Child Insurance Plans in India: Features and Benefits

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What is Term Insurance?

When it comes to investment planning, prioritising your child's future takes precedence. This is because rising education costs, health care costs, and wedding costs are all key components of your financial plans. As a result, having a solid financial plan in place for your child is critical.

You've probably heard statements that buying an online term plans or regular plans is one of the preferred approaches to protect your nominees against the financial uncertainties arising out of the possibility of your dying young. They most certainly are, as they offer a high level of coverage at a reasonable cost, as well as a lump sum payment in the event of the policyholder's premature death during policy tenure. The term policy then comes to an end.

What is the Child Policy?

A child plan pays out a lump sum after the policyholder passes away, but it does not end there. All future premiums are waived, and the insurance provider manages the investments on behalf of the policyholder, depending on the terms and conditions of the policy. When you are not present, a child plan will assist your kid's ambitions, from higher education to wedding preparation. It will act as a "financial parent" for your child when he or she is most in need.

Features of Child Plans

Premiums

In child plans, you have the option of paying your premium for a limited period or on a regular basis. The amount will be determined by the maturity and amount assured that you choose.

Amount guaranteed

Your child insurance plan may be able to offer a lump-sum payout in the event of the policyholder's untimely death. After that, the insurer continues to pay the premium on the insurer's behalf until the tenure ends.

Tenure

Child plans are often available between the ages of 0 and 21. However, some plans have a greater upper age limit. Child plans last from the time the child is born until he or she reaches a certain age.

Partial Withdrawals are permitted

You can make partial withdrawals from a child plan. This ensures that your financial needs are met in the event of an emergency. You can also use this money to pay off any other debts you may have.

Lump sum benefit

Child insurance plans give you the option to take the death benefit or maturity benefit in a lump sum. This helps you or your child get a considerable corpus which can be used for the child’s financial needs.

Waiver of premium

Child insurance plans often come inbuilt with the waiver of premium benefit . This benefit waives the premiums payable for the policy if the parent passes away during the term of the plan. Plus, the plan does not stop. It runs without any interruptions up to the chosen policy term and the insurance company pays the premium on the behalf of the parent. On maturity, the child insurance plan pays the maturity benefit.

Loyalty Addition and Wealth Booster

Under some traditional and unit linked child insurance plans you might enjoy added benefits of loyalty additions and wealth boosters. These benefits add to the corpus of the policy and enhance the policy payouts.

Riders

Child insurance plans come with a range of optional riders. You can choose to add one or more riders at a nominal additional premium to your policy for wider protection.

Flexibility

Child insurance plans allow you to choose the sum assured for the policy. You can also choose the policy term and premium payment term and frequency. This gives you flexibility in choosing the plan that matches your financial needs.

Plus, when you buy ULIPs, you get the added flexibility of switching, partial withdrawals, top-ups and premium redirections (subject to policy t&c).

Which One Should You Buy for Your Child's Future?

There are many different types of child plans available on the market, and they vary depending on the insurance company. A child plan should be established based on your needs and the future needs of your child.

Consider the following:
Financial assistance available to your child.
Budget-friendliness
Provides a safe haven for your child's dreams
Conditions of withdrawal

Key takeaways

Child insurance plans are life insurance plans that help you create a corpus for your child’s future needs.
Some of the features of child insurance plans include flexible tenure, partial withdrawals, flexibility of choosing the policy details, premium waiver benefit, etc.
When choosing a suitable child insurance plan, ensure that you choose an option which provides financial assistance to your child, is pocket-friendly, and offers financial security.

Wrapping Up

The finest and most highlighted benefit of obtaining a child plan is the financial help supplied to your child at various phases of their life. Higher schooling, marriage, or any other financial emergency are examples of these stages. Now is the time to protect your child's dreams.

FAQs

What are some of the top features of child insurance plans available?

Some of the top features of child insurance plans would include adequate protection, affordable premiums, attractive benefits, and flexibility. Bajaj Allianz offers some attractive child plans that you can consider for your child’s future.

Why is it important to invest in a child insurance plan?

It is important to buy a child insurance plan to create a corpus for your child’s future which remains unaffected even if you are not around.

How does a child insurance plan help in securing your child’s financial future?

Child insurance plans usually has a waiver of premium benefit . This benefit waives the premium if the parent dies but the plan continues. As such, the child plan ensures that a corpus is created for the child’s need even if its parent cannot do the same.

What is the eligibility criteria for buying a child insurance plan?

The eligibility criteria of a child plan depends on the plan and the Insurer . Some of the common criteria include minimum and maximum entry age, policy tenure, sum assured, etc.

Can I get a child insurance plan for my 15-year-old?

Usually, child insurance plans might have a minimum and maximum age requirement for the child. Check if there are such requirements and whether your child is eligible under them to buy the policy.

How can I purchase the best child insurance plan online?

To find the best child insurance plan, assess your needs and compare plans depending on your coverage requirements. Choose a plan that offers a comprehensive scope of coverage, attractive benefits, and has competitive premiums too.

Can I customise a child insurance plan based on my specific needs?

You can choose the sum assured, premium (in the case of ULIPs subject to the minimum and maximum limits specified under the plan), policy term, premium payment term and frequency, riders, etc. However, you cannot customise the terms and conditions of the plan.

How does a nominee differ from a beneficiary in a child plan?

A nominee is the individual responsible for collecting the death benefit if the life assured passes away. The nominee might not be the end user of the benefit. A beneficiary is the end user of the policy benefits. The beneficiary can be the same as nominee or different.

Why is it important to assign a nominee in a child insurance plan?

It is important to assign a nominee so that the death benefit can be collected from the insurance policy easily. Naming a beneficiary is important so that the intended user of the policy proceeds can be identified.

Are there any tax benefits associated with child education plans in India?

Yes, child plans offer tax benefits. The premiums paid are allowed as a deduction under Section 80C up to ₹1.5 lakhs. The death benefit is tax-free and the maturity benefit is also tax-free if some terms and conditions are met.

Are the returns from a child insurance plan tax-free?

Yes, the returns from a child insurance plan are tax-free on death. The returns received on maturity can be tax-free subject to previsions of the Income Tax Act , 1961 .

At what stage can funds be withdrawn from a child plan?

Usually, funds are paid at maturity. However, if you choose ULIPs, you can make partial withdrawals after the lock-in period of 5 years in case of emergencies.

When is it possible to make a partial withdrawal from a ULIP based child insurance plan?

If you choose ULIPs, you can make partial withdrawals from the fund value after the lock-in period of 5 years is over.

What factors should be considered while choosing a child education plan?

Assess factors like your needs, amount of corpus needed, inflation, type of child plan, sum assured, premium, policy term, etc.

What is the right time to invest in a child insurance plan?

It is suitable to invest in a child plan as soon as you become parents. This will help you choose a longer policy term and create a good corpus over time.

What documents are needed to buy a child insurance plan?

The documentation depends on the type of policy you are buying. However, some of the common documents include identity proof, age proof, address proof, income proof, proposal form, etc.

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