Child Insurance Plans
.Uncertainty and risk leaves every human being to look for Insurance policies which assure security to the near and dear,. Child insurance plans are one of the tools that help parents secure the financial future of their child. Children’s insurance policies have always been popular globally, but their significance has gone up of late due to rising costs, particularly in education As most of us have plans on fulfilling our children's upcoming dreams on their career, we are more vigilant in planning for their future financial needs. As with any other financial needs, proper planning will ensure that your child's future financial needs are catered to.
The very common misconception of this plan is that it insures child's life, but it is not so. It is a policy which insures the parent only but the child get benefited out of it. Earlier, the trend was that a policy was taken in a child’s name, which was a simple money-back plan. Now, parents take a term cover in their name, which would be replaced if there is any loss of income due to the untimely death of any of the earning parents. So, it has the twin benefits of investment and protection.
The important feature of the policy is WOP(Waiver of Premium). In case if the parent dies during the term of the policy, all the future premiums are waived for the policy and the sum assured is paid immediately to the child of the parent. Eg. For a 25 years old with a kid of 1 year old, the child insurance policy from HDFC for 20 years of sum assured of 1 lac have a premium of 4900/month. In case of eventuality to the parent 5 years down the line, the kid will get 1 lac immediately and all future premiums will be cancelled. On the other hand, if policy matures 20 years down the line, the kid will get 2.25 lacs when he/she turns 21. .
There are some quiet interesting child insurance policies available in the market. For eg LIC has a child insurance policy gives the option of giving 10 half-yearly installments on maturity instead of giving a bulk amount.. There are few insurance policies, which gives a assured amount to kid in various period of their life. (when kids turns 18, he/she receives certain %age of amount, when he/she turns 21, she gets certain %age and so on).Child insurance policies comes in two flavors - ULIP and Endowment type. Endowment offers fixed rate of return while ULIP returns depends on the market. So you can make a decision after evaluating both the options. Most of these child insurance plans aim to meet your financial needs. . If the parent opts for a comprehensive health benefit rider, upon contracting 18 listed illnesses, your child can avail the benefit of premium waiver.
These insurance plans provide you with funds at pre-fixed intervals, which will help to meet your child’s financial needs at different milestone years. In addition to this, if a parent signs up for an income benefit rider, the child gets 10% of the sum assured till the child reaches milestone years, which compensates the income loss. Similarly, if you have a Unit Linked Insurance Policies (ULIP)-linked endowment plan in your child’s name, you can prematurely withdraw 20% of the sum assured after 5 years from the effective date of the policy. So as with any other investment products, there is variety of child insurance plans available in the market. Have a good analysis of the policies before buying it. One should definitely give a portion of insurance premium to child insurance policies.
Following are the LIC’s best child insurance plans which are specially designed for Indian children.
- LIC Jeevan Kishore Child Insurance Policy
- LIC New Komal Jeevan Money Back Children Plan
- LIC Jeevan Chhay Endowment Insurance Plan for Child
- LIC's Child Career & Child Future Plan.
