Cover For Your Child

Child Insurance Plans 

Child Insurance policies are guaranteed return plans or endowment or Unit Linked Insurance plans that provide financial protection and security to your child. These plans look after the savings requirements for the child’s future and education. Every parent’s first goal is to ensure that their children to have a successful future and live their lives securely. Child plans help you to save for the higher education of your child. In this, you can build a corpus for the long term and get good returns. Child plan offers unique benefits such as waiver of premium, tax benefits, life coverage, etc. 

Let’s understand this with the help of an example: Mr. Ravi has taken a insurance plan of 10 years for his child.  He requires to pay a premium depending on his choice of premium payment mode. The payment modes are monthly, half yearly, yearly, or in single pay. If Mr. Ravi dies in the 7^th policy year, in such cases his beneficiary/nominee receives all the lump-sum payments. If in case Mr. Ravi survives the entire policy term, then he is eligible to select the use of amounts in equal parts for his child's education or he can also choose to receive a lump-sum amount at the policy end.

Benefits of Child Insurance Plans 

Nowadays, child insurance is important, if you want to secure his/her child financially. However, before deciding which is the right option for you, one should be aware of such insurance policies. Let’s discuss some of the points about child insurance plans: 

• Financial stability and protection: Your income is the only source that provides security to you and your family. However, in case of uncertainty in life due to which financial support stops, in such situations, a child plan is one of the safest options. It offers a lump-sum amount in case of an unfortunate event that protects your child if you are not there. So, cover for child in term life insurance is important for every parent. 

• Lump-Sum amount at the time of maturity: A lump-sum amount is offered by the child insurance policy at the end of the policy tenure. These plans provide you an option to choose a maturity date that suits your child’s future requirements.  Over the tenure, your investment grows and you save enough for fulfilling your child’s dream. 

• Flexible Payout options – Child insurance offers two payout options i.e., regular and lump-sum. Lump-sum is a large fund given at one time to fulfill all the major and the long-term needs of your child such as fees of higher education and marriage. Regular payouts take care of irregular expenses such as learning new skills, tuition fees, etc. 

• Waiver of Premium Benefit: In case of an unfortunate demise of the policyholder, the insurer pays the benefit and the plan does not end. This benefit waives off all your due future premiums. The fund grows until the maturity age and your child receives the maturity amount when he/she is ready to take admission in college or other life stages. This benefit is quite different from direct investment options in a mutual fund. In direct one, the plan stops in case of an unforeseen accident of assured. But child plan continues premiums benefits on your behalf, thus keeps your child’s future financially stable and safe. 

• Partial Withdrawals: Child plans offer you an option to withdraw a part of your funds in case of your child’s urgent needs. You are eligible to cash out some of your amounts after the lock-in period and pay for the college fees or immediate medical expenses. 

• Tax Benefits: Get the tax benefit on premium paid as per Section 80C of the Income Tax Act, 1961.  You can claim for deductions up to Rs. 1.5 lacs for your child's plan premiums. 

Why Do I need a Cover for Child in Term Life Insurance? 

• Child Insurance Plan offers protection to your child and also provides a chance to save money for your child’s bright future. 

• This plan makes sure that your child receives a lump-sum payment at maturity date or in case of any unforeseen event.

• It gives you a protective shield that ensures your child’s education does not get affected if you will not there with your child in future. The plan provides life cover to your child, in case of an unfortunate event. 

Types Of Child Plans 

There are three types of child insurance plans available. Here’s a quick laydown: 

• Child ULIP Plans – Child ULIP plan provides market-linked returns on the investment. One part of the investment is invested in securing the child’s future and the other remaining part is invested in debt and equity. 

• Savings Plan – You can go for a savings plan if you want to save and secure your child’s future without any market introduction. It also offers unique benefits such as maturity benefits, life cover, and tax benefits as per prevailing laws. 

• Single-Premium Insurance Plan – In this, a lump-sum amount is payable to the policyholder in a single premium for the complete policy tenure. 

Comparison between Child Covers – Child ULIPS and Traditional Plans 

Child Savings Plan vs Sukanya Samriddhi Yojana Scheme and Public Provident Fund

Final Thoughts!

As parents, kids are the most valuable part of their lives and they want to provide the best facilities to them. Parents spend half of their time thinking about their child’s aspirations and the inadequacy of funds might become a hindrance in your child’s dream. It is always better to start saving at the right age for a child’s higher education. Start financial planning today for your child’s better tomorrow. Choose the right cover for child in term life insurance at the right age and time.