Children will shape the next generation of the world we live in, therefore, shaping them in the required way with the best of opportunities for them is the foremost duty of a parent. A child from their birth, “a bundle of joy”, to becoming independent and self-sufficient is under the care of somebody else; all their basic needs and other requirements like education, food/shelter, vacations, outings etc. is under the responsibility of the parents. In no doubt, parents would only want the best for their children’s futures and would seek the best prospects available. However, delightful taking care of children and watching them grow might be, providing and taking care to ensure expenses.
It would come across as no surprise that these expenses keep growing as they become older. So, how can one plan for their child’s financial future? Many parents invest and build a corpus to cover for such expenses, however, the corpus built overtime might fall short in case of the untimely death of the breadwinner in the family. This is exactly where a child insurance plan comes in use as it provides a blend of investment and saving avenues simultaneously. Unit-Linked Insurance Plans is one such example which provides the benefits of investment and coverage.
Best Child Plan in India
Some of the best child plan in India are as follows:
ICICI Prudential Smart Kid Solution Plan
- There are two available options on the basis of investment portfolio strategies with this Unit-Linked Insurance Plan: 1. Life Cycle-based Portfolio and 2. Fixed Portfolio Strategy.
- A Life Cycle-based Strategy means that, as per the policyholder’s age, the first premium will be divided between Multi-Cap Growth and Income Fund. The former investment is a high-risk as well as high return fund whereas the other investment is a low-risk and low return fund.
- Within the duration of the policy term and as the policyholder ages in years the distribution and redistribution of invested money can happen annually, with the money being redistributed from Multi-Cap Growth Fund towards the income fund for protection from high volatility.
- The fixed portfolio strategy means the insurer will offer a set of choice between 6 fund instrument and the policyholder can pick any of the following in accordance with the appetite for risk. Such as opportunities fund, blue-chip fund, multi-cap balanced fund, money market fund, income fund, and money market fund etc.
Reliance Child Plan
- What more could a parent want for their child than to provide them with the best of opportunities and financial security? Reliance Child Plan not only helps the child but also the parents with coverage and worry-free saving method for the child’s future.
- This non-linked plan variant provides a fixed benefit and a quarter of the sum assured becomes payable annually in the form of benefit.
- These benefits during the last three policy tenures help assist the insured parent in securing the child with the corpus.
Aditya Birla Sun Life Insurance Vision Star Plan
- Yet another traditional child plan which provides for a child to be able to choose the best of opportunities without worrying about adequate funds is the Aditya Birla Sun Life Insurance Vision Star Plan.
- This plan provides a life cover as well as regular bonuses and terminal bonuses too. This plan also provides assured payouts starting from 5th year onwards after the term is over.
Aviva Young Scholar Advantage Plan
- Aviva Young Scholar scheme is a scheme in favour of systematic saving and helps in building a solid corpus to secure the child financially in the future.
- Aviva provides triple benefits, three-spear headed benefits, like a lump sum payout on death of a parent.
- Waiver on premiums will also be provided, as well as maturity benefit and flexible withdrawals as required.
Bajaj Allianz Young Assure Plan
- Bajaj Allianz Young Assure is a traditional child insurance plan and it is designed to get involved in the profits of a company in the way of bonuses.
- This plan, premium payable within the entire tenure through the Regular Pay premium payment option or for a limited tenure under the Limited Pay option of premium payment.
- Depending on the nature of the plan, the nature of paying the premium will vary and the Guaranteed Additions will be payable in terms of a percentage of the maturity benefits.
- Half of the maturity benefit is paid within a year to maturity and in two years, 55% of the guaranteed maturity benefit will be paid including any terminal bonuses.
HDFC Life Young Star Udaan Plan
- HDFC Life Young Star, a traditional insurance plan offered by HDFC Life, can be purchased through online or offline methods.
- This plan, in particular, provides for academic expenses prior to graduation education or post-graduation expenses etc.
- These include marriages, higher secondary education etc. It also includes all miscellaneous and extracurricular expenses throughout the education period.
Features of Child Insurance plans
The purpose of a life insurance policy for a child, child plans, is designed and curated to offer a safety net to a child for their future. They can be linked or non-linked variants and have the following features:
- The premiums payable can be on a lump sum basis within the policy term. Alternatively, it can also be paid frequently for a selected period of time or on a regular basis as specified by the provider. The amount payable will depend on the chosen sum assured and the provider.
- The insured sum will be paid out in case of the untimely demise of the insured. The policy would, however, continue and the premiums would be waived. The maturity benefit would, then, be paid when the plan matures
- The number of years the policy can be availed for is the policy’s tenure. These tenures can be for 10 years and above as specified. As for the eligible age, dependent children from 0 years to a maximum of 25, with certain exceptions, are covered. The maximum maturity age, however, is up to 70 years
- After a policy has completed its term, it is referred to as a matured policy. The maturity amount of a policy can be chosen based on personal requirements and factors such as inflation and interests etc. Single premium plans might not be enough to provide appropriate maturity benefits, go through your choice of the policy before applying.
- On top of the maturity of the policy, money back child life insurance plans offer a segmented payout method, which can either be in a lump sum or in annual instalments.
- Partial withdrawal can also be made under ULIPs wherein the policyholder can withdraw partial amounts to cover financial emergencies.
Benefits of Child Insurances
The following benefits are more commonly assured with a child life insurance plan:
- The premiums payable is periodically flexible and therefore reduces the load on a parent to provide coverage and financial security.
- The type of plan can be chosen, between ULIP and Endowment Plan.
- A premium waiver is provided with the most policy in case of the insured’s demise.
- Child insurance plans can be used as security or collateral against loans.
- Tax benefits are also provided: the premiums paid are exempt from income tax under section 80(C) of the Income Tax Act. Moreover, the plan benefits are also tax-free in nature under Section 10 (10D) of the said Act.
Types of Child Plans
There are three different types of child plans and they are:
Child Unit-Linked Insurance Plan
- A Child Unit-Linked Insurance plan is primarily featured with insurance coverage and involvement in the capital market.
- The sum assured is paid to the benefactor (the child) in case of the untimely death of the insured parent.
- The premiums are waived and the fund value is paid on maturity.
- These features of the plan truly safeguard a child from any pressures or financial burdens in spite of the insured parent’s demise.
- Moreover, since the plan invests in the market, the returns are good and help in wealth creation
- If a parent is looking for an investment with a more stable return as bonuses over the sum assured, then the endowment plan is the go-to plan.
- These are traditional endowment policies provide guaranteed returns on maturity or death
Bonus additions help in increasing the corpus so that the child has sufficient financial resources when needed.
Money-Back Child Plans
- Money-Back Child Insurance plan is a non-linked plan that offers a money-back option during the term of the policy.
- These plans help cover the expenses arising from education, marriage and other needs and requirements of the growing child. The provisions under are designed to cater all such expenses.
- Money-Back Child Plans provide liquidity and also allow bonus to grow the corpus
Why are Child Plans necessary?
The importance of the best child plan in India has been discussed in short before, but here are some brief pointers of the necessity of a child insurance plan:
- First and foremost, child life insurance plans, are meant to safeguard and secure a child’s future. This is applicable even in the absence of policyholder. The benefits offered continue well after the demise of the parent, benefits like maturity benefit etc. as initially decided upon. This will help the child financially, for their education and/or marriage among other events.
- One of the best parts to investing in a child’s life insurance plan is the premium waiver given in case of the death of the policyholder inside the plan term. Therefore, it does not create an unwanted burden on the child or the family and provides the exact same benefits as before. Additionally, the remaining premium is cleared by the insurer.
- Tax benefits, as mentioned above, is another good reason to invest in such plans because it not only helps save some hard-earned money in the right way but also goes into a primary responsibility- children. Under section 80C, premiums of a maximum of Rs. 1.5 lakhs are exempted from income tax including any waivers and riders purchased separately.
- Disciplined savings can be done through a Unit-Linked Insurance Plan. These savings can be used to meet the future goals of one’s children. This can be done under Systematic Investment Plan (SIP) under the mutual fund scheme. Therefore, a consistent rate of savings helps meet all financial and future financial needs of your child.
The concept behind the bets child plan in India touches the fact that caring for one’s children however pleasurable incurs expenses long before the birth of the child itself. It doesn’t make a difference if it’s nurturing an infant or caring for a teenager, the reasons behind expenses might differ but overall expenses are all the same in an increasingly expensive world. From medical treatments to education to marriage, a financial plan has to be devised to fit in all these requirements and responsibilities.
Best child plan in India are among the possible options in the investment market to build a corpus sufficient for compensating for the aforementioned factors. They not only help safeguard your children financially through investments in the market but also keep them insured and taken care of with the coverage provided.