Which Insurance Policies Can Help Secure Child Education and Marriage?

Along with investments to grow your savings, insurance schemes can help secure your children’s education and also fund their marriage (which is becoming costlier than ever now). These schemes are especially important because the proceeds from these policies can help your child fund their future capital needs in your absence. 

Let’s look at the types of insurance policies you can buy to secure your kid’s education and their marriage.

Types Of Insurance Policies To Secure Child Education & Marriage

The insurance space in India is replete with policies that offer fairly comprehensive coverage featuring important benefits. Given the numerous options available, it is important to filter out insurance policies that best serve your purpose. If your goal is to plan for your child’s future and create a corpus sufficient to fulfill their education and marriage-related expenses, investing in the following types of insurance plans can help you:

1. Child Education Plans

   Child education plans are necessary insurance instruments for child planning. These child plans help you effectively cover the cost of education, from school tuition fees to college and even studies abroad. What makes child education plans an ideal investment is the life insurance component that is attached to them. In the event of the parent’s death, these plans offer a lump sum payout to the child that can be used in the future to serve expensive capital-related needs, including marriage.

   Key Features of Child Education Plans

   • The lump sum benefit amount receivable on the death of the parent is entirely tax-free. The amount can be used in whichever capacity the child deems fit, even if it is to pay for their own marriage or medical needs.

   • Further, coverage and benefits under a child plan continue till the end of the policy term, even on the death of the premium paying parent with the waiver of premium feature. 

   • There are several money-back insurance policies that offer periodic payouts to help cover certain milestones in the child’s educational pursuits. 

   • Child plans also serve as collateral for loan applications that one may avail to pay for higher education in a foreign nation. 

2. Term Life Insurance Plan

   Term insurance is a type of life cover that offers protection for a specific term. These policies offer comprehensive coverage to the tune of Rs. 1 Crore at affordable premium rates. However, term life insurance policies are pure risk protection plans and, therefore, do not come with any maturity benefit. The death benefit amount that is offered to the family of the life assured can help secure important financial aspects such as child education and marriage. This ensures that a child’s needs are taken care of even in the absence of an earning parent. 

   Key Features of Term Life Insurance Plans 

   • On the death of the policyholder within the policy term, the death benefit amount payable to the nominees is either done as a lump sum payout or in installments. 

   • Policyholders are offered flexible premium payment options and even rebates on assuring a higher sum. 

   • Premiums paid for term plans are tax exempted under Section 80C of the Income Tax Act, subject to a limit of Rs. 1.5 Lakhs. 

   • The proceeds can be used by the nominees to pay off outstanding debts, pay for a child’s education and even finance the marriage of a child. 

   • Term insurance comes with riders that can be availed at nominal charges for extra cover against accidental death, disability/dismemberment, and critical illnesses. 

3. ULIPs

   ULIPs are excellent options because they come with dual benefits of investment and insurance. The investment component invests a part of your premiums in market-linked instruments such as stocks and bonds, thereby ensuring higher returns. The insurance component offers financial security to your family in the case of your death within the policy term. In fact, you can name your children as beneficiaries of the policy, ensuring that only the child receives the sum on your demise. 

   Key Features of ULIPs 

   • These plans can help you create an additional corpus through the investments, which you can leave as a legacy for your children or pay for their education, and marriage.

   • Policyholders have the option to choose the investment strategy and funds according to their appetite for risk. 

   • There are some specially designed child ULIPs, wherein the child receives the death benefit on your demise, and the future premiums are waived off. 

   • In the event of your unfortunate demise, the policy continues till the maturity date; therefore, the investments keep growing. The accumulated fund value is paid to your child as the policy matures.  

   In addition to the above-mentioned insurance policies, you can also purchase traditional endowment-based child plans. These are ideal for people looking for a low-risk profile as these plans offer guaranteed returns on the death of the policyholder as well as on the maturity of the policy.

   Let’s look at some of the best child insurance plans to help your secure your child’s education and marriage.

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

Best Child Plans^†† to Secure Their Education And Marriage

Disclaimer: †† Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is done in alphabetical order (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Summing Up!

An insurance policy for a child should be bought to help her/him be financially secure after your death. Given that a child’s education and marriage are primary concerns for parents, the potential costs associated with each should be estimated prior to buying a policy. This will ensure that the sum assured against your death can be put to optimal use without disturbing the balance required to fund these events. The proceeds from your insurance policies should be allocated in a way that each of your goals are fulfilled without overlapping other needs.