As a parent, your children are the most essential part of your life. Your little moments of happiness depend on them. While trying to maintain a balance between emotions and practical life, managing expenses and savings often becomes a difficult task.

You will do anything to make your children happy and secure their life and future. Even in your absence, Max Life Child Insurance plans are specially customized to address your child’s future needs.

About Child Insurance Plan

A child insurance plan is an investment-cum-insurance plan from life insurance companies, which provides financial security for your child’s dreams and goals. You can use a child insurance plan to invest in your child’s major life goals like higher education and marriage.

While you are building a corpus for your child to fulfill these goals, the insurance plan provides a safety cushion to the corpus in case of your untimely demise. In the unfortunate event of your passing away before meeting the goal, the plan can invest the money on your behalf and give the maturity amount you originally targeted for your child.

Thus, child insurance plans are part of a wider range of child-specific financial products, which also include child education plans. Child insurance plans are a combination of insurance and investment products, which ensure financial security for your child’s future. These schemes pay the life cover as a lump sum at the end of the policy term.

Besides lump-sum payouts, Canara HSBC Life Insurance’s child insurance plans also have periodic payouts. These periodic payments coincide with critical milestones in your child’s life such as education, marriage, etc.

Child insurance plans are usually customizable with options to add various riders that enhance the plan according to your child’s specific needs.

Importance of insurance for children

Insurance for children should not be neglected given the uncertainty of life. Children are dependent on parents/guardians to feed them and fund their academic pursuits, among other necessities. On the death of a parent, the child should not have to struggle for funds to survive and reach a basic level of care and education. That is why insurance for children is essential if you are a parent.

How does Child Insurance Plan Function?

Have a look at the primary working of child insurance plans:

• Child Insurance Plans are commonly made to serve two objectives together – as an insurance product and an investment instrument. The product offers a financial shield to your child at all critical phases of his/her life.
  
  
• If you purchase the plan, you will become the policyholder and your child will become the nominee. However, in your absence, the insurance element assures that your child, being the nominee, obtains a substantial amount of money to be capable of managing his/her finances seamlessly.
  
  
• The investment component helps to build a substantial fund to accumulate enough funds to meet the necessary expenditures in the future such as traveling abroad for higher education, getting admission and paying fees for a college abroad, wedding, or starting his/her own business.
  
  
• With ensured financial soundness, the parents will be able to focus on other elements of their child’s growth and development.

Are Child Plans Tax-Free?

In addition to death benefits and annuity benefits, insurance buyers often look for ways to save tax. It may be cited that child insurance plans contain tax benefits like any other insurance plan. Policyholders can claim deduction on their taxable income from such policies under Sections 80C, 10 (10D), and 80DD of the Income Tax Act, 1961. Note that all income from a child plan, including death and maturity benefits, is completely tax-free.

Tax Benefits on Child Insurance Plan

Sections of the Income Tax Act, 1961	Tax Benefits
Section 80C	Premiums paid against child insurance schemes are eligible for a tax deduction.Any person can claim deductions up to Rs 1.5 Lakhs out of his/her taxable income.Any person can claim a reduction of up to Rs 1 Lacs on their kid’s tuition fees. *
Section 10 (10D)	All income including maturity benefits, death benefits, and income benefits from the child insurance plan is completely tax-free.
Section 80DD	This applies to parents of children with serious illnesses or special necessities.A deduction of up to 33% can be claimed against expenses related to the treatment of the child.A deduction of up to 40% and 80% can be claimed against expenditures related to minor and major disabilities respectively.
Section 80E	Interest paid on loans for the higher education of the child is tax deductible.

Key Features and Benefits of a Child Insurance Plan

Buying insurance for children offers a wide range of attractive and special benefits to the policyholder and comprehensive maturity benefits along with life cover for a financially safe future for the children.

Additionally, a child insurance plan will help you save significantly for your child without running from pillar to post.

Here are the benefits delivered by the child insurance plan:

1. Corpus for Child’s Education

A child plan helps you save enough for the future and build a corpus for your child. The corpus available from a child insurance plan relies on the pre-defined terms and conditions of the policy and the amount invested in it in form of premiums.

2. A Kitty for Medical Treatment of the Child

Child insurance plans also provide a choice of withdrawing money during the period of the child investment plans. Such a partial withdrawal comes in handy when the child is hospitalized due to an illness, minor accident, or serious medical circumstances. The best child plan works as an add-on to one’s health insurance plan.

3. Supports the Child in the Absence of Parent (s)

Insurance companies offer premium waivers if the parent (ie the insured) dies during the policy term of the child’s insurance plan. With the Waiver of Premium (WoP) facility, the sum assured will be paid to the nominated beneficiary, while the outstanding premium for the remaining policy term is paid by the insurance company.

On maturity of the policy, the child is entitled to the maturity amount as a lump sum promised while purchasing the best child plan.

Premium waiver benefits often come in-built with the best child insurance plans.

4. Income Protection for the Child

Some child savings plans offer regular income to children, which is equivalent to 1% of the sum assured if the parents are not around to pay the premium.

5. Acts as Collateral for Loans for Higher Education

Higher studies are expensive, whether one plans to send a child to a private college or university in India or abroad. A child plan comes in handy if one wants to get a loan for higher education, as it is allowed to be used as collateral.

It can also work as collateral for other child-related borrowings.

Buying a child insurance plan is a great option and the best investment for a child. A child insurance plan also instills discipline and helps to inculcate the habit of saving to secure the child’s future.

6. Partial Withdrawal to Enhance your Child’s Talent

If your child has a special talent such as playing an instrument or acting, you can encourage your child to pursue it by taking partial withdrawals from the child’s insurance plan. Additionally, some schemes offer a periodic payment option that can be used to further encourage the child’s talent.

7. Tax Benefits

All child insurance plans fall under the most elevated bracket of tax exemption i.e. E-E-E category. This is the highest grade of tax benefit given to schemes like PPF by Indian tax laws.

8. Additional Riders

Certain riders are available, giving you more than a simple life insurance policy. These riders are available in three sub-categories:

• Accidental Demise and Disability Benefit – The Accidental Death and Disability Rider Benefit pay the extra amount assured in case of your unfortunate casualty causing death or disability.
• Critical Illness Rider Benefit – Critical Illness rider benefit provides coverage for a pre-determined set of critical diseases.

9. Flexibility in Policy Term, Premium Paying Term, and Benefit Payout

The best time to mature the policy is when you realize that your child needs to stand on his feet. Select the policy term to meet the specific period.

The premium amount is subject to the sum assured and the maturity benefit amount that you opt for. You can choose to pay the premium amount at regular intervals or for a specific period. Most life insurance providers offer options like annual, semi-annual, quarterly, and monthly payment modes.

When it comes to the maturity amount payment, you can choose to receive it in a lump sum or over 5 years or more depending on the policy chosen.

Best Child Insurance Plans in India

Plans	Entry Age	Maximum Maturity Age	Minimum Annual Premium	Minimum Sum assured
AEGON Life Rising Star Insurance Plan	18 to 48 years	65 years	Rs 20,000/-	10 times the regular Annualized Premium
Aviva Young Scholar Secure	21 to 50 years	71 years	Rs 50,000/-	10 times the annual Premium
Bajaj Allianz Young Assure	18 to 50 years	60 years	N/A	10 times the Annualized Premium
Bharti AXA Life Child Advantage Plan	18 to 55 years	76 years	Depends on the Minimum Sum Assured	Rs 25,000/-
Birla Sun Life Insurance Vision Star Plus	18 to 55 years	75 years	N/A	Rs 1 Lac
Edelweiss Tokio Life EduSave	18 to 45 years	60 years	Rs 6,968/-	Rs 2.25 Lacs
Exide Life New Creating Life Insurance Plus	18 to 45 years	60 years	5 Years PPT: Rs 50,000 per annum; 8 Years PPT: Rs 30,000 per annum; 10 Years: Rs 25,000 per annum	5 Years PPT: 2,05,020 (Monthly) and 1,85,280 (Yearly) ; 8 Years PPT: 1,78,780 (Monthly) and 1,62,380 (Yearly); 10 Years PPT: 1,79,590 (Monthly) and 1,63,120 (Yearly)
HDFC SL YoungStar Super Premium	18 to 65 years	75 years	Rs 15,000/-	10 times the annualized premium
ICICI Pru SmartKid Solution	20 to 54 years	64 years	Rs 48,000/-	Rs 45,000/-
IndiaFirst Happy India Plan	18 to 50 years	60 years	Rs 12,000/-	Higher of 10 or 7 times the yearly premium or 0.5/0.25*term*yearly premium
Kotak HeadStart Child Assure	18 to 60 years	70 years	Regular Pay – INR 20,000 5 Pay – INR 50,000 10 Pay – INR 20,000	Higher of 10 or 7 times the yearly premium or 0.5/0.25*term*yearly premium
Max Life Shiksha Plus Super	21 to 50 years	65 years	Rs 25000/-	Rs 2.5 Lacs
Pramerica Life Future Idols Gold Plan	18 to 50 years	65 years	Rs 10, 800/-	Rs 1.5 Lacs
Reliance Life Child Plan	20 to 60 years	70 years	Rs 25,000/-	Equal to Policy
Sahara Ankur Child Plan	0 to 13 years	40 years	Single-Premium- Rs 30,000/-	5 times SinglePremium Paid
SBI Life- Smart Champ Insurance	21 to 50 years	70 years	Rs 6,000/-	Rs 1 Lac
SBI Life- Smart Scholar	18 to 57 years	65 Years	Rs 24,000/-	20/7 times the yearly premium (regular pay) or 1.25 times the single premium
Shriram Life New Shri Vidya	18 to 50 years	70 years	N/A	Rs 1 Lac
Smart Future Income Plan	18 to 55 years	80 years	N/A	100 times the chosen monthly income
SUD Life Aashirvad	18 to 50 years	70 years	N/A	Rs 4 lacs
TATA AIA Life Insurance Super Achiever	25 to 50 years	70 years	Rs 24,000/-	10 times the yearly premium
Wealthsurance Future Star Insurance Plan	18 to 54 years	64 years	Rs 25,000/-	Higher of 10/7 times the yearly premium or 0.5/0.25*term*yearly premium

Types of Child Plans

There are 2 types of child schemes in India – traditional schemes and Unit Linked Insurance Schemes (ULIP). Traditional insurance schemes can be endowment or whole life insurance schemes. This is a mixture of both insurance and savings. Conventional schemes come risk-free and offer fixed returns. On the other hand, ULIPs are a combination of protection and investment and come with risks as investments are made in market-linked funds.

Traditional Plans	ULIPs
The amount of payout is guaranteed.Investments are usually made in safe and low-risk products.Returns may not be excellent but will be stable.	Investments are done in equity markets.Longer investment duration increases the chance of higher returns.Can choose a mix of low or high-risk funds and safe funds like debt instruments.Flexibility to switch between different types of funds.

Eligibility Criteria

The eligibility to buy a child plan varies from company to company. The usual entry age for purchasing a child insurance plan is 18 to 21 years, and the maturity period can be up to 60 to 65 years.

The sum assured also differs according to the scheme. While some plans have no minimum criteria, others have criteria of at least 5 to 10 times the annual premium amount. This means that if the yearly premium is INR 30,000, the sum assured will be around INR 3 lakh.

Claim Process

Get the child insurance plan from an insurance company that boasts of a high claim settlement ratio. This ensures a smooth and quick claim processing and settlement in times of crisis. Let’s get familiarized with the claim procedure.

• In the circumstance of an event for which a claim requires to be filed, notify the insurance company about the incident as early as possible. This can be done by visiting the nearest branch office or calling their toll-free number or sending an email
  
  
• Also, submit the claim form and give other details like particulars of the policy, the date, and cause of the incident, the name of the nominee, etc.
  
  
• Once the claim is registered, provide other supporting evidence, documents, and reports.
  
  
• The company will start the verification procedure for the documents and the case.
  
  
• If approved, no further investigation will be required and the benefit of the claim will be transferred within 30 days of the submission of documents.

Documents Required for Claim Process

To claim in any case, keep the following documents to avoid any rejection. Required documents may differ from case to case.

• Duly filled in claim form and Policy documents
  
  
• Medical certificate
  
  
• Death certificate
  
  
• Diagnostic reports
  
  
• Prescriptions
  
  
• FIR copy and Postmortem report (unnatural death)
  
  
• NEFT details
  
  
• KYC of insured and nominee

Exclusions

In certain circumstances, the insurance company does not provide coverage in case of death. These are called exclusions. Below is the checklist of exclusions for child insurance plans:

• Suicide or self-harm: If death occurs due to suicide within 1 year of taking the policy, the nominee does not get any claim amount.
  
  
• Participation in adventurous or risky sports: If the policyholder knowingly participates in these sports, such as racing, rock climbing, skydiving, etc. which lead to death, the insurer does not accept any claim.
  
  
• Alcohol or drug consumption: If the insured dies due to an overdose of alcohol or drug, the nominee gets no benefit.
  
  
• Accident due to driving after the consumption of drugs/alcohol: If the policyholder dies during an accident while driving under the influence of alcohol or any kind of drug, there is no scope for getting any benefit.
  
  
• Criminal activities: Illegal activities or acts of war or criminal activity leading to death negates any claim benefit.

Important Aspects

Always keep these important points in mind so that you can understand the children’s insurance plans well and benefit from them in the long run.

• Begin Early: When it comes to child insurance plans, sooner is better. Starting a child insurance plan as early as possible is good for your child’s future. This offers an opportunity to make a larger corpus when the child grows up. The overall benefit of a child insurance plan is visible when the investment period is longer as it offers higher returns. Most child insurance plans offer maturity benefits and payouts during critical stages of children’s lives.
  
  
• Know the Terms and Conditions: Each child insurance plan comes with its own set of terms and conditions. Hence, before choosing a plan, check and compare the plans thoroughly to rule out any misunderstanding after taking the plan. Choose the plan as per your needs and suitableness.
  
  
• Consider Increasing Costs: While choosing the policy, think of multiple economic variables to make the most of the child insurance plan. The rising cost of education, inflation, and healthcare expenses are some common economic factors to be kept in mind. Systematic financial planning helps in meeting financial goals related to children. This also supports inculcating the habit of saving.
  
  
• Partial Withdrawal Clause: Everyone faces a crisis or emergency at some point in life. A partial withdrawal clause protects you against contingencies when money is urgently needed. If you have opted for a partial withdrawal clause, you can withdraw a part of the money from the sum invested in the child plan to meet the unforeseen expenses.
  
  
• Premium Waiver: Child plans come with a rider or additional benefit of a premium waiver, wherein the policy persists even in case of the sudden death of the policyholder. Such a benefit is offered by the insurer where you are paid for the premium cost in case of your sudden death during the policy tenure and the death cover is paid as a lump sum to the child on maturity. In short, the policy does not expire even at the time of trial.
  
  
• Fund Selection: A child insurance plan collects the premium money from all the policies and invests the amount in multiple investment instruments as per the policy. Being a parent, you should be well informed about all the child insurance plans available in the market and offered by your insurance company. The majority of child insurance plans come with systematic transfer plans and dynamic fund allocation options. This will help you vary the amount invested by the policy in equity and debt markets.

FAQs