Buying insurance plans for infants and young children has become like a trend budding everyday thus, making a significant comeback in the Indian insurance market.
Rishi Piparaiya, director- marketing and sales, Aviva Life Insurance believes that the increasing education cost has grown up the sensitivity among young parents about insuring their child’s future. He explained it with an example stating the fee of a reputed medical college would be around Rs 2 crore after 10 years from today.
He added that self-employed class is expected to bring-in larger demands marginally in comparison to salaried class. Also, Aviva India is planning to launch more such plans.
Child insurance, unlike life insurance term plan, pays the death benefit if case of policyholder’s demise and with the balance premium paid by the insurer, the policy continues. Child plan can be purchased as a ULIP or traditional plan. In case of traditional plan, there are fixed returns at the time of maturity or at fixed intervals whereas, ULIP can either cover the child or the parent.
According to the certified financial planners, ULIP is expensive in comparison to other instruments as it has higher premium investment, policy allocation charge and deductions of around ranges between 5%-7% (first year only).
Managing director and CEO of PNB MetLife, Tarun Chugh informed that they have a ULIP child plan and are planning to launch a unique traditional child plan in some time.
He added that life insurance plans are the most preferred ones because of the financial protection offered by them to a family and acts as a good mode of saving for child future education. He believes that insurance ensures corpus an individual has decided for their child’s future which would help him grow irrespective of their presence. 31-40 years is the major age bracket of parents investing into child plans as revealed by Mr. Chugh.