As parents, it is the most joyous feeling to see your child grow and achieve success in life. Right from the moment a child is born, parents start preparing the best for their kids. One of the greatest supports a child needs is the financial ability to choose what they want in life. You can offer this financial assurance to your kid via child insurance plans. Education and marriage can be two crucial milestones in your child’s life. To ensure uninterrupted financial aid, choose investment plans for the girl child today!
What are Child Insurance Plans?
Child insurance plans are a combination of life insurance and child support plans. Simply put, insurance plans for children are a policy that offers lump-sum payouts at various stages of your child’s life and also guarantees life cover for the policyholder (parent). So, even if the parent passes away during the policy tenure, the child still receives the policy benefits as stated. Above this, tax benefits are an added perk.
Types of Child Insurance Plans
There are different types of child insurance policies that you may choose from. Depending on your needs, your child’s future plans and financial requirements, and your current premium-paying threshold, you may choose the most suitable plan to secure your child’s future.
Commonly, child insurance plans have the following options for you:
- Child Insurance ULIPs
Unit-linked insurance plans can be used as investment plans for girl child, which cater to multiple financial goals and can be customised according to your asset allocation requirement and risk appetite. The parent also receives life insurance coverage. Some plans also have a premium waiver benefit that even if the parent dies during the policy tenure, the future premiums would be waived off, and the policy would continue as per schedule so that the child’s future is not jeopardised.
- Endowment plans
Under endowment plans, the parent or the policyholder receives life insurance coverage and maturity benefits, which can be utilised for your child’s future. In case the insured individual dies during the policy term, a lump-sum death benefit is received, which can be very helpful in securing the child’s future.
- Money-back plans
Money-back plans are a type of child insurance plans in which you are eligible to receive regular income. Under money-back plans, the policyholder receives a regular inflow of income to meet planned expenses like fees, admission, etc. Upon maturity, the remaining benefits are disbursed to the policyholder. This amount can be utilised for your child’s upcoming expenses.
Benefits of Child Insurance Plans
A child insurance plan can be quite beneficial not just for the child but also for the parents. Wondering what benefits your child can reap with an insurance plan? Here they are:
- Financial protection
A child’s secure and stable future is heavily dependent upon the financial aid he or she receives. With a child insurance plan, you can ensure the financial safety net for your child’s future.
- Relief for parents
As parents, you can have the much-needed mental peace that your child has the required financial assistance throughout their essential stages of life. Child insurance provides benefits even during your absence. So, you no longer need to stress over the burden of saving for your child’s future.
- Tax benefits
Above all, investing in a child insurance plan makes you eligible for tax benefits. The Income Tax Act of 1961 states sections under which you can avail up to ₹1.5 lakh tax benefit against the premium paid for the child insurance plan.
FAQs:
Here are answers to some of the most common questions that may often come to your mind:
- Do child insurance plans offer rider options?
Yes, with most child plans, you have the option to choose riders along with the insurance plan to maximise the benefits. Common rider options are:
- Accidental Death Benefit Rider
- Critical Illness Benefit rider
- Accidental Permanent Total/ Partial Disability Benefit rider
- Waiver of Premium Benefit rider.
- What are the tax benefits for child insurance plans?
If you invest in an insurance plan for your child, you are eligible for tax benefits up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. The death benefit remains tax-free under Section 10(10D) of the Income Tax Act of 1961. Maturity plans can also get you tax benefits, provided the required conditions are fulfilled.
- What happens if the policyholder dies during the policy tenure?
In a life insurance plan, the payout depends on the type of policy that you have. If the parent or the policyholder dies during the policy tenure of the child insurance plan, the proceeds of the policy are paid out to the nominee. In most child plans there is a waiver benefit, where if the parent dies during the policy term, the upcoming premiums are waived off. The policy, however, continues, and the child continues to receive the benefits as per the plan.
Conclusion
Parenting is said to be the toughest yet the most beautiful part of life. One thing in life that an individual never wants to fail at is parenting. With your love and care, your child also requires financial assistance as they grow. To let your child achieve everything they want, start investing in child insurance today. It is the financial protection that stays with your child even if you are no longer around. Secure your child’s future with the right child insurance plan.
