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Child Plans

As a parent you always wish to make your child well educated, aim for his/her successful career in life thus fulfilling all his/ her dreams. You do not want your child to compromise for building his career in any circumstances. Apart from your children's education, you also dream of a lavish wedding for them. Child plans help your child with the lump sum amount incase of your uncertain death, this way your child's future plans do not get a beating. If you have a rough idea when will your require funds for your child's education and marriage funding, then you can buy a child plan which matures when you require funds for the purpose.  
How do Child Plans work?
In a simple Child Plan, the life assured / policyholder is the parent. The child is just the beneficiary (just like a nominee) in the policy. Some traditional plans also give risk cover for the child. Risk cover in such plans start after completion of seven years of age. You have to choose a sum assured i.e. the lump sum amount, which you wish to receive, incase of your untimely  death. Child plans are available as traditional plans as well as ULIPs.  
On death of the parent during the term of the policy, the sum assured is paid to the beneficiary, so that the family can continue with similar standard of living as before even after the loss of the earning member of the family. The future premium payment gets waived, so that the child or his family does not have to pay the premium for the entire policy term. Future maturity or other benefits are paid as it is. In certain ULIPs the insurance company pays the premium on behalf of the policyholder till the policy's maturity. The fund value at the end is paid to the child on the maturity of the policy, so that the lump sum amount can be utilized for the child's future needs like higher education. Now a days, few insurance companies provide double benefit, where the sum assured is paid on death as well as at the end of policy term (i.e. maturity).  
Some of the Child Plans of different life insurance companies:
  • LIC's Komal Jeevan: 
    LIC's Komal Jeevan  is a Money back plan which provides regular income on a fixed interval after child becomes major. Periodic payments are made when child attains the age of 18,20,22,24. This gives financial support during the child's education period. It has both survival benefits and maturity benefits. In case of death of proposer future premiums are waived of and all other benefits are paid as it is.

  • SBI Life Scholar II: 
    This is a traditional savings cum money-back child plan. The premium payment term is till the child attains 18 years of age and the policy term is till child attains 21 years of age. On maturity (i.e. after the premium payment term), the 25% of sum assured is paid in four installments. You also have the option to receive the full sum assured in lump sum on the due date of first installment payment; the policy terminates after taking this option. On death of the parents during the term of the policy, the basic sum assured is paid, the further premium payment is waived and as the survival benefits are paid to the child in installments just like to maturity benefits. Riders are also available with this plan.

  • Birla Sunlife insurance Bachat Child Plan: 
    This is a traditional child plan, where the premium has to be paid monthly. The sum assured can be chosen as a multiple of monthly base premium ranging from 120 to 180 times depending on the age of the life assured. The minimum monthly base premium is Rs.400 and maximum is Rs.3,000. On maturity, all the monthly base premiums with Bachat Additions (fixed percentage depending upon the premiums) and Loyalty Additions are paid. On death of the life assured, the sum assured is paid to the nominee, all future premiums are waived and on maturity, the maturity benefits is also paid. 

  • TATA AIA Life Insurance United Ujjwal Bhawishya Supreme: 
    This is ULIP child plan where the investment risk is borne by the policyholder. It offers seven fund options for investment, which one can select as per the need and risk taking ability. Benefit of the plan is that here the plan will continue even after the death of the policyholder and death benefit will be paid immediately. The company will waive all future regular premiums in case of Death or Total Permanent Disability of the parent (Life Assured).

  • Met Smart Child: 
    This is ULIP child plan where the investment risk is borne by the policyholder. The minimum annual premium of the plan is Rs.18,000 and the sum assured is 10 times of the annual premium. On death of the parent during the term of the policy, higher of the sum assured or 105% of the sum assured is paid and the future premium payments are waived and the insurance company pays the future premiums till the maturity; on maturity the fund value will also be paid to the beneficiary. On survival of the parent till maturity, the fund value is paid.

Children's Plan: Benefits

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Children's Plan: Riders

  • Rider, adds the extra bit in life insurance
  • Accidental Death Benefit Rider
  • Accidental Disability/Dismemberment Benefit Rider

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Children's Plan: Exclusions

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Children's Plan: Tax Implications

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