Children’s life insurance policies provide cover for the child’s parent/guardian/grandparent for a specified term. That is, if the parent, guardian, or grandparent were to pass on, the child’s future is not put in jeopardy.
In the event of such an occurrence, the child receives the sum assured in the policy plus bonus/participating profit/guaranteed addition, if any, or the value of the investments, at a pre-determined age. Generally, children’s policies are calculated to mature at specific, important events in the child’s life, such as attaining college-going age or the wedding.
This money is receivable irrespective of whether the proposer i.e. the parent/guardian/grandparent survives the term of the policy.
In case of a money back policy, the child receives fixed portions of the sum assured at regular intervals. On maturity, the child receives the balance sum assured, if any, plus the bonus/participating profit/guaranteed addition, if any, or the value of investments, whichever is higher.
In the event of death of the proposer, the policy continues and usually no further premiums need to be paid. On maturity i.e. at a pre-determined age, the policy continues and the child receives the sum assured plus bonus/participating profit/guaranteed addition, if any, or the value of the investment, depending on the type of policy purchased.
The premium for children’s policies usually is based on the age of the proposer and the child.
However, there are other ways to provide for such eventualities. If one chooses to impose self-discipline and invest regularly, other saving/investment avenues, such as mutual funds, offer higher returns.
What is Child Insurance plan?
For every parent, it is very important to plan for their children’s future in time. We try all possible measures to provide our lil ones with the best comforts of life. Be it best basic education, higher education, planning their carrier or marriage. We want their dreams to be nurtured fruitfully. We would want the same even if we’re not around.
To cater to this need of ours children plans from various Insurance companies act the best.
How do these plans work: Child Education Cost Calculator
1. Insurance can be taken on the lives of children, who are not majors
2. The proposal will have to be made by a parent or a guardian
3. Risk on the child’s life will begin only when the child attains a specified age
4. Even parents can take a cover in their name, which would benefit the nominee child in case of untimely demise of the earning parent.
Significance of children plans:
1. These plans help you fulfill your financial commitment towards your children
2. Help you meet the rising cost of your child’s education
3. These plans provide you with funds at pre-fixed intervals to help you meet the important milestones’ requirements of your child
4. Secures both parents’ as well child’s life
5. Also provides with a life cover
6. Premiums are relatively low
7. Cover is obtained irrespective of the state of child’s health on the deferred date
Things one should be clear with while opting for child insurance plan:
With regard to the deferred date* various options are available. In some plans, children between the age of 5 and 12 are insured, with risk commencing at age 12. While in some other plans, policy can commence when the child is between 1 and 12 years old and risk will commence 2 years after policy commences, but not earlier than age 7.
Children policies have conditions whereby the title will automatically pass on to the insured child, on his attaining the age of majority. This process is called vesting.
*Deferred Date – The time gap between the date of commencement of the policy and the commencement of risk is called the ‘deferment period’. If the child is 6 years old when the policy is bought and the cover begins when the child attains 15 years of age, the deferment period is 9 years. The date on which the risk will commence, at the end of the deferment period, is called the deferred date.
Importance of Child Plans
The life of a parent is full of executing important duties towards the child. Right from raising the kid from infancy to seeing him/her relax with their very own families -there are important matters one needs to attend to. Parents take care of everything related to the child and want to make sure that their child’s every want is looked after with none compromised.
This is where child plans can help you in looking after your infant’s education or marriage expenses in the years to come. All you have to do is make investment of a part of your income in a child plan to ensure you have got enough funds in the times ahead whilst your child would require it the most.
So the day your child desires to pursue a degree in architecture from abroad or a film-making course in a reputed institute, you’re in a comfortable position to ensure his/her fees. And even if something unlucky happens to you, you are confident that the needs of your childrenare taken care of when you aren’t around.
Take a look at different child insurance plans and give your child the first-rate gift of a comfortable future today.
What if you die five years after taking the plan? The term insurance policy will give a lump-sum for the instant needs of the family and in addition investments in the mutual fund will stop. The child plan, however, will now not pay the lump sum, however, make an investment on behalf of the policy holder. Insurers trust the waiver of premium function in a child plan as the most important thing as it does not let the demise of the policyholder derail the investment plan for his infant.
An Indian investor is continuously unnerved with market volatility and lacks the necessary discipline to create wealth over the long term. It’s pretty likely for the person to set cash in a mutual fund for his infant.
However, a child plan will make the parent retain making an investment, for the simple reason of making sure that he saves sufficiently for the kid. You could stop paying the premium after five years, however, specialists say this should be a tactical ploy to keep away from a cash crunch, not a strategic flow to lessen one’s investment.
Insurers say child plans are dependent on fulfilling the desires of the kid. A normal Ulip stops if the insured person dies. You must plan for it today. If you are looking to buy a good child insurance plan, then you should take help of an online insurance web aggregator that helps you in choosing the best child plan for yourself. You can take help of free insurance quotes and comparison service in choosing the best out of all.What to check:-
Ensures your child’s future needs and allows you to plan in a better way to stabilize your future financially.
Multiple needs fulfilled
All future needs of your child whether its education, marriage, or business are covered and looked after
You have the provision of liquidizing your plan through partial withdrawals
You get tax deduction for the premium you pay under Section 80C and any income from the plan is tax-free under Section 10 (10) D of the Income Tax Act
You can buy the riders like accidental death benefit, income benefit and critical illness benefit.
Tips To Consider While Buying Child Insurance Plan
It is advisable for you to calculate the required funds for your child education and marriage before going to buy coverage for children. With this additional information, you would be able to choose the best cover and can decide easily on the related premium amount and the time period of the child life plan. In some products you will get additional benefits such as accident cover, health, etc. You must compare child policies of different insurance companies on our site because with it, you can compare the premium amount per year and the returns presented by different companies.
Make sure to insure your life also. It is beneficial to buy a plan which has a built in clause premium waiver for the future. This would guarantee that the plan continues if you are not there to take care of it and your child would be able to receive assured sum amount at maturity. It is advisable for you to check the company’s record before purchasing child insurance. Buy the plan in the parent’s name instead of a child, since the child anyway has no dependants. But if you are planning to buy the best one in the child’s name, then ensure that it has a built-in feature of premium waiver in case of death of the parent.
This will protect your child from the burden of heavy premium payments and he will continue to reap the benefits of the plan. Also do a check out the tax benefits of the plan.It is an incrediblefinancial investment planning tool for child education / marriage / unforeseen expenses etc.It assists in meeting the child’s monetary needs and provides safety in the form of a life insurance plan.
For a great future of your ward, you must buy the best child insurance plan. By comparing service and free quotes, you will get the best and affordable child plan that meets your requirements easily. An online policy is a good option, it will assist you in comparing different plans of the top companies. It is worthwhile to look for best plan with riders and related features which make your plan more useful and effective. Riders provide additional benefits at low premiums. Some companies are offering riders as a part of the policy, whereas in few companies it is optional.
Riders provide a more secure and financially stable life to your ward. It is advisable to select a rider, according to your requirements. Don’t think about the extra premium that you are paying for riders, consider the benefits that you will get and make your policy more powerful.
The most helpful riders are those which make sure that the policy will not terminate in the case where the policyholder dies during the policy period.
Future premiums are waived off for the child, in case of death of the insured. With the help of it, your child will not have the burden of paying the rest premium amounts.
The insurer will pay a lump sum amount for the treatment of your child in case of dreaded diseases that may hamper his future growth.
It is same as above, in this case the insurer will provide a lump sum amount for the treatment of your ward.
Features of Traditional Child Policy
Here are some main features that you must look for hen you are purchasing a child policy for your ward’s future.
The premium completely depends upon the type of coverage and sum assured that a consumer choose.
The best way to calculate the required sum assured is that the sum assured should be around 10 times your current income.
For this first check your war needs and his/her age and buy a policy till your child get on his feet.
A child policy must be offering many types of child insurance policies such as Premium Waiver Benefit, Accidental Death and Disability Benefit, Critical Illness Rider Benefit and much more just look for that.
Apart from this there are some more things that you must check such as maturity amount, waiver period, partial withdrawals and lots more.
Now the question that arises is that which is the best child policy for you, but there’s no right answer of this question as the child policy depends upon the requirement of the policy holder. You should cautiously compare and then purchase the child policy that suits your need and which meets the future needs of your ward.
How it works?
Many people ask how a child insurance plan really works? Will they be able to provide assistance on time? Will they help in dealing with all the upcoming expenses and so on. The basic step is that you have to invest an amount on the monthly basis for maximum 25 years. It will help you in saving a lot of money for your child with good returns that will help you in dealing with the child’s education expense and later on, marriage expense as well.
Those child plans that are linked with ULIPs will get maximum returns for your child. It is found that unit linked child insurance plan is misunderstood just because of its high costs. They maximize the benefits after a long term period of the plan and you have to continue with the plan tenure. If you require good returns and nice growth, then you should be ready for the higher market risk that is involved in the same.
Why Invest In The Child Insurance Plan
You must be not aware of those benefits that a child insurance plan can give you. It will take care of maximum financial needs of your child when you are there for them or even in your absence. It will help you in providing the best education for your child. Saving for a child insuranceis also the best thing for your insurance policy as well.
When you are going to shop for a child plan online or offline, you must keep a few factors in mind while choosing the desired one.
Factors that you must keep in mind while shopping for the best child insurance plan
1. Time period for building a good corpus
2. An estimation of the amount that is required to build a corpus
3. The age in which fund will be required
4. Investment avenues to be considered.
Documents Required For Child Insurance Plans
Age proof– Birth Certificate, 10th or 12th mark sheet, Driving License, Passport, Voter ID, etc.(Any one)
Identity proof– Driving License, Passport, Voter ID, PAN Card, Aadhar Card, which proves ones citizenship
Income Proof– Income proof specifying the income of the person buying the insurance
Address proof– Electricity Bill, Telephone Bill, Ration Card, Driving License, Passport, should clearly mention the permanent address
Proposal Form– Duly filled in proposal form is required
Plan for your child wisely today. Do not give yourself a chance to regret on anything in future.