Planning a secure financial future for your child is essential so that your child has the necessary means to pursue his/her dreams. That is why you should create a financial corpus for your child’s future. However, in case of premature death, you might not be able to create the desired financial corpus for your child’s future. This is where child insurance plans come into the picture. These plans ensure that a financial corpus is created whether or not the parent is alive. LIC’s New Children’s Money Back Plan is one such child insurance plan which helps in securing your child’s financial future. Let’s understand the plan in details –
LIC’s New Children’s Money Back Plan is a traditional money back policy which participates in the profits declared by the insurance company. The plan pays money back benefits at important ages of the child ensuring that the child gets the finances needed for pursuing higher education or marriage.
Here are the benefits which are promised under LIC’s New Children’s Money Back Plan –
Since this is a money-back policy, survival benefits are paid over the duration of the plan. The benefits are paid when the child attains 18 years, 20 years and 22 years of age. The benefits are paid @ 20% of the sum assured.
When the term of the plan comes to an end 40% of the sum assured, accrued reversionary bonuses and a final additional bonus is paid to the policyholder.
If the child dies during the term of the policy, a death benefit is paid. The benefit would depend on the age at which the child dies. If the child dies before risk coverage has started under the plan, the premiums paid would be refunded as the death benefit. However, if the risk cover has started and the child dies thereafter, a sum assured on death would be paid along with accrued reversionary bonuses and a final additional bonus. The sum assured on death would be considered to be the highest of the following –
The plan allows two types of premium discounts which help you in saving your money. The first discount is called the modal discount which is allowed if you pay the premiums annually or half-yearly. The discount is 2% of the tabular premium if you pay yearly premiums and 1% if you pay half-yearly premiums. The second discount is allowed for choosing a sum assured level which is INR 2 lakhs or above. The discount offered is as follows –
Sum assured chosen
Premium discount allowed
INR 2 lakhs to INR 4.9 lakhs
INR 2 per INR 1000 sum assured
INR 5 lakhs and above
INR 3 per INR 1000 sum assured
You can choose to delay receiving the survival benefit. The delay is allowed if the benefits are received within the policy duration itself. If you delay receiving the survival benefits, the benefit payable would increase by a factor which is determined by LIC.
If you have paid the premiums of the first three policy years and subsequent premiums are not paid, the policy becomes paid-up. In a paid-up policy, the benefits payable would reduce. They would become as follows –
The survival benefits are not paid in a paid-up policy. However, if the survival benefits have been deferred, they would be paid after being reduced by the number of premiums paid against the total number of premiums payable.
If the premiums have been paid for the first three policy years, you can choose to exit the policy by surrendering it. When the policy is surrendered, the company would pay a surrender value which is calculated as follows –
Surrender value = (Guaranteed surrender value factor * total premiums paid till death) + (Guaranteed surrender value factor for bonus * vested bonus)
However, LIC might also declare a special surrender value and if that value is higher than the guaranteed surrender value calculated above, the special surrender value would be paid.
A policy loan is available if you are in need of funds. Loans are allowed only after the plan acquires a surrender value. The value of loan would depend on the surrender value of your policy and you can avail a part of the surrender value as loan. The percentage of surrender value which you can take as the loan would depend on LIC.
The plan offers LIC’s Premium Waiver Benefit Rider. You can choose the rider for additional coverage. The rider can be taken on the life of the proposer (parent or grandparent of the child). If the proposer dies during the term of the policy, the premiums payable under the plan would be waived. LIC would contribute the premium and the policy would run unaffected. Thereafter, any survival benefits, death benefit or maturity benefit which falls due would be paid as promised.
Coverage under LIC’s New Children’s Money Back Plan is available for children and only parents or grandparents of children can buy the policy. Other eligibility conditions are as follows –
0 years to 12 years
Maximum maturity age
Term of the plan
25- entry age of the child
Minimum – INR 1 lakh
Maximum – no limit
Depends on age, term and sum assured chosen
If the child is aged below 8 years when the policy is bought, risk coverage would start at either of the following policy anniversaries, whichever is earlier –
When the child completes 18 years of age, on the following policy anniversary, the policy would vest in the name of the child. This means that the child would become the policyholder since he/she has attained maturity.
The policy allows you to pay premiums annually, quarterly, half-yearly or monthly. You can also buy the policy and pay premiums through a Salary Saving Scheme. If you do not pay the premium within the due date, you would get a grace period for paying the outstanding premiums. The grace period would be 15 days for monthly premiums and 30 days for all other modes of premium payments.
Here are sample annual premiums (rounded off to the nearest rupee) which are payable at different levels of sum assured and age. The premiums do not include the applicable GST.
Age of the child
Sum Assured INR 2 lakhs
Sum Assured INR 5 lakhs
Sum Assured INR 10 lakhs
To understand the working of LIC’s New Children’s Money Back Plan, let’s take an example. Suppose a parent buys this policy for his child aged 5 years for a sum assured of INR 5 lakhs. The premium payable would be INR 26,460 (excluding taxes) (as per the above-calculated rates). Here’s how the plan would work –
LIC’s New Children’s Money Back Plan offers you dual tax benefits which are as follows –
The premium that you pay for the policy would be allowed as a tax-free deduction under Section 80C. This deduction would help in reducing your taxable liability and save your taxes. You can claim a maximum deduction of INR 1.5 lakhs under this section.
The survival benefits received as well as the maturity or death benefits received under the plan are all tax-free incomes. You don’t have to pay any tax on the benefit received from the plan. The entire benefit is considered to be a tax-free income under Section 10(10D) of the Income Tax Act, 1961.
You can buy a policy from an agent of LIC by fixing up a meeting with him/her. You can also visit the nearest LIC branch and apply for LIC’s New Children’s Money Back Plan from the office of the company.
Alternatively, you can buy any other child insurance plan online without any hassle through Turtlemint.. You can visit https://www.turtlemint.com/life-insurance and choose ‘Savings for Child’ as your insurance need to view the available child insurance plans. You would then have to provide your coverage details like –
You can also provide your name and contact details for allowing Turtlemint’s executives to get in touch with you to ease your purchase. After the details are entered, Turtlemint shows you a list of child insurance plans offered by different companies. You can compare the plans and buy one online by paying the premiums through Turtlemint’s website.
To buy the policy, you would have to submit the below-mentioned documents –
To make a survival claim or maturity claim, you would have to submit a claim discharge form which should be filled and signed. The bank account details of the policyholder would also be required so that the claim is directly transferred to the claimant’s bank account.
For death claims, you should inform the company about the death of the child. The claim form number 3783 should be filled and submitted to the insurance company along with the following documents –
The company would then verify the documents and process the claim. The bank details of the nominee should also be provided so that the claim is paid directly to the nominee’s bank account.
Existing customers of Turtlemint can also make their claims through Turtlemint itself. Turtlemint offers its customers dedicated claims handling team which follows the claim process and gets customer claims settled quickly. You would have to inform Turtlemint at 1800 266 0101 or at firstname.lastname@example.org for your claims to be processed and settled.
Bonus depends on the performance of the insurance company in a financial year. They are paid only when the company earns a profit. As such, bonuses are not guaranteed.
If you want to postpone receiving the survival benefit, you should make a request to LIC for at least 6 months before the survival benefits are due to start.
Yes, the plan does not cover suicides. If the insured is more than 8 years old and commits suicide within 12 months of buying the policy, 80% of the premiums paid would be refunded. Similarly, if the child dies due to suicide within 12 months of policy revival, higher of 80% of the premiums paid or the surrender value acquired by the plan would be refunded. No death benefit would be paid under these situations.