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Best 3 Child Plans in India: Insurance and Education Plans
Birth of child brings happiness to the family but also brings duty and responsibility with it. Every parent wants to give the best of the things to their child. There is no better gift then securing your child’s future.
Generally, parents got confused due to the lack of knowledge and abundance of insurance policies, circulating in the market. Here’s a comprehensive guide for every such parent:
What is Child Insurance Plan?
In simplest words, it’s a way of backing child with financial support for the expected and expected situations. You obviously cannot come up with a wholesome of money, when it’s needed. So, this gradual way comes in handy. The concept behind developing these child insurance plans is assuring future finical security for:
• The child’s education expenses
• To help you bear unaffordable fee hikes.
• To help the kid combat sudden death of parent(s).
• To Give financial support in Health Issues
With helping you succeed in parenting, child insurance plan helps to accomplish child’s future financial needs and that too, at the right age. It acts as a double-edged sword which works as both insurance cum investment plan. Timely investment provides sufficient funds for emergency needs later.
There are 2 Types of Child Insurance Policies :
As a parent, only you can secure your child’s future from better planning. Liable insurance plans encompass Death Insurance plans and Education Insurance plans. Let’s have a look:
1. Education Insurance Plans
It is beneficial in the long run, by paying a lump sum amount you are ensuring your child future educational needs. On maturity, the child will be benefited by a considerable amount of money which can be used for higher education, marriage or other purposes. These plans are designed for a right time investment so that any unfortunate event in your life won’t hinder your child’s education, even after you are not around will be providing lifetime financial security.
2. Death Insurance Plan
In case of the unfortunate death of the parents, the child will get lump sum amount of the money insured. It is developed from the concept that you performed your duty well even after demise.
If you are planning to invest for your child’s future security, there are a number of companies that are involved in giving you safe and secure plans. Scroll down to know about the best insurance plans.
Why is Child Insurance Plan Must?
The vulnerability of life and death is out of control of any human. If highlighting through statistics then we will find an average of 1 lakh accidental deaths in India annually. It excludes unfortunate and untimely death.
As your child grows up his/her educational expenses also grow. You must have some plans for your child’s future, fulfilment of which requires money. In case they don’t have you with them or you won’t be able to arrange money at that peak time, there would be hardly any source of help, here; child insurance plan will act as blessing.
To tackle these situations, you should secure your family with an insurance plan to reduce the risk of an uncomfortable life.
• It is the best way to save your money
• High cover at a low cost can be rightfully used in educational or any other emergency
• A child insurance plan offers a lump sum pay-out on the death of the insured.
• After the death of the insured, the insurance company continues investing money on behalf of the policyholder.
• Customized pay-out will help you to enforce discipline of saving money
• Higher cover costs, higher benefits
• The increasing educational expenses can only be organized by insurance plans.
Read more here: Why Have a Child Insurance Plan
Basics of Child Plans in India
• Child insurance plans help parents to save money for child’s future goals by timely investment.
• Birth of a child brings a bundle of responsibilities that can be accomplished only by planning.
• Every parent tries hard to withstand the child’s financial need, be it about education or marriage.
• The invested money grows over a period of time which can be redeemed at maturity or on the death of the insured.
• It acts as a life cover which will be active till maturity even after the demise of parents. The premiums will be paid by insurance company.
• The payouts will be done at two levels- on parental death and on maturity.
• There are two types of most active plans in India; they are endowment based and Unit Linked Insurance Plans (ULIPs).
• Endowment plans- It depends on the insurer’s performance; if your insurance company is profited, out of your investment, then you will experience growth in your fund value. In such case, you have to depend on the bonus given out to you.
• Child ULIPs are highly preferred by Indians. These plans take advantage of fair investment and hence carry risk with them. It gives policyholders both investment and insurance under an integrated program. They are effective only if redeemed after a long term. These plans require high entry charges associated with them, so the amount of your money invested is less in the initial years than in the later.
At the end of the policy period, the family would get an equal amount of life cover along with the final market linked fund or bonus. At maturity of these plans, the final amount is paid out to the parents, and it is up to them how to utilize this money for their child.
Important Tips before Purchasing Child Insurance Plan in India
To buy any child insurance plan, follow these steps:
1. First, decide the policy term; it will depend upon when your child needs the money.
2. Calculate the amount of money you need to invest
3. The endowment plans will be more effective if the policy is for a term less than 8-10 years.
4. Go for ULIPs, if the policy term is more than 8-10 years or so.
5. Contact your financial planner to decide the amount of life cover needed.
6. Before finalizing your plans, compare various children’s insurance plans and their pros and cons carefully.
7. Stay with your plan for the long term.
8. Rather than features and titles, calculate the ROI yourself
9. Consider your own personal preferences and limitations
10. Read the term related documents carefully
Best 3 Insurance Plans for Children in India
Below plans are selected considering the returns compared to payments that is to be made every month and general requirements of a common Indian Family
1. Jeevan Tarun by LIC
JEEVAN TARUN by LIC is a limited premium payment plan which offers a combination of savings and protection.
Why to Choose This Plan
• The plan can be purchased for a child ranging between the age group of 0 to 12 years by parents or grandparents.
• It helps to cater educational and growing needs of the child.
• The policy provides options to either break or utilize your policy from ages 20 to 24 years as its annual Survival Benefits or wait until the age of 25 years for Maturity Benefit.
• The flexibility of the plan allows the proposer to choose the amount of Survival Benefit on various stages.
• You can get a fixed percentage of Sum Assured on Survival Benefit on every fourth anniversary or a fixed percentage of Sum Assured as Maturity Benefit with an additional bonus.
• It also facilitates with loan allowance.
There are few terms and conditions related to policy change, read them carefully.
2. Elite Super Life by ICICI
This premium payment plan Elite Super Life by ICICI is of great worth. Read how,
• The plan offers 4 investments strategies, which can be used according to personal investment needs.
• It has notable benefits 4 investment strategies; you can invest in 5 Equity, 2 Debt and 2 Balanced and can switch between them anytime.
• If the policyholder dies before the maturity of the policy, the nominee will receive lump sum payment.
You can avail partial withdrawal facility after the 5th year of the first premium-made.
By using the top-up facility, you can increase the amount of investment in the plan anytime.
3. FGEP (Future genius education plan) by Max Life
This plan, FGEP by Max Life offers complete financial security through future money backs or immediate pay-outs. Even after you will not be around, your plan will continue to grow.
• Maturity Benefits of the policy are paid to the child.
• The child can avail 4 guaranteed money back that is to be payable annually in the last 4 years of policy for educational expenses.
• It has increased your protection cover against disease, death or dismemberment.
It offers two Premium Payment Terms:
• 8 years fixed Premium Payment Term
• Policy Term less three years
Comparison of these 3 Plans:
Before you select your kid’s life insurance policy, you must be willing to compare the best policies available. So, here is the chart to ease the things down for you. Have a quick look before finalizing:
What is Monthly Premium?
As a policyholder you have to pay for your policy on a certain basis, the most desirable is the monthly payment or monthly premium. It is like updating your saving account monthly. The most simple and sort out mode of making payments with a limited amount every month.
What is ROI?
It is the ratio of return on investment, in other words, the amount of money you invested in a particular policy, and the amount of many you are getting back on its maturity is ROI. Just like CP – SP = profit/loss.
What is Partial Withdrawal/ Premature Withdrawal?
Suppose, you have brought sweets to eat after dinner, but you can’t wait till dinner and start having chunks of sweet after every hour then it is partial or premature withdrawal. If you withdraw a significant % of your money before the maturity of your policy, it is premature withdrawal. For more, you can see Jivan Tarun by LIC.
What are Tax Benefits on Insurance Policy?
It varies as per the insurance policy. Generally, the kids’ insurance policies come with tax benefits. But make sure to double check with your insurer that whether your policy provides tax benefits or not.
What are ULIP and PPF?
Both of these are the instruments used for tax saving.
ULIP acts as a risk cover to the policyholders and also provide investment options like investing in the mutual fund, bonds or stocks.
PPF is fully tax exempted option for investment. It facilitates loan, withdrawal, and extension of account to the investors. In PPF, you need to invest a limited amount of money for a limited time period with a particular rate of interest, and after the maturity, you will get the money back. It has several benefits
Read about PPF here
What is Age Limit?
The minimum and maximum age that is required to ensure that you can now take the policy is referred to as the ‘age limit’.
• For child policy, it is 0-12 years.
• For general insurance, it is 18 to 65 years.
What is Sum Assured?
Sum Assured is the savings that you did for many years and going to get back after the maturity of your policy. It is the amount of money that was assured to you when you started your policy.
What is Death Sum Assured?
It is 100%+5% of the sum assured that is offered by the insurance company to the nominee or family of the policyholder if he/she met death before the maturity of the policy.
What is F.A.B.?
The best of all, FAB is the final gift given by insurance company to the policyholder. It is an additional bonus paid to the insured. It is onetime payment plan and is paid for those policies which have the tenure of 15 years or more.
Kids’ happiness and secure future is what we all want. So, don’t hesitate in asking. Just drop your comment below. We will try our best to answer your query.