Child Insurance Plan

Child Insurance Plan is an insurance plan that simplifies your requirement of securing a child's future needs. The ever-rising college tuition fees, foreign university fees, and future marriage expenses make it relevant to buy the child plan. The child insurance plan provides both insurance and investment benefits. The child plan prepares you financially to support the dreams of your child. The policy also helps to secure the future of the child financially even after the death of the parent. Save regularly with the child plan so that you are financially ready to fulfill the key milestones of your child’s life like higher education and marriage.

Child Insurance Plan by ABSLI

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What is a Child Insurance Plan?

A child insurance plan is an insurance cum investment policy that helps you prepare financially for your child's future needs. The insurance policy provides life cover and maturity benefit. The life cover of the policy protects the child's life goals even after the unfortunate demise of the parents. With the policy's savings & investment aspect, you can create a considerable fund to provide for your child's important life stages- right from education, higher studies to marriage.

Wondering How Child Insurance Works?

Find out with an example

What is child insurance

Importance of Child Insurance Plan

As a parent, you have a strong desire dream to provide the best for your child, that your child should have a quality education and lead a comfortable life. A child plan can help you in accomplishing this dream. The policy offers a focused approach towards saving money in a disciplined manner. The child receives the education which she/he desires with a lump sum payout at maturity or when any unfortunate event happens to you. It also helps you beat inflation and save accordingly. A child insurance plan is important for the following factors:

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Use it as collateral for loans:
The child insurance plan gains a surrender value after a few years of premium payment. Once it gains value, the insurance policy can be used as collateral for the loans.
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The dual benefit of savings and insurance:
A child insurance plan allows you to save money regularly for your child. At maturity, you get a lump sum to support your child's dreams. With the insurance component of the child plan, your child's future is secured. It implies that even after the death of the life insured (parents), the child's goals are protected as defined in the policy.
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Expensive higher education fees:
Not everyone can dream of sending their children abroad for higher education. But when you save with a child insurance plan, you have a dedicated fund ready after years that can be used for the child's education. Suppose you send your child, to a reputable institute in India, to pursue engineering for his higher education. Keeping in mind the current rate of education inflation of 10-12%¹, you would need Rs.30 lakhs for engineering against Rs.20 lakhs today. This makes buying a child plan relevant.
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A fund ready for child's marriage:
With a child insurance plan, you can gradually save money for providing a grand wedding of your child. Your savings today may fall short in future. A child insurance plan will help you save for your child's marriage at your dream destination. You may want to arrange a wedding at Udaipur. For a dream wedding in Udaipur today, the estimated cost will be Rs.50 lakhs² with a total of 150 guests. The cost of the same wedding will be Rs.75 lakhs after 5 years considering inflation of 8%.
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Peace of Mind:
A child insurance plan gives you immense peace of mind. When you begin the premium payments in favor of the policy, you know that you will have a dedicated fund for your child over the years.
Benefits of Child Insurance Plan
Child insurance plans ensure financial support at every milestone of your child’s life. With this insurance policy you can help your child to fulfill all their goals and ambitions. A child insurance plan provides these benefits:
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Better Higher Education:
You can choose the milestone of your child’s life for which you want to build the fund. One of your milestones can be quality higher education. Let’s suppose, your child wants to become a doctor after 16 years. The current cost of MBBS for 5 years is Rs.50 lakhs6. By 2038, you will need approximately Rs.2.5 crores for the same education. So buying child insurance will help you plan the required corpus by a regular investment over the coming years. This will ensure that money will not be a hurdle if your kid pursues the dream to become a doctor. When the time comes the policy will pay to support the admission process.
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Rider Benefits:
The primary scope of coverage of the child plan can be enhanced by buying riders. These riders are available at an additional cost and can be included at the policy's inception. Some riders that you can buy under a child insurance plan are Accidental Death Benefit Rider Plus (UIN:109B023V02), Critical Illness Rider (UIN: 109B019V03), Hospital Care Rider (UIN: 109B016V03), Surgical Care Rider (UIN: 109B015V03), Waiver of Premium Rider (UIN: 109B017V02), and Accidental Death and Disability Rider (UIN: 109B018V03).
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Support the child even after parents' demise:
Even after the unfortunate demise of the parents, the child insurance plan continues to provide protection to the child. All the future premiums are waived off, and the nominee gets the assured benefit as defined in the policy terms. Apart from the assured benefits, a life cover amount is paid to the nominee upon the death of the life insured. This ensures the child's future is financially secured even upon the demise of the parent (life insured).
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Tax Benefit:
The child insurance plan provides you with a tax deduction benefit7 under Section 80C. All the premium paid is eligible for tax deduction up to the maximum limit of Rs.1.5 lakhs. You can also claim a reduction of up to Rs.1lakh on their tuition fees. All the maturity proceeds received as a death benefit or maturity benefit are tax-exempt under Section 10(10D).
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Lump-Sum Maturity Benefit:
The insurance policy gives you a lump sum amount on maturity to fund the goals in your child's life- Higher education or planning a grand wedding.
Our Child Plans
ABSLI Child’s Future Assured Plan
Protect the important milestones in your child’s life
Financial Security
Guaranteed¹ Returns
20% Loyalty Additions
Flexibility to Save
Guaranteed benefits
₹24.62 lacs
Annual Premium
₹1 lakh3
ABSLI Vision Star Plan
Money Back Plan to nurture your child’s passion
Financial Protection
Flexible Premium Payment
Future Premium Waiver
Regular assured payouts
Total Return
₹92.39 lakhs
Annual Premium
₹9.36 lakhs4
Why buy ABSLI Child Plans?
A child insurance plan is a way you financially prepare yourself to manage future expenses for a child's important milestones. Consider below reasons for buying ABSLI child insurance plan:
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Fast Online Process:
Amidst the fast-tracked life, it gets difficult to visit the office physically to purchase the policy or file a claim. This is why the insurer provides a fast and convenient online process to buy a policy or file a claim.
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Two Product Options:
Aditya Birla Sun Life Insurance provides you two child plans. One is ABSLI Child's Future Assured Plan, and the other is ABSLI Vision Star Plan.
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Flexibility to Choose the Sum Assured, Payment Terms and Policy Term:
The child insurance plan from Aditya Birla Sun Life Insurance allows you to conveniently select the sum assured, premium payment terms (monthly, regular, yearly, etc.) and policy term.
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Flexibility to Save for a Child's Life Goals:
ABSLI Child's Future Assured Plan gives assured benefits and the flexibility to save for different life goals. You can choose to save for either marriage/education or both.
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High Claim Settlement Ratio:
ABSLI has a high claim ratio of 98.04%⁵ reportedly, which has developed and improved the trust and credibility of our customers in us. We promise to settle the claim within the shortest time possible, that is 3.5⁸ days.
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Life Cover:
ABSLI child plan provides life protection coverage. It implies that after the unfortunate death of the parent, the waiver of premium benefit in the child plan will ensure all future premiums are waived off & the policy continues to be in force till maturity giving all the mentioned benefits.

Features of Child Insurance Plan

These are the features of a child insurance plan:

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Flexibility to Choose the Sum Assured:
It offers the flexibility to choose the sum assured as per needs/requirements.
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Flexible-Premium Payment:
The child plan gives you the convenience of flexible premium payment frequency like monthly, quarterly, half-yearly, or annually.
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Lump-Sum Benefit:
The child insurance plan provides a lump sum benefit to the beneficiary at the time of the death of the life insured or on the maturity of the policy.
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Waiver of Premium:
If the parent dies during the policy tenure, the insurance company waives future premiums. The policy benefits accrue as per said terms.

Who should Buy a Child Insurance Plan?

Who wishes to have sufficient funds for the important stages of their child’s life, like marriage or education, must have a child insurance plan. Categorically these people can buy a child plan:

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Young and Married Couples:
Buying a child plan will be favorable for young married couples. It is because they might soon begin with family planning. The insurance will help them prepare financially gradually, even before or right after their child has taken birth.
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Guardians:
Guardians can take care of a child’s dream with a child plan and financially support the child to fulfill their dreams.
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Grandparents:
Grandparents can also buy a child insurance plan. Keeping in mind the income levels, the grandparents can prepare them financially for their grandchildren’s future education and/or marriage goals.
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Taxpayers:
Taxpayers can buy a child insurance plan. All the premiums paid in a year are eligible for tax deductions (maximum Rs.1.5 lakhs per year) under section 80C of the Income Tax Act, 1961.
How does a child insurance plan work?
A child insurance plan provides insurance cover along with an opportunity to invest. The insurance coverage starts from the time you pay the premium. The life cover component provides a lump sum to the beneficiary if the life insured (parent) passes away during the policy period. On maturity, the plan offers a lump sum amount along with the bonus added to the policy. The proposer (you) can choose the premium payment, which can be regular premium, single premium, or limited premium payment paid monthly, yearly, or half-yearly. In case of the death of the life insured, all future premiums will be waived.

Let us understand the concept with an example. Assume Rahul purchased ABSLI Child Assured Plan when he was 35 years. The policy term was 20 years, the pay-out period is 3 years, sum assured ₹5 lakhs, annualized premium ₹35,775/- (excluding tax), premium paying term 8 years, payment frequency annual, guaranteed pay-out option: Education Milestone. In the 18th and the 19th years, Rahul received ₹1.8 lakhs per year. ₹1.5 lakhs as 30% of the S.A plus ₹30,000 as 20% of loyalty additions. Then in the 20th year, Rahul was paid ₹2.4 lakhs (₹2 lakhs as 40% of S.A. + ₹40,000 as 20% of loyalty additions.
What is Covered in the Child Insurance Plan?
A child insurance plan is an insurance policy that provides you coverage for :
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Maturity Benefit:
The child insurance policy pays the maturity benefit to the life insured at the end of the policy term. The maturity benefit is the amount of assured benefit as per the policy terms. This amount can be used for the child’s education or marriage expenses.
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Untimely Death:
The child insurance plan will provide financial protection to the child after the untimely death of the life insured (parent). The policy will continue, and the beneficiary will be given the sum assured after the death. The maturity benefit will be presented at the end of the policy term, and all future premiums will be waived off.

Factors Affecting Child Insurance Premium

These are the factors that affect the child insurance premium:

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Age:
The age of the proposer and child will affect the premium of the child plan. The closer the maturity date, the higher will be the premium amount. Also, if your age is more, the insurance company will charge more premiums to keep the child's life goals protected.
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Child's Life Goals:
The premium of the child plan will be based on the child's life goals for which you take the policy. The premium will be more if you want a comprehensive cover to fulfill goals of education and marriage.
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Policy Term:
Policy term also affects the premium under the child plan. If the policy term is shorter, the premium will be higher and vice-versa.
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Premium Paying Term:
The premium paying term is the period that denotes the duration for which you choose to pay the premium. One should evaluate for how long she/he wants to take the liability of the premium payments.
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Riders:
The premium payable increases by a nominal amount when you select rider covers. Some of the riders you can include are ABSLI Accidental Death and Disability Rider, ABSLI Critical Illness, ABSLI Surgical Care, ABSLI Hospital Care, ABSLI Waiver of Premium, and ABSLI Accidental Rider.
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Sum Assured:
Child insurance premium is directly affected by the amount of sum assured you choose. If the sum assured is higher, the premium will increase.

Child insurance Riders

Riders are additional covers that are taken to increase the scope of cover. These additional covers are available at a nominal premium.

Tips to Choose Child Insurance Plan
Before choosing a child insurance plan, this is what you must keep in mind:
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Start Early:
When you buy a child plan early in life, you in a way let the money invested grow over a longer period of time. The interest that you earn over the investment is reinvested into the policy to yield power of compounding.
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Check for the Premium Waiver:
Check whether the insurance policy allows for the premium waiver or not. In case of the death of the life insured, all the future premiums are waived off but the policy continues to remain in force & all benefits are provided as per the policy terms.
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Choose an Adequate Sum Assured:
Education inflation⁹ marks its growth at a percentage higher than retail inflation. What may seem adequate today can fall short tomorrow. The education prices are going to rise exponentially. This is why you must opt for an assured sum that will ensure all future needs of the child.
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Read the Terms and Conditions:
Go through the terms and conditions of the child plan. Pay attention to all inclusions, exclusions, and other clauses. Also, check for the returns you will receive.
Assistance to buy a child insurance policy

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Frequently Asked Questions

Find out more about child insurance plans and explore how it will benefit you.

You can buy a child insurance plan to plan for the finances for a child's higher education. The education inflation is 10-12% which is double the household inflation. This means that if you want your child to pursue engineering after 15 years, you should have close to Rs.50 lakhs considering inflation of 10%. Whereas the current cost of engineering in India is Rs.10 lakhs¹⁰.

A child insurance plan will give you an opportunity to save money. The policy gives your child a maturity benefit that helps meet the cost of higher education. The policy will help your child to pursue their dream education in case of unfortunate events. Child insurance plans benefit you with partial withdrawals to meet emergency expenses.
It’s certainly advisable but not compulsory. However, to ensure your child’s future requirements and dreams aren’t compromised due to lack of funds or in your absence, it’s advisable to save money through child plans.
The moment your child is born. Buying early not only secures your child’s future but also gives more time to grow the funds. This helps in building a bigger corpus and ensures you have adequate funds needed at key milestones of your child’s life.
Yes, it does. Premiums paid towards a child insurance plan qualify for tax benefits under section 80C of the Income Tax Act, 1961. Also, the pay-out at maturity is tax exempt under section 10(10D).
Premiums depend on many factors including sum assured, premium paying term, riders opted for and any other additional features availed. Today insurers offer online calculators which help in gauging premiums.
You can buy a child insurance plan online as well as offline. It is a smart decision to buy online as it not only saves time but also money as it is cost effective.
Adequate sum assured, waiver of premium benefit and pay-out structure are some important considerations which you must take into account before opting for a child insurance plan.
The insurer waives off all the future premiums in case of the life insured’s death during the policy term while policy benefits continue till maturity. This makes sure that the maturity benefit that was set for a certain age remains intact as planned. This waiver of premium rider must be chosen if not an inbuilt feature.
No, it won’t. After the death benefit is paid, the policy continues till maturity and the matured amount is paid at the end of the policy term.
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  • Disclaimer

    1Source: https://economictimes.indiatimes.com/tdmc/your-money/how-to-plan-for-child-education-expenses/articleshow/52500991.cms
    2Source: https://www.wedmegood.com/destination-wedding/udaipur
    3ABSLI Child’s Future Assured Plan. Plan option: Education & Marriage Milestone. Male | Age: 35 years | Policy term: 29 years | Premium paying term: 10 years | Annualized premium: ₹1,00,000 (excluding tax) | Sum assured: ₹18,65,846 (₹9,32,923 for each benefit) | Payout option: 9 years.
    4ABSLI Vision Star Plan, age 30 years, male, sum assured Rs.50 lakhs, premium: Rs.936511/- (including GST) premium paying term 5 years, pay frequency: annual, Assured Payout Option: Policy option B, policy term:14 years, death benefit: Rs.92,22,000 lakhs, Bonus Type: Simple Reversionary.
    5As per annual audited figures submitted to IRDAI for the period FY 20-21.
    6Source: https://www.moneycontrol.com/news/business/personal-finance/childrens-day-how-to-save-for-your-kids-expensive-college-education-7711131.html
    7Tax benefits are subject to changes in tax laws. You are advised to consult your tax advisor for the same.
    8As per annual audited figures submitted to IRDAI for the period FY 20-21.
    9Source: https://www.moneycontrol.com/news/business/personal-finance/childrens-day-how-to-save-for-your-kids-expensive-college-education-7711131.html
    10Source: https://www.tflguide.com/cost-of-higher-education-in-india-calculator-infographics/#:~:text=Cost%20of%20engineering%20education%20in%20India,-Engineering%20is%20still&text=The%20normal%20cost%20of%20engineering,between%2010%20to%2015%20lakh.
    11Provided all premiums are paid.
    ABSLI Vision Star Plan (UIN: 109N096V03) is a traditional participating life insurance plan. All terms & conditions are guaranteed throughout the policy term, except for the bonuses which would be declared at the end of each financial year. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. Some benefits are guaranteed and some benefits are variable with bonuses based on the future performance of the participating business and economic conditions. If your policy offers guaranteed returns then these will be clearly marked "guaranteed" in the illustration table on this page.
    ABSLI Child Future Assured Plan (UIN: 109N124V01) is a non-linked non-participating individual life insurance savings plan. All terms & conditions are guaranteed throughout the policy term. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc. The insurance cover for the life insured (including minors) will commence on the policy issue date.
    ADV/3/21-22/2489