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Child Plans

About Child Plans
A child insurance plan is a combination of insurance and investment which helps in financial planning for your child’s future necessities at the right age. These plans financial secure your child’s future and finance the turning points in his/her life such as higher education and marriage,by delivering flexible pay-outs.Not just this, Child plans also ensure that your child’s future financial needs are taken care of even in your absence.

These plans offer you the flexibility to invest based on your child’s education requirements, your financial status and other monetary goals. It also provides a life cover of around 10 times the annual premium, which is a lump sum payment at the end of policy term. Additionally, it also offers partial withdrawal facility when needed.

Advantages of Child Insurance Plans
Payer benefit and waiver of premiumPredetermined pay-outsMaturity benefitTax benefits
Riders are available to ensure that the child plan does not lapse when the payer does not survive the policy term. The most important being the payer benefit and waiver of premium. This means, in case of untimely death of the parent during the time period specified in policy, all future premiums will be waived off and the policy will still remain active.
Child plans also offers prefixed percentage of the sum assured known as periodic payouts. These pay-outs can be useful at various stages of a child’s life be it for short term or long term financial needs.
Child plans offers comprehensive benefits of life cover along with maturity benefits. These provides money for higher education.If the parent has wisely invested in the child plan at early age, then the invested amount gathered at end of term policy will be sufficient to meet the inflated fees of professional courses.
For the premiums paid under child plans, parents are not eligible for annual deduction from their total income of up to Rs. 1.5 lakhs under Income-tax Act, 1961. They also benefit from tax free maturity profits, subject to fulfillment of the terms and conditions stated therein.
Types of Child Plans

There are many different types of term insurance policies available, which are as follows:

Unit Linked Child Insurance PlansTraditional Endowment Child Insurance Plans
In this, a portion of the premium is invested in buying units of a fund and rest portion comes under the equity funds. As the plan is market-linked, the yields are decided on basis of net value of assets at the maturity period.
With a combination of insurance and investment, parent could plan their child’s insurance with an expected rate of return. Here in this, insurance cover is given for a specified period and assured maturity amount is also received at the end of term policy.
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