- Financial safety for your child
- Multiple payout options to choose from
- Partial withdrawal option
Child Insurance Policies: An Overview
Child Insurance Plan is a financial tool that helps you secure your child’s future with dual protection. The premiums you pay get compounded over time and offer a lumpsum amount for a child’s higher education. The life cover protects your child financially in case of your unfortunate demise. These plans help you save enough amount to provide a brighter future for your child.
Child insurance policy offers a range of benefits including:
- Financial security for your child,
- Flexible payout options as per your need,
- Life coverage,
- Customized solution as per your goals,
- Helps to beat education inflation,
- Tax benefits,
- Creation of saving habits, etc.
This article is a comprehensive guide to child insurance policy including the best child insurance plans, their features, benefits, etc.
Types of Child Life Insurance
There are two types of Child Insurance Plans- Child ULIPs and Child Saving Plans
- Child ULIPs
A child ULIP plan is a financial instrument that helps you save money for your child’s future. Your premiums are invested in market-linked funds and a portion is invested to provide you with life cover. - Child Saving Plans
These plans also help you save money for your child’s bright future but your funds are not invested in markets. It also offers you various tax advantages under Section 80 C and Section 10 (10D).
In the next section, we have provided you with a table showing the Child ULIPs and Child Savings Plans.
Best Child Insurance Policies in India
We have provided you with a list of the best child insurance plans that you can choose from for your child’s secured financial future.
| Name of the Plan | Entry Age | Maximum Maturity Age | Policy Term | Maturity Benefits | Unique Features | Type of Plan |
|---|---|---|---|---|---|---|
| SBI Life Smart Scholar Plus | Min- 18 years (Parents) Child- 0 year Max- 57 years (Parent) Child- 17 years | Parent- 65 years Child- 25 years | 8 to 25 years | Rs. 21,47,197 @4% Rs. 32,07,423 @8% | Loyalty Additions, Enhanced investment opportunity through 9 varied fund options, Partial withdrawals option | Child ULIPs |
| ICICI Pru Smart Kid Plan | Min- 20 years Max- 54 years | - | 10 to 25 years | Rs 21,58,000 @4% Rs 32,46,000 @8% | Create wealth through market-linked returns, Fund expenses at key educational milestones, Life coverage | Child ULIPs |
| HDFC SL YoungStar Super Premium | Min- 18 years Max- 65 years | 75 years | 10 to 20 years | Rs 18,60,000 @4% Rs 27,60,000 @8% | Choose to invest in any or a combination of funds Option to choose between Save and Save-n-Gain benefit options, Option to withdraw from your funds after 5 years | Child ULIPs |
| Max Life Future Genius | Min- 21 years Max- 45 years | 66 years | 13 to 21 years | - | Policy continuance benefit with a premium waiver, Guaranteed money back during graduation, Flexible premium payment tenure | Child Saving Plan |
| PNB Metlife Guaranteed Future Plan | Min- 0 years Max- 65 years | 80 years | 12 to 32 years | - | Guaranteed benefits, Customization of income payouts, Get rewarded for higher premium payments | Child Saving Plan |
| Bajaj Allianz Life Young Assure | Min- 18 years Max- 50 years | 60 years | 10/15/20 years | Rs 22,00,000 | Guaranteed Additions (GA) and bonuses, Special rates for female policyholders, 3 Cash Installment Options to choose from | Child Saving Plan |
| ABSLI (Aditya Birla Sunlife) Vision Star | Min- 18 years Max- 55 years | 75 years | 14 to 23 years | - | Assured Payout, Reduced Paid-Up Benefits, Choose your rider options | Child Saving Plan |
The above premiums are for a 30-year-old father having a 1-year child paying premiums of Rs 1 lakh for 18 years and a policy tenure of 18 years.
How Does Child Insurance Work?
Let’s understand how a child insurance policy works with a simple premium illustration.
Problem- Mr. Ramesh a father of a 1-year-old child was looking for a plan to secure his child’s future.
Solution- His financial advisor recommended him to purchase a Child Insurance Plan. He bought the SBI Life Smart Scholar Plus Plan to fulfill the purpose.
Let’s understand how the SBI Life Smart Scholar Plus Plan works for him with a premium illustration table.
| Age of policyholder | Age of child | Annual premiums | Policy tenure | Premium payment term | Total premiums paid | Maturity benefits | Death benefits |
|---|---|---|---|---|---|---|---|
| 30 years | 1 year | Rs 1 lakh | 18 years | 18 years | Rs 18 lakhs | Rs. 21,47,197 @4% | Rs 20 lakhs |
Takeaways
- Once the policy matures Mr. Ramesh would receive a maturity amount of Rs 21,47,197 that he can use to incur future expenses of his child. In case of Mr Ramesh’s demise during the policy tenure, his child would get death benefits of Rs 1 crore.
Features of Child Insurance
Here are some features of a child insurance policy:
- Life coverage
Child insurance plans offer life coverage to the policyholder so that the future of their child is secured even in case of their unfortunate demise. - Partial withdrawals
Child insurance policies allow you to make partial withdrawals at certain events of life such as once the maturity age of the child is achieved, graduation of the child, etc. - Premium waiver option
In case of the policyholder’s demise during the policy tenure, the policy will continue and all premiums are paid by the insurer. It ensures that your child is financially protected even in your absence. - Choose add-ons
You can choose additional riders with child insurance plans to enhance your coverage options. Choose the riders that best fit your requirements. - Sum assured
Child plans offer flexible sums assured to the policyholders to choose from. You can choose the sum assured amount that is suitable for you.
Benefits of Child Insurance Plans
There are several benefits of buying a child insurance plan. Let’s understand some of these benefits in detail:
-
Secures your child’s future
Child insurance plans secure the financial future of your child. It covers their future education and other needs.
-
Peace of mind
Buying a child insurance plan offers peace of mind for responsible parents. Even in the absence of parents, the future of the child is financially safe.
-
Helps to beat inflation
We know that inflation is increasing every year. Education inflation is increasing even at a higher rate compared to normal inflation (approximately 15-20%). Child insurance plans help you beat the inflation index of the economy.
-
Higher returns
With Child ULIPs the policyholders enjoy higher returns as your funds are invested in the markets. As the economy grows so will your money.
-
Saving habit
Child education plans create a habit of saving among people. These savings compound over time with child insurance plans and offer benefits in the future.
Key Takeaways
- You must buy a child insurance plan as soon as possible to get maximum benefits out of it.
- Choose the premium amount you want to invest as per your affordability and future needs.
- Buy a child insurance plan to beat the current inflation rate which may increase even in the future.
- You should choose add-ons wisely as per your requirements.
Documents Required to Buy Child Insurance Policy
Here is the list of documents required to buy a child insurance policy:
- Proposal form
- Identity proof (Passport, Voter ID card, Aadhaar, Driving license)
- Age proof
- Address proof
- Income proof (Salary slip if salaried or bank statement)
Conclusion
Child Insurance Policy is an ideal option to secure the future of your child financially. You can choose your sum assured, policy term, premium payment term, and frequency as per your requirements. We have provided you with a list of the best child insurance plans to choose from and you can consider them for buying.
Child Insurance Plan : FAQ
1. What are Child Insurance Plans?
Child Insurance Plans offer you dual benefits- lumpsum on maturity to secure your child’s financial future along with a life cover benefit.
2. How many types of child insurance plans exist?
There are two types of child insurance plans- Child ULIPs and Child Saving plans.
3. Which insurance is best for a child?
There are various best insurance policies for your child including- Max Life Future Genius, PNB Metlife Guaranteed Future Plan, Bajaj Allianz Life Young Assure, ABSLI (Aditya Birla Sunlife) Vision Star, etc.
4. What are the Documents Required to Buy Child Insurance Policy?
There are various documents required to buy a child insurance policy including a Proposal form Identity proof, Age proof, Address proof, and Income proof.
5. What are the tax benefits of child insurance plans?
The tax exemption is available under Section 80C of the Income Tax Act as per the old regime. The premium paid towards these plans qualifies for a deduction of up to ₹1.5 lahks from your total taxable income.
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