Child life insurance provides coverage for the care and maintenance of children, which includes medical expenses, education and other expenses. Some child life insurance plans will also provide coverage for funeral expenses. The need for such a policy is greater than ever before because of the high cost of raising a child in today's economy.
If a child is not around to take care of their parents, it is often the responsibility of the surviving parent to take care of the child. In order to ensure that surviving parent can provide for their child, they need life insurance.
Life insurance policies are important because they provide a safety net for children who are left behind when their parents die. This article also discusses how child life insurance companies calculate rates based on age and other factors and what types of policies exist for children in this regard.
What is Child Life Insurance Plan?
Child life insurance is a type of insurance that covers the cost of medical expenses for children. Child life insurance policies are usually purchased by parents when they have their children or soon after. This policy will cover medical expenses for the child as well as funeral costs if the child dies before adulthood.
Child life insurance policies are typically purchased to cover medical expenses and funeral costs in case of death of the child before maturity, but there are other uses for this type of policy too such as covering the cost of childcare while one parent takes time off to care for a sick relative or covering college tuition in case one parent has to suddenly stop working due to an injury or illness.
Types of Child Life Insurance Plans:
1. Child ULIPS: A Unit Linked Life Insurance Plan is an insurance policy that doubles up as an investment. A part of your money goes towards protecting your child just like the standard child education plan. The remaining part is invested in a mix of equity and debt.
2. Child Savings Plans: Child Saving Plan allows the policyholder to invest in the plan without any market risk. It is a multi-faceted plan that provides life cover, maturity benefits and tax benefits, all in one single policy.
3. Single Premium Child Plan: The policyholder pays a lump sum amount in the form of a single premium for the entire policy term and stays worry-free from remembering the due dates of premium payment. You’ll not have to come across any hassles of arranging finances for the premium payment. Some insurance providers additionally offer appealing discounts or reduce the premium on child plans.
4. Traditional Child Plan: When it comes to the child endowment plans it is essentially a traditional life insurance plan that provides security and savings. A child endowment plan will act as a financial wherein the financial objectives for the benefit of your child will be fulfilled. The premium is invested in debt instruments while the decision is kept with the insurance company. The bonus payable at maturity decides the returns.
Why you need Child Insurance Plan?
- It is one of the best ways to save enough with regular investments for your child’s future for needs like higher education which can be costly.
- Financial protection features in child plans ensure that your child gets the best in the future even in your absence.
- Builds corpus for child’s education
- Ever rising college tuition fee
- Expensive private school and foreign university fee
- Future marriage expenses
How Child Life Insurance Plan Works?
The Child Insurance Plan is a life insurance plan that protects children from the financial consequences of a premature death.
The Child Insurance Plan offers protection to children who are under age 18. If the child dies before reaching age 18, then the policy pays out a lump sum death benefit to the parents.
Child Insurance Plan is an insurance that covers children for their financial consequences if they die before reaching age 18. It provides protection for parents in case their child dies prematurely.
- Provides financial security during the most crucial years of your child's life
- Offers a perfect blend of investment and savings in a single plan
- Safeguards child's future, even after demise of the parent
- Favours disciplined, long term savings, which usually becomes a challenge
Top 5 Best Child Life Insurance Plans in India 2022:
|Child Life Insurance Policy
||Premium Payment Option
|Star Union Dai-Ichi Aashirwaad Child Plan
|| 20 years
||Yearly, Half-yearly, Quarterly, Monthly
||Rs. 4 lakhs
|India First Life Little Champ Plan
||7 to 14 years
||Yearly, half-yearly, quarterly, monthly.
||Rs. 1, 50,000
|Aviva Young Scholar Plan
||7, 10, 15 years
||Yearly, half-yearly, quarterly, monthly.
||Rs. 3, 96,000h
|LIC’s New Children’s plan
||Rs. 1 lakh
|HDFC Life Click 2 Wealth
||10 to 40 years
||Single pay, regular & limited pay, top-up.
||Rs. 4 lakh
Benefits of Child Education Insurance Plans:
- Child Education Insurance Plans are designed to help parents provide for the education of their children. They are similar to a savings account that parents can use to pay for their children's education if they pass away.
- Child Education Insurance Plans are the most common type of insurance plans for children. They are designed to cover the costs of education, healthcare, and other expenses related to a child's upbringing.
- The primary goal of these plans is to ensure that children have access to quality education. If a child has a disability or is handicapped, they can also apply for special funding through these plans.
- The government of India has made it mandatory for all parents to enrol their children in such plans as part of its efforts towards universalizing coverage and reducing inequalities in society.
- In our Child Education Insurance Plan, you pay premiums for a specified period (monthly, half-yearly, yearly or single pay). Once the policy term ends, you receive a lump-sum amount called the Maturity Benefit.
- It makes sure that your child receives the education he/she desires with a lump-sum pay out at maturity or when any unfortunate event occurs to you.
- It acts as a safety net to make sure that your child’s education does not get affected even if you are not around. In case of an unfortunate event, your child receives the life cover.
Tax Benefits with a Child Education Life Insurance Plan:
Apart from the other benefits of a child education plan, tax benefits are sure an added benefit.
Tax Benefits on child plan premiums paid: Premiums paid towards child plans are eligible for deduction under section 80C of the Income Tax Act, 1961. You can claim a deduction from your taxable income for this. This deduction is up to Rs.1.5 lakh a year.
Tax Benefits on income from child plan: The amount received at maturity of the child education plan, will be completely tax laws free under section 10(10D). If you have opted for a ULIP investment, the maturity pay-outs are tax-free if the total annual premiums paid are below Rs. 2.5 lakhs. If the annual premiums exceed Rs. 2.5 lakhs, then the maturity pay-outs will be taxed as Long Term Capital Gains.
Tips for Buying Child Life Insurance Plan:
Waiver of premium benefit: Are you worried about premium payment in case of an untoward incident? Relax! Most child plans, including ours, offer inbuilt waiver of premium benefit wherein in case of the death of the parent, all future premiums are waived off. However, the policy continues with all the said benefits thus ensuring your child’s future needs are taken care of no matter what.
Purchase at Initial Stage: Buying a child plan early has its perks. Not only it secures your child’s future but pay-outs at key milestones of your child’s life ensure that their needs are well taken care of. As the plan has a savings component, an early start gives more time to your money to grow, bringing in the power of compounding in the long run.
Sum Assured: Note that education inflation is very different from retail, and is growing at an alarming rate. What may seem adequate today can very well fall short tomorrow. With higher education costs expected to jump up by several notches, opt for a sum assured that ensures all future needs of your child, particularly related to higher education are met with ease.
Understand the T&Cs: Go through the fine print to get a better understanding of the child insurance plan. Make sure you pay attention to every minute detail including the inclusions, exclusions and other clauses to make an informed choice.
Choose an Investment Fund as per your Needs: Some child plans provide you the option to choose from various funds, equity, debt, or a mix of both as per your risk appetite. Equity funds are high-risk funds that offer higher returns. Debt funds, on the other hand, offer stable returns. It is important that the child plan you choose provides you with options that suit your needs.
Policy term: It is the duration of financial cover, from the policy start date to the date of maturity. It depends on the time for which your child will need financial planning support.
Premium payment mode: You can choose to pay the entire premium at one go or pay regular premiums on an annual, half-yearly, quarterly, or monthly basis as per your finances.
Maturity amount: Insurance Company pays this amount at the end of the policy term.
Partial withdrawal: If you invest in a unit-linked insurance policy for your child’s future benefits, you can withdraw parts of your fund value after five years.
Add-on/Riders Covers for Child Life Insurance Plan:
Accidental Death & Disability Rider: This rider provides an extra sum assured in case of an unfortunate event that leads to the death or disability of the insured.
Critical Illness Rider: Critical illness rider offers coverage for a predefined set of critical illnesses.
Term Rider: Child term rider provides death benefits in case of the demise of the child (before a particular age). However, after the child attains maturity, the term plan can be converted to a permanent insurance cover up to five times the original amount without the need for medical exams.
Premium Waiver Rider: In case of the demise of the policyholder, the outstanding premium gets waived off, and the beneficiary will get the benefits at maturity.
Exclusions of Child Life Insurance Policy:
- Drug or alcohol abuse
- Self-harm or Suicide
- Adventurous or Risky Sports
- Criminal Activities
Claim Process of Child Life Insurance Plan:
You must buy a child insurance plan for your child from an insurance provider that has a higher claim settlement ratio. This will make sure of the quick and smooth claim process and settlement in the times of crisis. Here’s the common claim process for almost every insurance provider:
- In case of any situation for, which you need to file a claim, notify the insurance provider about the incidence ASAP.
- You can do this online by sending an email or by calling on your insurer’s toll-free number or simply by paying a visit to the nearest branch office.
- Submission of the duly filled claim form is also necessary along with giving all the minute and necessary details such as the cause and the date of the incident, nominee’s name, etc.
- Once you register a claim with the insurer, provide the necessary and supporting documents along with reports.
- The insurance provider will appoint a surveyor to verify the case and the supporting documents.
- If approved, and with no further inquiry, the insurance company transfers the claim benefit with 30 days of the furnishing documents.
Documents required buying a Child Life Insurance Plan:
- Duly-filled up policy form Address proof
- Photo ID proof
- Income proof
- FIR Copy
- NEFT Details
- Age proof
- KYC of the nominee
- Policy Document
- Medical Certificate
- Death Certificate
- Diagnostic Reports
- Post-mortem Report
Eligibility Criteria to buy a Child Life Insurance plan:
Different policies have different eligibility requirements. The criteria are based on the following parameters:
- Age of the child at the time of purchase
- Your age at the time of buying the policy
- Age at maturity
- The minimum premium amount required
- Minimum policy term
How to Compare & Buy Child Life Insurance Policy Online?
The process of comparing and buy an Child plan life insurance premiums online has become simple with PolicyBachat. For buying a term insurance plan online please visit our website Policybachat.com Following are steps to compare term plans online in our portal.
- Visit the PolicyBachat Website and select the ‘Life’ tab.
- Enter your Name, Date of Birth, and Mobile Number.
- Click on the ‘View Plans’ button.
- Just Answer 5 Simple Questions.
- Select your ‘Gender’.
- Select ‘YES’ or ‘No’ if you have Smoked or Chewed Tobacco in the last 12 months.
- Select your ‘Annual Income’.
- Select your ‘Education Qualification’.
- Choose your ‘Occupation Type’.
- Enter your ‘Email Address.
- Then click on ‘Start Saving Money.
- Premium Quotes of top term life insurance plans will be displayed as per data entered by you and which are suits your requirement.
- You can edit policy details, sum insured value, policy terms and you can choose your preferred company.
- Purchase the best Child life insurance policy using online payment.
How to Renew Child Life Insurance Online?
Child Life insurance can be renewed online by visiting the website PolicyBachat first and then selecting a suitable insurance company. It’s worth noting that each insurance company’s renewal process may differ slightly. The following is a step-by-step guide to renewing an insurance policy online:
Step 1: log in to PolicyBachat.
Step 2: Choose a policy that is about to expire or has already expired.
Step 3: Select the coverage you require and click “Renew.”
Step 4: Read the insurance policy’s inclusions and exclusions, as well as the terms and conditions. Also, make sure to read the small print.
Step 5: Pay for the policy and receive it at your registered email address.
FAQs of Child Life Insurance Policy:
Will the policy terminate once it pays the death benefit?
No, it won’t. After the death benefit is paid, the policy continues till maturity and the matured amount is paid at the end of the policy term.
Are Child Education Insurance Plans covers a child’s life?
Yes, Most child plans insure the life of the earning parent, and not the child. The benefit associated with child plan’s is that the child’s future dreams of pursuing higher education are fulfilled, in case of an untimely death of the parent.
Is Child Plan ends if / when the parent dies?
Yes, The beauty of child education plans is that usually they come with a Waiver of Premium Option, which means upon an untimely demise of the parent, the future payable premiums are waived off, and the policy continues. There is no impact on the benefits due to be received at maturity of the child plan.
Is child insurance plan is suitable only for meeting the education costs for the child?
No, Child Education plans are designed to take care of the rising cost of education for your child. However, there is no restriction on the usage of the amounts received at regular intervals during the policy term and at maturity. Example – If you invested in a child education plan for higher studies, however, your child chooses not to pursue further studies and use the funds instead for other commitments, he / she may do so irrespective of the original goal it was intended for.
Is Child Insurance Policy locks in the investment for a long period?
Yes, Most online child insurance plans are flexible when it comes to policy term. The policy term of most market linked child plans usually range between 5 to 25 years. This means the earning parent can withdraw money, either partially or fully, if required earlier than planned.