The moment a mother conceives, her sole purpose is to give birth to a safe and healthy baby, her next thought is how to secure their child in this brutal and competitive world. There are multiple child insurance and other kinds of investment plans that parents opt to safeguard their child even if they meet with an untimely death or other critical illness.
Nowadays, many parents prefer opting for a unit-linked insurance plan (ULIP) and child savings investment plan rather than investing in a cliche child insurance. It’s good to try something new for your child, but it is also vital to see the outcome or benefits of the selected plan. As mentioned earlier, both the insurance offer security for your child’s education, but the returns are dismal. Moreover, if you exclude the costs of these children’s policies, your return on investment is lowered.
If you want to ensure your child’s upbringing, education, and costs in the event of your untimely death, this blog is the correct route to your final decision as we have brought you the best investment plans for your child’s future.
What is Child Insurance
Let us begin by clearing the basics, and that is what is a child insurance plan?
A child insurance policy is beneficial and seals the deal offered for every responsible parent. It is dual benefit insurance that offers both investment and life insurance perks under a single plan.
A child insurance policy also allows the life insured to protect their children’s future while accumulating an investing corpus to achieve the main milestones in a child’s development.
Here, the life insured (customer) is the parent, whereas the child (consumer) becomes the nominee/beneficiary in the child insurance plan.
Our parents used to say that they completed their education in mere thousands and to make us stand on our feet they had to spend lakhs. If you see the education trend, the cost of education is rising, and the graph shall continue to increase due to changing technology and the quest to put your child in the best school. Moreover, education inflation is at an alarming rate of 10% – 12%.
Just FYI!
Moreover, the cost of education in India has increased by around 169% between 2005 and 2011. Also, in 2018 alone, parents spent roughly 2 lakh or more on primary education, with the cost rising to nearly 4 lakh for secondary and higher education. Pursuing a degree and other higher education is also a pricey deal because most children nowadays prefer going abroad to pursue their higher studies.
Why is it important to Buy a Child Insurance Plan?
After understanding the basic definition of child insurance, let us get down to know the importance of child insurance, and they are as follows:
Supports your Child’s Future Goals
A child insurance plan will help the parents in fulfilling their child’s future objectives, even if they are alive to witness it or not. These specially tailored plans come with options for life insurance and goal protection. A child insurance plan will suffice all your child’s monetary needs either through investment or life coverage provided within the plan.
Helps in Conquering Major Steps
A child insurance plan also helps you to choose and invest for your child’s major life steps such as marriage, education, and moving abroad for higher studies. A good child insurance plan allows the life insured to perform partial withdrawal when needed. If the life insured (parent) dies the policy continues and the future premiums will be waived off.
Increase the Investment’s Growth
If you aim at a long-term investment plan, this can open the door to benefits as you can have a bountiful deal because the longer you continue to stay and invest, the higher the return on investment will be.
Tax Advantages
Every insurance comes with a constant benefit: living a stress-free life and a tax-free environment. If the life insured invests in a child insurance plan, you can minimize your taxable income amounting to Rs. 1.5 lakhs each year. Under the child plan, the partial and maturity withdrawals are also considered tax-deductible.
Add ons
Apart from providing a haven for your child’s current and future objectives, a child insurance plan also comes with several benefits such as waiver of premium (if the life insured meets with unfortunate death then, the insurance company shall waive off the future premiums), partial withdrawals, which acts as aid with to cover financial emergencies.
Note: As mentioned earlier, the cost of Indian education has taken a drastic toll. If we look at higher education in India, it could range from Rs. 5 lakhs to Rs. 25 lakhs. And then are other peripheral charges related to studies can vary depending upon the qualification, duration, and educational institute.
Best Child Insurance Plans in India
Now, let us discuss the best-handpicked child Insurance plans and alternatives that parents can have to safeguard their child’s future, and they are as follows:
Aditya Birla Sun Life Insurance Child Future Assured Plan
This inclusive plan by the ABSLI is a life insurance savings plan that provides guaranteed payouts to cover key achievements and happy beginnings in your child’s life, such as – education, marriage, and many more.
Some of the features of this child plan by the ABSLI are as follows:
Assured Benefit: This benefit provides guaranteed support through your child’s significant milestones in life, such as – education and marriage, or both. Now, to avail of this benefit, you have to select between three alternatives laid in the plan,
- Education Milestone Benefit
- Marriage Milestone Benefit
- Education and Marriage Milestone Benefit
The Educational Milestone Advantage
guarantees annual payouts equal to a specified percentage of the sum assured selected by the life insured. The policyholder has the liberty to customize the payment terms to correspond with different stages of their child’s educational milestones like – high school, graduation, and post-graduation.
Benefits of Marriage Milestone
As the life insured move towards the end of the insurance period, they shall receive a guaranteed lump sum payment for their child’s wedding. The life insured will be eligible for this perk when their child is between 24 and 32.
Benefits of Education and Marriage
This benefit combines the main events of your child’s life. Here, the education milestone benefit is paid on the due dates mentioned in the plan, whereas the marriage milestone benefit will be paid when the term plan expires.
Loyalty Additions
If the life insured pays all their required premiums, a 20% loyalty bonus is applied to their guaranteed benefits towards the end of each planned payout.
Maturity Benefit
Here, the maturity benefit is equal to the assured benefit payable at the conclusion of the plan.
Increased Insurance Coverage
If the life insured chooses to pay the additional premium at the commencement of the policy, they have the option to additionally choose enhanced insurance coverage equal to 50%, 100%, or 200% of the sum assured.
Perks with Extra Cost
- ABSLI Accidental Death and Disability Rider
- ABSLI Critical Illness Rider
- ABSLI Surgical Care Rider
- ABSLI Hospital Care Rider
- ABSLI Waiver of Premium
- ABSLI Accidental Death Benefit Rider Plus
To know more about this plan, click – ABSLI Child Future Assured Plan.
Aditya Birla Sun Life Insurance Vision Star Plan
This plan by the ABSLI is a comprehensive plan that has guaranteed payouts for financing your child’s education and future objectives even in your absence. This child insurance plan comes with two vivid options (Option A & Option B), and they are as follows:
Option A – This option entails four biennial payments of 20% | 20% | 30% | 30%. After all the premiums are paid for the first five years, the life insured will receive an assured payout will be made every two years.
Option B – This option comes with a five annual payments of 15% | 15% | 20% | 20% | 30%. Once all the premiums are paid for the first 5 years, the policyholder will avail of an assured payout annually.
Some of the benefits and features of this plan are as follows:
Death Benefit
Here, the beneficiary shall receive the death benefit if the policyholder meets with an untimely death. And, once the death benefit is settled, the term plan is declared canceled.
Assured Payout
At the beginning of the fifth year following the end of the premium-paying term, the user will start getting the assured payouts is the pre-established percentage based on the sum assured selected by you.
Maturity Benefit
This perk can be availed once the policyholder survives through the term plan. The insurance company will pay you the maturity benefit and terminal bonus (if any).
Benefits at Nominal cost
- ABSLI Accidental Death and Disability Rider
- ABSLI Critical Illness Rider
- ABSLI Surgical Care Rider
- ABSLI Hospital Care Rider
- ABSLI Waiver of Premium Rider
- ABSLI Accidental Death Benefit Rider Plus
To know more about this plan, click – ABSLI Vision Star Plan.
Unit Linked Insurance Plan (ULIP)
The parents who want to club their child’s life with an insurance and investment tool, then a unit-linked insurance plan is (ULIP) a wise decision because this type of insurance plan provides the policyholder with the best of both worlds. ULIPs offer higher returns than other standard types of investing, allowing the life insured to beat inflation while also saving for your child’s future.
Under this plan, when the life insured pay their share of the premium, a portion of it is invested while the other is used for life insurance. Using a chunk for investment raises the stakes of the user to reap profitable returns from the market. They also come with a death benefit that will act as financial aid to keep your family afloat even in your absence.
Public Provident Fund – A Safe Investment Plan
The public provident fund comes with a 15-year lock-in period, where the interest rate is much higher than that of a savings or fixed deposit (FD). One can also avail of tax benefits under Section 80 C of the Income Tax Act (1961).
Conclusions
Parents go selfless and move beyond their pocket allowance to provide their child with the best because they want their kid to suffer the least and achieve all the vital milestones in life without facing any economic crunch.
To make sure you are pampering your child with the best, choose the best possible inclusive child insurance plan from the best insurance provider from the market.
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