A child insurance policy is an ideal choice for parents who are looking to secure the lives of their children. These policies can help you plan for significant milestones in your child’s future and will ensure that your child doesn’t face any unnecessary hassles. Read on to know more about the benefits of child insurance plans and the most popular child plans in the country.
Benefits of Child Insurance Plans
Security: The primary benefit of a child insurance policy is to provide your child financial security in case of an unfortunate eventuality. Thus, child insurance plans ensure that your child’s welfare is not compromised even if you are not around.
Life cover: Child insurance plans offer a life cover and thereby provide a death benefit to the child in case the parent meets with an untimely death during the policy tenure. This benefit will ensure that there are sufficient funds available to take care of any immediate expenses that may arise.
Maturity benefit: Most child insurance plans offer a maturity benefit at the completion of the policy tenure. Thus, as a policy buyer, you can opt for a policy tenure with payouts that correspond to your child’s age and expected milestones in his/her life.
Survival benefits: In addition to the maturity benefit, certain child insurance plans also offer a number of survival benefits during pre-defined policy years. These guaranteed survival benefits can, thus, be of help in paying off various expenses.
Partial withdrawal facility: Many child insurance plans give you the option to make partial withdrawals from your fund, in case of an emergency.
Bonuses: If you opt for a ‘with-profits’ child insurance plan, you will also be eligible to receive bonuses and guaranteed additions that can help increase your overall corpus.
Option to purchase riders: Most insurance providers give policyholders the option to purchase insurance riders along with their child insurance plan, as a way to increase the protection accorded by the plan.
Flexibility: Child insurance plans are quite flexible. Thus, a policy buyer can opt for a policy tenure and sum assured as per his/her needs.
Who can purchase a child insurance plan?
A child insurance policy is typically bought by individuals who wish to secure the lives of their child. Since these policies act as a savings instrument, you can pay your premiums on a regular basis and save-up for major financial needs that your child may face during his/her life. In the event of the policyholder’s untimely death, a child insurance plan will ensure that the child is able to continue receiving a good education and has enough funds for his/her lifetime.
Top 5 Child Insurance Plans in India
Listed below are 5 child insurance plans that are offered by life insurance providers who had the highest claim settlement ratio between FY16-17.
1. LIC’s Jeevan Tarun Plan: The Jeevan Tarun Plan from LIC is a non-linked, participating, limited premium payment policy, which offers both savings and protection features. This policy is designed to meet educational needs of children and any other financial needs that they might have while growing up.
Key Features of LIC’s Jeevan Tarun Plan:
- This policy pays out guaranteed survival benefits to the child.
- In the event of the policyholder’s death, the insurer will pay a guaranteed death benefit along with the vested simple reversionary bonus and the final additional bonus.
- At the completion of the policy tenure, the policyholder will be paid a maturity benefit.
- Policy buyers can purchase LIC’s Premium Waiver Benefit Rider along with this policy.
- Policyholders can avail a loan against this policy after it acquires a surrender value.
- This policy can be surrendered at any time by the policyholder, provided that premiums have been paid for a minimum period of 2 years.
- Policyholders can avail a mode rebate if they opt for the yearly or half-yearly mode of premium payment. Similarly, upon choosing a sum assured over Rs.2 lakh, one becomes eligible to receive a rebate.
2. Max Life Shiksha Plus Super Plan: The Shisksha Plus Super Plan is a unit-linked, non-participating, life insurance policy that helps you save for your child’s higher education and other needs.
Key Features of Max Life Shiksha Plus Super Plan:
- In the event of the policyholder’s untimely death, the nominee will be given a death benefit.
- At the completion of the policy tenure, the life assured will receive a maturity benefit.
- This policy also provides guaranteed loyalty additions at the end of each policy year, starting from the 11th year onwards.
- Tax benefits can be availed by the policyholder and nominee.
- This policy can be purchased by any individual between 21 and 50 years, provided he/she has a child between 0 and 18 years.
3. HDFC SL YoungStar Super Premium Plan: The YoungStar Super Premium Plan from HDFC Standard Life is a unit-linked insurance policy that is ideal to help you accumulate money for your child’s future.
Key Features of HDFC SL YoungStar Super Premium Plan:
- This policy provides financial protection to your child. In the event of the policyholder’s untimely demise, the nominee will receive yearly payments.
- This policy offers flexible benefit payment options – Save-n-Gain Benefit or Save Benefit.
- Policyholders can invest in any fund as per their choice.
- Policyholders can make partial withdrawals from their funds after 5 policy years.
- The minimum and maximum policy tenure for this plan are 10 years and 20 years, respectively.
- In order to purchase this policy, prospective policy buyers need to be 18 years or above.
4. Aegon Life iMaximize Insurance Plan: The iMaximize Insurance Plan is a unit-linked insurance plan that provides both protection to the life assured and market-linked returns. This policy also caters to the needs of one’s child by providing financial relief in the event of the policyholder’s death.
Key Features of Aegon Life iMaximize Insurance Plan:
- Policyholders can invest in funds as per their appetite for risk.
- This policy comes with two death benefit payout options.
- In the event of the policyholder surviving till the maturity date, the insurer will pay the total fund value of the policy as the maturity benefit.
- Policyholders can claim tax benefits for premiums paid. Further, a tax rebate can also be claimed on the payout received.
5. SBI Life – Smart Scholar Plan: The Smart Scholar Plan from SBI Life Insurance is a non-participating, unit-linked insurance policy that provides returns on the money you invest and also provides financial security to your child.
Key Features of SBI Life – Smart Scholar Plan:
- This policy provides a lump sum amount at maturity of the policy.
- In case of an unfortunate eventuality, future premium payments will be waived off by the insurer.
- This policy also pays regular loyalty additions to the life assured.
- Policy buyers can invest in funds as per their risk appetite.
- Policyholders can make partial withdrawals from the fund, in order to meet emergency liquidity needs.
- In the event of the life assured’s death, a lump sum death benefit will be paid to the nominee.
- Tax benefits, as per prevailing Income Tax Laws, can be availed.
In conclusion, a child insurance plan is a must if you wish to financially safeguard your little one’s future. Before you purchase a policy, make sure to compare the various plans available and opt for one that best suits your needs.