pre-fixed intervals. The idea behind allowing partial withdrawals instead of paying the lump sum amount at once is to help the parents meet the financial needs of their child at the key moments in his life, such as admissions in educational institutes, medical emergencies, etc. Therefore, it is wise to opt for plans that allow partial withdrawal of funds. This option gives you the flexibility of meeting unplanned expenses in case of emergencies. This facility works as a financial support in case of eventualities.

*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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Insurers Offering Child Plans

Tata AIA

Aditya Birla Sun Life

Bajaj Allianz

Max Life

HDFC Life

ICICI Prudential

Bharti AXA Life

Edelweiss Life

Kotak Life

Future Generali

PNB MetLife

SBI Life

Aviva

Bandhan Life

Canara HSBC

IDBI Federal

IndiaFirst

Pramerica Life

Reliance Life

Sahara Life

Shriram Life

Star Union

View more insurers
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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