Child insurance plans are life insurance plans which help in creating a secured financial future for the child. A parent can buy this plan for the benefit of his/her child. The plan promises a benefit after the term is over whether or not the parent is alive at the time of maturity. This way, the plan guarantees a financial corpus which can be used for the child’s future.
Here are some of the best child plans available in the market
|Name of the plan||Sum Assured allowed||Salient features|
|HDFC Life Young Star Super Premium Plan||Up to 40 times the annual premium||
|ICICI Smart Life Plan||Up to 40 times the annual premium||
|Bajaj Allianz Young Assure Plan||10 times the annual premium||
|LIC New Children’s Money Back Plan||Rs.1 lakh and above||
Yes, you should be a parent to a child to buy a child insurance plan.
The child should be a minor whose age should not be above 18 years as on the date of buying the plan.
If child plans are offered as endowment or money back plans, they usually attract bonus. However, unit-linked plans do not offer a bonus.
You can buy a child plan online or offline. However, buying online is recommended because you can compare the different plans before buying. Moreover, buying online is also easy.
If the child is not insured, nothing would happen. The plan would continue till the parent is alive. However, if the child is the insured, the plan would terminate after paying a death benefit.
In child education plans, the parent is, usually, the policyholder who pays the premium. If the parent dies but the child is alive, the plan does not terminate. Future premiums are credited by the insurance company on behalf of the parent and the plan completes the chosen tenure and pays the promised maturity benefits.
Child plans usually cover parents. However, there are a few child plans available in the market which also cover the child where the parent is the proposer.
Yes, many child plans allow optional riders which can be chosen by paying an additional premium. The riders which are available depends on the plan.
Yes, grandparents are said to have an insurable interest in their grandchildren and they can act as a proposer to buy a child plan for their grandchild.
Yes, since minor children are dependent on their parents, premiums paid for child plans can be claimed as a tax-free deduction by parents. Moreover, the benefits received under the plan would also be a tax-free benefit in the parent’s hands.
Yes, many insurance companies offer unit-linked child insurance plans which can be taken to avail market-linked returns and to build an inflation-adjusted corpus for the child’s future.
In some child plans, where the child is the life insured, risk coverage under the plan does not start immediately after the policy is bought if the child is very young. In that case, a deferment period is imposed during which the plan would continue but risk coverage is not available. Only after the deferment period is over does the plan start the risk cover.
If the child dies during the deferment period, the policy refunds the premiums paid. Since risk cover is not active, the sum assured is not paid.
As long as the child remains a minor, he/she cannot become the policyholder. But, when the child attains majority, i.e. he/she attains 18 years of age, the policy vests in the name of the child. This means that the child becomes the policyholder of the policy.