Child Plans

Financial Security for Child’s Future:

A child plan ensures that major life expenses like higher education or marriage are financially covered, regardless of life’s uncertainties

Protection Against Unforeseen Circumstances:

In the event of a parent's untimely demise, a child plan includes a life cover component that offers a lump sum amount to the family, ensuring the child’s future needs are not compromised.

Building a Savings Habit:

Regular contributions to a child plan encourage disciplined savings, helping accumulate a substantial fund over time through the power of compounding.

Tax Benefits*:

Contributions towards child plans are often eligible for tax deductions under Section 80C of the Income Tax Act, providing additional financial relief.

Flexibility in Payments:

Many child plans offer flexible payment options, allowing parents to choose the frequency and amount of premium payments according to their financial convenience.

Educational Support:

Child plans often come with features like partial withdrawals that allow parents to meet the expenses of higher education without any financial strain.

Investing in a child plan is a prudent decision to ensure your child’s future is secure, both educationally and financially, allowing them to achieve their dreams without monetary constraints.

Traditional Child Insurance Plans:

These plans offer a mix of investment and insurance with a focus on safety and guaranteed# returns. They typically invest in debt instruments and provide a lump sum amount on maturity or on the untimely death of the parent.

Unit Linked Insurance Plans (ULIPs) for Children:

ULIPs offer both life insurance and investment in market-linked instruments. These plans provide the potential for higher returns by investing in a combination of equity and debt funds, based on the risk appetite of the policyholder. They also offer flexibility to switch between funds to maximize returns.

Waiver of Premium:

In case of the untimely death of the parent, the future premiums are waived off, but the policy continues and the child receives the intended benefits.

Maturity Benefits:

These plans usually offer a lump sum amount on maturity, which can be aligned with significant milestones in a child’s life, such as college admission.

Partial Withdrawals:

Many plans allow for partial withdrawals to meet financial needs at critical stages of the child’s education or other developmental milestones.

Death Benefits:

Provides a lump sum amount immediately on the death of the insured parent, ensuring that the child’s future financial needs are not hindered.

Riders:

Additional riders such as critical illness or accidental death can be added to enhance the cover, providing broader financial protection.

Tax Benefits^*:

Premiums paid towards child plans are eligible for tax deductions under Section 80C, and the maturity benefits are tax-free under Section 10(10D)** of the Income Tax Act, subject to certain conditions.

These features make child insurance plans a comprehensive financial tool for securing your child’s future, providing both insurance coverage and investment growth opportunities.

Ensured Educational Opportunities:

Guarantees funds for higher education, which can be crucial for your child's career and personal development, regardless of the economic or personal changes that may occur over the years.

Comprehensive Financial Security:

Offers a combination of death benefits and maturity benefits, ensuring that your child will have financial support through their formative years and beyond, even in your absence.

Adaptability to Changing Needs:

Many child plans offer flexible features such as partial withdrawals or the option to add riders, adapting to your child's evolving needs as they grow.

Peace of Mind:

Knowing that you have a plan in place to support your child’s major life events, such as education and marriage, can provide immense peace of mind.

Long-Term Wealth Creation:

Investing in a child plan contributes to building a significant corpus over the long term due to the power of compounding, especially if started early in the child’s life.

Premium Payments:

You pay premiums regularly over a specified term, which may vary depending on the policy. Some plans allow for a lump sum payment option.

Investment Growth:

The premiums are partly used to provide life cover, while the remainder is invested in funds or instruments chosen based on the plan’s nature (traditional or ULIP). The returns on these investments accumulate over time, contributing to the corpus.

Payouts:

On maturity, the child insurance plan pays out a lump sum amount. In ULIPs, the payout depends on market conditions and the fund’s performance.

Death Benefit:

In case of the parent’s demise during the policy term, an immediate sum assured is typically paid to the family, ensuring financial support for the child’s needs without interruption. Further premiums may be waived while the policy continues to invest towards the maturity benefit.

Partial Withdrawals:

Some plans allow withdrawals during the policy term to cater to immediate financial needs related to the child's education or other expenses.

Understanding these mechanisms helps you effectively plan and utilize a child insurance plan, ensuring it aligns with your financial goals for your child’s future.

Waiver of Premium Rider:

Ensures that all future premiums are waived off while keeping the policy benefits intact if the parent (policyholder) passes away or becomes disabled. This ensures that the policy continues to accumulate funds without further financial burden on the family.

Critical Illness Rider:

Provides a lump sum payment if the parent is diagnosed with a specified critical illness during the policy term. This helps cover medical expenses and other financial needs during a critical time without impacting the funds set aside for the child’s future.

Accidental Death and Disability Rider:

Offers an additional sum assured in case of accidental death or disability, providing extra financial support to the family in such unforeseen circumstances.

Term Rider:

Adds a specific term insurance cover to the primary policy, increasing the death benefit over and above the main policy cover, which can be crucial for covering immediate financial needs in case of the parent's demise.

Income Benefit Rider:

Provides a regular income to the family for a specified period following the death or disability of the policyholder, helping to manage day-to-day expenses and maintain financial stability.

Enhanced Financial Protection:

Riders like accidental death, critical illness, and waiver of premium provide additional layers of financial security, ensuring that the child’s future is protected against multiple risks.

Cost-Effective Coverage:

Getting riders along with the main policy is usually more cost-effective than purchasing separate insurance policies for each type of cover.

Customizable to Needs:

Riders allow you to customize the insurance plan based on your specific needs and concerns, making the policy more flexible and tailored to your family’s circumstances.

Peace of Mind:

Knowing that you have comprehensive coverage that accounts for various possibilities gives you peace of mind, allowing you to focus on raising and planning for your child without undue stress about their financial future.

Incorporating riders into a child plan is a strategic way to ensure that your child’s needs are comprehensively covered, making it a robust financial tool for securing your child's future.

Age of the Child:

Most child plans can be availed from the birth of the child, with some plans setting a minimum entry age of 90 days. The maximum entry age can vary, typically around 10 to 12 years.

Age of the Parent:

Parents can usually purchase child plans from ages 18 to around 50 or 55 years. This age range allows parents to cover the significant educational and developmental milestones of their child.

Policy Term:

The policy term is often flexible but should typically extend until the child reaches adulthood—usually considered to be 18 or 21 years old. Some plans may extend the coverage further to cover educational expenses like college or postgraduate studies.

Premium Payment Terms:

These are often flexible, with options for regular pay (throughout the policy term), limited pay (pay for a limited time but stay covered longer), or single pay (one-time lump sum payment).

Financial Status and Health of the Policyholder:

The parent or legal guardian must be able to pay the premiums consistently throughout the term. Health declarations or medical examinations may be required, depending on the policy specifics and the sum assured.

It's important for parents to review the eligibility criteria carefully to ensure they meet the requirements and that the policy meets their financial planning goals for their child’s future. Selecting the right plan early can maximize the benefits received and ensure the child is well-protected and supported as they grow.

Application Form:

A completed and signed application form that provides all the necessary details about the policyholder and the child.

Proof of Identity:

Valid government-issued ID documents such as a PAN card, Aadhaar card, Passport, or Driving License of the parent or legal guardian.

Proof of Address:

Recent utility bills, bank statements, Aadhaar card, or Passport that shows the current residential address of the policyholder.

Proof of Age:

Birth certificate, Passport, or school certificate of the child to verify their age.

Income Proof:

Recent salary slips, income tax returns, or Form 16 to demonstrate the financial capability of the policyholder to pay the premiums.

Photographs:

Recent passport-size photographs of the policyholder.

Medical Reports:

If required by the policy, medical examination reports to assess the health status of the policyholder.

Bank Account Details:

To facilitate premium payments and to receive any payouts, bank account details such as cancelled cheque or bank passbook might be needed.

These documents help the insurance company assess the risk and eligibility of the applicants, ensuring the policy terms are suitable for both the insurer and the insured.