Child Insurance Plans
Child insurance plans are combinations of insurance cover and investment which help in securing the future of a child. With insurance cover, protection is offered to the child for any untoward situation like loss of parents etc. On the other hand, the investment option allows the child to generate sufficient capital so that the future of the child is secured.
The best part is that these plans come with flexible payouts that can be availed at crucial milestones to effectively utilize for education and other important stages of the child's life.
What is a Child Education Plan?
A child education plan is like an insurance plan that protects the future of a child monetarily to allow him/her to pursue the desired education goals. This plan also secures the savings of parents along with guarding the life of the child. Parents can use this savings in parts or in total as per the need of the child.
Most education insurance plans are available with life insurance protection and allow the insured to enhance savings by means of regular premium payment. Moreover, the lump sum capital that is received at maturity of the policy allows the child to pursue higher education with the best facility without worrying about finance.
What Are The Kinds Of Child Insurance Plans?
There are various types of insurance for children available in the market. The parents or interested individuals can select the best life insurance for children considering different factors such as tax benefits, savings, coverage offered, children to be covered, market situations and so on.
Below are some of the different kinds of child insurance plans available in India:
The Single Premium Child Plan allows the insured to get a lump sum amount by paying only a single premium for the entire term of the policy.
The Child Endowment Plan allows the insured to invest in different debt products offered by the insurer. The profits on such investments are small but they are without any risk and the insured can stay at ease about the safety of their money.
ULIP, on the other hand, allows the policyholder to divide the total investment that he/she is willing to make in different products including equity and debt. These are long term plans that go for 10-15 years.
The Regular Premium Insurance Plan allows the insured to pay premiums as per their comfort on a monthly or quarterly basis. The insured can also pay as per biannual or annual basis.
Since child education in India is so expensive, especially in the private sector, for a bright future for your child you need child education plans. This way, you will not compromise on the level of education of your child.
Key Features And Benefits Of A Child Education Policy
When it comes to features and benefits of a best policy for a child, there are various merits that you can gain. Some of them are mentioned below:
What All Tax Benefits Are Available On Education Insurance Plans For Children?
As mentioned above, child insurance plans offer the highest level of tax exemptions. Hence, the premium that you pay for child plans becomes eligible for tax deduction. Further, the interest that you earn and the capital that you receive at maturity from such plans are also exempted from tax. This is because the best child plans come under the EEE exemption, which is the highest bracket of tax exemption.
Top 3 Child Policies in India
There are numerous good child insurance and education policies available in India. However, choosing the best child education plan is a tricky decision and needs enough consideration. You must buy the best plan as per the requirement of your child. Below are the top child plan providers and their plans in India:
|Insurer||Plan name||Min. Premium (Yearly)||Max. Sum Assured|
|Life Insurance corporation of India (LIC)||LIC New Children's Money Back Plan||INR 4,327||No Limit Fixed|
|HDFC Life Insurance||HDFC life YoungStar Udaan Plan||INR 24.000||Depends on insurer and the chosen insurance policy|
|SBI Life Insurance||Smart Champ Insurance||INR 6,085||INR 1, 00, 00,000|
List Of Documents Required For Buying Child Insurance Plans
Here is the list of documents required for buying a child saving plan:
- Age Proof in the form of Birth Certificate, Passport etc.
- Identity Proof in the form of Aadhaar card, Passport, PAN Card, Voter ID etc.
- Income Proof in the form of income of the policy buyer.
- Address Proof like Electricity bill, Passport, Driving License etc., and
- Duly filled Proposal Form.
What Documents Are Required For The Child Insurance Claim Process?
Here's a list of documents required for raising a child plan claim:
- You need a claim form that is duly filled.
- You need a copy of the Policy papers.
- You need a medical certificate/ death certificate
- Any diagnostic reports etc.
- You may also need a post-mortem report if the death is unnatural
- You may also require a copy of FIR if the death is unnatural
- NEFT details of the nominee
- KYC details of the insured and the nominee
Things That Are Not Included In A Child Insurance Plan
Below are the things that are not included in a child plan:
- If the policyholder dies because of an overdose of drugs or alcohol, in that case the nominee may not receive benefits.
- Also, if the death of the policyholder takes place because of committing suicide during the first year of buying the insurance, in that case the nominee will not receive any claim amount.
- Further, if the insured happens to die due to taking part in adventure sports, the insurer doesn't entertain claims.
- In addition, if the insured dies because of being involved in any illegal activity or violence, even in that case the insurer doesn't cover the child.
How To Get The Best Child Education Plan
There are some aspects as mentioned below which can be considered for choosing the best child education plan.
Try to purchase a child education plan when your child is born or is very young. This way you can have a huge corpus in your possession.
Before buying a plan compare the plans as well as the premiums that are offered by different insurers for child plans.
Compare the benefits and features of the plans that you have considered.
Make sure the partial withdrawal clause is there and you read it well.
Also, do ensure that the premium waiver benefit is also there so that your child can gain in case you are not around.
Frequently Asked Question
The things that make child plan policy special are:
- It offers a comprehensive gain of both life insurance along with offering maturity benefits to the child.
- It serves as a safety net to make sure that the child could fulfill his/her education goals.
- Child plans also help a child to have a lump sum amount as payout in case of any untoward situation with parents. This amount helps the child to pursue education without difficulty.
- Further, in case of the policyholder's (parents') death, the future insurance premiums are paid by the insurer and she/he receives the maturity benefits at the end of the policy.
Saving Plan and Investment plans are the two types of child plans available.
In a savings plan an individual pays regular premiums for the required time period and when the policy matures the policyholder receive guaranteed payouts. On the other hand, in an Investment Plan, the amount is invested in the market. Here, the premium paid by the policyholder for a particular duration of time is invested in debt and equity funds. These are risky, market-linked policies and allow good returns on investment.
It is a kind of insurance policy that allows protection against the child's future in terms of education and higher studies. It allows the parents an opportunity to save a capital for their children to ensure their good future. This saving helps the child to obtain the education of their choice.
A child insurance plan is important because it allows parents to save enough for their child's future. Further, it allows parents to make sure that their children do not have to compromise on their dreams because of the financial crunch. So, if you want to secure the future of the child financially, you must buy the best policy for child education.
Yes, you can easily withdraw the money after completion of 5 years of the policy. Partial withdrawal is also possible if required for the child’s specific needs (if any).
Yes, the proceeds received from a child plan as well as the money that the nominee receives in case of sudden death of parents or at maturity is totally tax-free.
Ideally the right time to plan a child education plan is when the child is born or before he/she starts school. This is because it will give enough time for the parents to have a lump sum capital. However, if you miss it at that time, you can still buy a child plan anytime during the schooling of the child to save for his/her higher education.
Yes, you can buy such a plan for your child aged 15-years. You can use either offline or online mode to buy such a plan. This plan will help the child receive a good amount of capital in case of sudden death of the head of the family.
In a child plan, a nominee is generally the person appointed by the policyholder to take care of the financial records of the insured after his/her death. The nominee has the responsibility to disburse the capital among the legal inheritors. A beneficiary, on the other hand, can either be a financial institution in certain cases, while in others the nominee and beneficiary can be the same.
Yes, under section 80 C of the Income Tax Act, you can have tax benefits on the premium that you pay for your child plan.
To select the right child insurance plan, you may consider aspects like:
- Tax benefits
- Monthly savings
- Children in the family
- Market situations
- Government policies etc.