What is Child Saving Plans
A child plan is a customized investment and insurance solution designed to fulfil a child’s financial needs. A child plan includes two components:
The investment component is intended to support the child’s financial needs by accumulating money through investments in various assets.
The insurance component is intended to safeguard the child from unforeseen catastrophes such as the death of a parent, with the youngster receiving a fixed annual pay out if such an event occurs.
Types of Child Plans
- Child ULIP’s – The premium payment is invested partially in debt products and largely in equity instruments. The policyholder has the option of selecting which securities to invest in.
- Child Endowment Plans – The premium is invested in debt securities. The corporation chooses which debt instrument to invest in.
- Single-Premium Insurance Plan – A one-time deposit is required for the Single-Premium Child Plan, which is also subject to discounts and other perks.
- Regular Premium Insurance Plan – You must pay the premium at certain times under the Regular-Premium Plan. Premium payments can be made monthly, quarterly, semi-annually, or annually (as agreed upon).
What is a Child Education Plan?
A Child Education Plan is an insurance policy that provides both security and the opportunity to save money for your child’s future. It ensures that your child obtains the education he or she wishes through a lump-sum payoff at maturity or in the case of your death.
How Does a Child Plan work?
- First, you must decide how much coverage you require. Second, you submit an application to the bank, which will then inform you of the computed premium depending on the quantity of coverage chosen. Then you must choose the type of policy.
- As previously indicated, there are two kinds of policies: child plan ULIPS and child endowment plan. The ULIP plan allows you to choose which instruments to invest in, whereas the endowment plan allows the firm to invest in debt instruments.
- Then you must choose whether to make a lump sum payment or monthly instalments. Once you’ve settled on a payment schedule, you may begin your insurance by paying the premium.
- Following that, if the insured (parents) die in any terrible occurrence, the corporation will pay a portion of the maturity amount to the kid annually until maturity. All premiums due after death are exempt from payment. The whole cover amount will be paid to the child at adulthood.
- If the insured outlives the policy term, the kid will get the entire cover amount at the conclusion of the term. In addition, if a mid-term necessity arises, parents may take funds from the corpus.
Why Is a Child Plan Important for You and Your Child?
- Quality private education is more expensive than ever before, and educational prices continue to climb as a result of a variety of reasons, including inflation. Parents who wish to provide a solid education for their children must pay more than ever before, putting a significant financial strain on the families’ resources. Investing in a child education plan from the start can help to guarantee that such worries do not arise when the child is in need of money.
- Investing in a kid education plan guarantees that the child’s ambitions are realised even if the parent is no longer alive. For example, the Assured Education Plan has clauses that waive all future premiums owed upon the parent’s death. The kid additionally receives 5% of the Sum Assured immediately and on each death anniversary of the parent until he or she reaches the age of 17. This guarantees that their education is not disrupted by sad events.
- Premiums for a child education plan can be as little as Rs. 20,000 per year or even Rs. 2,000 per month; nevertheless, by the time the kid reaches the age of 17, he will have access to Rs. 200,000. These might be obtained in one lump sum or as regular payments that assist the youngster in meeting crucial milestones. A kid education plan is an investment with incalculable rewards.
- Bank education loans typically have very high interest rates, ensuring that a youngster is in debt for a very long period. This drastically dampens the spirit and serves as a significant impediment for a young professional who begins their work with a substantial financial burden that must be paid off as soon as possible. Having a school loan implies that a professional must always hunt for high-paying positions, with little regard for experimentation. Furthermore, it undermines their capacity to begin saving or investing at the outset of their employment.
- Even if a kid’s parents are not there, a bright future might be imagined with a child education plan. Having a kid education plan in place will guarantee that she never needs to worry about her studies being delayed, and she will be able to pursue her aspirations without fear of financial repercussions.
- Premiums paid on a child education plan are normally tax deductible under the requirements of Section(s) 80C, 80CCC(1), 80D, 10, and 10D, if applicable. Though these are subject to change, some tax benefits in the form of exemptions are available upon payment of premiums.
- A kid education plan will provide the youngster the ability to imagine and dream big. Most programmes allow for payments to be made as needed by the youngster. This helps the youngster to thoroughly consider their alternatives before aiming for the stars.
- A child education plan protects a kid’s future and gives them the opportunity to plan for their future without being constrained by a lack of financial means. The Assured Education Plan allows you to pick flexible payment periods based on your child’s developmental milestones.
Benefits of Child Plans
- Education of the child: The expense of educating a child can be too high. College costs are growing in tandem with the high rate of inflation. If your child wants to pursue further education at a prestigious university, the costs might be too high, making last-minute funding arrangements problematic. With a kid plan implemented throughout a child’s early years, you may save enough funds to support the child’s education without worry.
- Medical Care for a Child: If the child requires expensive medical care, a child plan implemented at the appropriate time comes to the rescue. By investing in a kid plan, you not only save money via accumulation, but you also gain additional profits. This investment corpus can be utilised to offer worry-free medical help to the child because the financials are taken care of.
- In the absence of parents, financial support is provided: Kid plans have an insurance benefit that provides the child with the maturity amount at the conclusion of the policy term if a parent dies. Along with this, the kid will receive yearly payments for the rest of his or her life beginning with the year of death, and all future premiums will be waived.
- Collateral Protection: The kid plan is regarded as an acceptable loan security. You can utilise the strategy to raise cash if you need emergency funds.
Child Plans with Company Name
- Aditya Birla Sun Life Vision Star Child Plan
- Aegon Life Rising Star Child Insurance Plan
- Ageas Federal Dream Builder Child Plan
- Bajaj Allianz Young Assurance Child Plan
- Bharti AXA Life Child Advantage Plan
- Canara HSBC Child Plan
- Exide Life Wealth Maxima Child Plan
- HDFC SL Youngstar Super Premium Child Plan
- ICICI Pru Smart Kid’s Regular Premium
- Kotak Head Start Child Assure Plan
- LIC- New Children’s Money Back Plan
- Max Life Shiksha Plus Super
- PNB Metlife Smart Child Plan
- Pramerica Rakshak Gold Child Plan
- Sahara Ankur Child Plan
- SBI Life – Smart Scholar
- SBI Life – Smart Champ Insurance Plan
- Star Life Bright Child Plan
- Shriram New Shri Vidya Child Plan
- Tata AIA Super Achiever Plan
Best Child Plans in India
|Insurance Company||Plan Name||Minimum Annual Premium||Maximum Sum Assured|
|LIC||New Children Money Back Plan||Rs,4,327||No Limit|
|HDFC||Life YoungStar Udaan||Rs.24000||Depends on Premium chosen, policy term and premium payment time|
|SBI Life||Smart Champ Insurance||Rs.6,085||Rs.1,00,00,000|
|ICICI Prudential||Smart Kid Solution||Rs.48,000 (for one pay option)||10 times of Single Premium|
|Max Life||Future Genius Education Plan||Rs.40,000||No Limit|
Features of Child Plans
1. Amount of the premium: You must pay a premium for each kid plan, which is determined by the maturity benefit you select.
2. Mode of premium payment: The policyholder has the option of paying the premium. You can pay a single lump sum premium or a recurring premium that might be annual, semi-annual, or quarterly.
3. Policy period: The insurance term is determined by the child’s age at the time of enrolment in order to determine the periods of his life when he will require money and how much he will require.
4. The level of maturity: The maturity amount is paid out at the conclusion of the insurance term or when the parents die. There is also the opportunity to withdraw the money after 5 years, depending on the child’s needs.
5. Premium waiver: In the tragic event that the parent(s) dies, the kid receives a regular payment from the maturity amount and a lump sum amount is paid at the conclusion of the term, as well as the premium payment responsibility is waived. The policy will not expire until maturity, and the premium expenses will be borne by the corporation.
6. Withdrawal in Part: The money can be taken for the corpus after 5 years, based on the child’s needs, such as college expenses for further education, medical ailment, or marriage.
Types of Riders Available in Child Plan
- Child Term Rider
- Accidental Death and Disability Benefit
- Critical Illness Rider
- Premium Waiver Rider
- Income Benefit Rider
Child Term Rider: A kid term rider is life insurance purchased in addition to your core life insurance policy. It offers term life insurance to your current and future offspring. What exactly is term life insurance, you may wonder? Term life insurance works by “renting” your coverage for a certain period of time.
Accidental Death and Disability Benefit: This rider gives an additional sum assured in the event of an unfortunate incident that results in the insured’s death or incapacity.
Critical Illness Rider: Illness that is critical A rider provides coverage for a specific group of essential diseases.
Premium Waiver Rider: In the event of the policyholder’s death, the outstanding premium is forgiven, and the beneficiary receives the benefits upon maturity.
Income Benefit Rider: This rider entitles the kid to 1% of the rider sum insured each month in the following circumstances:
- The parent’s death
- A parent’s permanent handicap as a result of an accident
- Parents suffering from any of the serious conditions listed in the policy
Things To Consider Before Buying A Child Plan
1. Ratio of Claim Settlement
The claim settlement ratio, or CSR, is a statistic that measures an insurance company’s efficiency in settling claims. The greater the claim settlement ratio (CSR), the more claims paid out by the insurer. It is best if you choose an insurance firm with a high CSR.
The amount of coverage, in turn, is determined by a variety of criteria, including your age, yearly income, and lifestyle behaviours. As a result, you must examine different child insurance policies based on the available coverage level – choosing a kid plan that provides maximum coverage to financially protect your child’s future at reasonable premiums due.
3. Policy Duration
To optimise the benefits of a kid plan, select the longest feasible insurance coverage duration. You may ensure that your child’s child plan provides adequate financial security throughout his or her growing years. Make careful to evaluate several kid insurance policies before settling on one with the longest coverage duration.
4. Additional Rider Advantages
Many insurance providers allow you to increase your coverage advantages under a kid plan by purchasing rider add-ons. These riders give an additional quantity of money, in addition to the standard insurance benefits, for particular life situations such as accidental disability and death, as well as severe sickness upon diagnosis.
5. The Advantages of Maturity
A kid insurance policy promises to pay a considerable quantity of money amassed during the policy’s term upon maturity. It is recommended that you select a kid plan that provides the most maturity benefits for the least amount of money spent in premiums.
How Much Should You Invest In A Child Plan?
- One of the most difficult decisions that every consumer must make when purchasing a kid plan is determining the appropriate coverage quantity for the chosen plan. If you are also perplexed, read this section carefully to determine how much you should put in a kid plan.
- It is critical to comprehend the rising costs of the education business in order to get the best coverage. Higher education costs are growing at a rate of 10 to 12 percent each year. A four-year engineering programme typically costs approximately 7-8 lakhs. The cost is expected to range between 14 and 25 lakhs in the next six years. It would cost roughly 28 lakhs by 2027.
- To offset such costs, substantial investment is required. Building a corpus of one crore may appear challenging under normal circumstances, however it is not impossible to save this amount. You may do that by investing Rs. 9,000 per year in an equity fund for 18 years at a rate of 15% each year. Because the rate of inflation in the education business is so high, compounding is required to work for you over a longer period of time.
How To File a Child Plan Claim?
Procedure for Filing a Claim for Children’s Health Insurance
A health insurance coverage can be claimed using either a reimbursement or a cashless method. You can choose a cashless procedure in an insurance company’s network hospital. However, if you are hospitalised at a non-network hospital of the insurance company, you must pay the fees out of pocket and then request reimbursement from the insurance company.
Cashless Claim Process for Children’s Health Insurance
You would not need to spend a single dime out of your pocket if you used the cashless option. Instead, you would need to provide the necessary documentation to the hospital authorities, who would then finish the rest of the procedure.
Step 1: Contact the insurance company.
The first step after being hospitalised is to notify the insurance about the hospitalisation, as well as the predicted treatment and expenditures. You may either call the insurance directly or contact the hospital’s mediclaim department, who will then finish the procedure.
Step 2: Display the Claim Card The hospital authority will next request that you show the claim card and give insurance-related documentation such as the policy number, policy provider, and so on.
Step 3: Provide Specifics
You must present policy information and identification to the mediclaim department for verification.
Step 4: Examination by the insurance
After obtaining all of the documentation, the insurance company will send an agent to the hospital for verification of the occurrence and hospitalisation.
Step 5: Claim Resolution
The hospital will complete the rest of the process. And the case will be resolved.
Reimbursement Claim Process for Children’s Health Insurance
When you opt to have your kid treated at a hospital that is not in the insurance provider’s network, the claim is resolved in a reimbursement method –
Step 1: Notify the Insurer
After being admitted to the hospital, the policyholder must notify the insurance company of the hospitalisation and projected expenditures.
Step 2: Seek medical attention and pay your bills.
Get your child the proper medical care and pay the hospital’s medical costs.
Step 3: Fill out the Claim Form
Obtain a claim form from the insurance provider and fill it out, including data such as hospitalisation charges, doctor’s fees, and so on, for the purpose of calculating the reimbursement amount. Submit the claim form to the insurance company.
Step 4: Submit All Necessary Documents
After completing the form, you must provide the insurance with other documents such as medical bills, medical reports, pharmacy bills, doctor’s prescriptions, and so on.
Step 5: Examine By the insurance company
After obtaining all of the paperwork, the insurance company will dispatch an agent to the hospital for verification of the occurrence and hospitalisation.
Step 6: Claim Resolution
If the insurance company is satisfied, your claim will be paid within 2-3 weeks and the reimbursement money will be sent into your supplied bank account.
Documents Required for Child Plan
- Age Proof
- Identity Proof
- Income Proof
- Address Proof
- Proposal Form
- Other Documentation requested by the insurer
1. What should be the minimum age to buy a child insurance plan?
There is no such thing as a set entry age for any kid insurance plan because it varies from insurer to insurer. However, the minimum age to get a kid insurance policy is 18 years old (for the parent).
2. Can I take a loan on the Child Education Plan?
Yes. During the investing period, a person receives a loan of 90% of the primary account amount of the Recurring Deposit.
During the Benefit Phase, a person can borrow up to 75% of the outstanding FD amount.
3. What is the range of minimum premium under the child plan?
There is no such restriction on the sum insured amount. However, the minimum monthly premium is Rs. 500. It varies from insurance to insurer.
4. Can a minor be a nominee for my plan?
Yes, that is conceivable. However, you must nominate someone to receive insurance benefits on behalf of the candidate.
5. How is the frequency of the pay-outs fixed?
This is determined by the insured when purchasing a kid plan. The policy paper specifies the periodicity.
6. What is the right time to buy a child plan for my child?
You should start saving for your child as soon as possible. It should ideally be as soon as your child is born. Companies, on the other hand, enable you to cover your kid within the established limitations of the entrance age, which varies from insurer to insurer.