Child insurance plans

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.

Why is a child education plan required?

  • The guarantee offered by a child education plan is not offered by any other investment avenue. Most of the child education plans have an inbuilt benefit called the premium waiver benefit. This benefit promises to pay a maturity benefit irrespective of the parent being alive on maturity. The benefit, thus, secures the future of the child. The child education plan acts as an investment-cum-insurance plan which serves two purposes. One, it creates a financial corpus, especially for the child. Two, it helps provide funds at the important milestones of the child’s career. Child education plans also create a fund specifically for meeting children’s higher education. Thus, the plan fulfills the child planning need of the individual.
  • Since child insurance plans come in unit-linked version too, parents can opt for such versions for building an inflation-proof corpus for the future use of the child.

Why is a child education plan required?

  • The plan can be taken for covering the parent or the child. Usually, most child plans cover parents who have a minor child. However, in some plans, the child is also covered.
  • There must be a minor child, whether insured or not, for buying the plan. The child is to be named in the proposal form as the plan is meant to create a financial corpus for the named child.
  • A premium waiver benefit is inbuilt in many plans. Under this benefit, the child education plan continues even if the parent dies during the term of the plan. If the parent is the life insured, in case of death during the term, a death benefit is paid. Thereafter, the plan continues till maturity. Premiums are paid by the insurance company on behalf of the parent. When the plan matures, the maturity benefit is paid again. If, on the other hand, the child’s life is insured, the parent becomes the policyholder. If the parent chooses the premium waiver rider and dies during the plan tenure, the plan does not stop. Premiums are paid by the insurance company and the plan continues till maturity. On maturity, the maturity benefit is paid. However, if the child is insured and he/she dies during the term, the plan would stop and the death benefit would be paid.
  • Child plans can be offered as different types of life insurance plans. They can be offered as endowment plans, money back plans or unit-linked insurance plans.
  • The term of the plan can be taken from 5 years to 25 years. Some plans also offer the term of up to 30 years.

Best child education plans in India

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
  • A unit linked plan with two death benefit options
  • 50% of the premiums are paid as annual incomes if the parent dies during the term and the ‘Save-n-Gain’ benefit preference is chosen by the parent
  • Four investment funds are available
  • Coverage for critical illness is available as an option
ICICI Smart Life Plan Up to 40 times the annual premium
  • Choice of two portfolio strategies for investments
  • Loyalty benefits and Wealth Boosters increase the fund value
Bajaj Allianz Young Assure Plan 10 times the annual premium
  • The maturity benefit can be taken in three installments
  • Guaranteed additions are paid on maturity
  • Inbuilt accidental permanent total disability benefit
  • Choice of 5 additional riders
  • Premium rebates for high levels of guaranteed maturity benefit selected by the policyholder
LIC New Children’s Money Back Plan Rs.1 lakh and above
  • Children aged 0 to 12 years are covered
  • Bonuses accrue under the plan
  • 20% of the sum assured is paid when the child attains 18 years, 20 years and 22 years
  • Optional premium waiver rider

FAQs

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.


Yes, the option of surrender is available in a child plan.

Life Insurance Companies

  • HDFC Standard Life Insurance
  • Aegon Life Insurance
  • ICICI Prudential Life Insurance
  • IDBI Federal Life Insurance
  • SBI Life Insurance Company
  • Edelweiss Tokio Life Insurance