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Child Plans are specific insurance plans which help parents save for their child’s future expenses in a systematic manner.

Guide to child plans

Child Plans are specific insurance plans which help parents save for their child’s future expenses in a systematic manner. In addition, child insurance plans also provide life insurance cover on the parent’s life, thus ensuring financial security to the child in the event of an unfortunate demise of the parent.

Child plans in the market are available on both Traditional and ULIP platforms to suit the varied investment objectives of the customers. However, customers looking for higher returns in view of the spiraling cost of higher education, generally opt for ULIP child plans.

The ULIP child plans provide life cover to the parent along with investing the premiums in the funds as per his investment objective. In case everything goes as planned, the Fund value is available at the end of the Policy Term for taking care of the child’s future requirements.

Plans with no upfront premium allocation charges are popular since the total premium gets invested in the funds of choice, thus maximizing the scope for long-term returns. Additional flexibility to withdraw funds as per need via partial withdrawals ensures that the parent can access his funds as per child’s educational requirement. In case of an unfortunate demise of the parent during the Policy term, these plans provide an immediate guaranteed lump-sum amount to the child along with a fixed yearly income for the remaining duration of the Policy. In addition, all the future premiums due in the policy are paid by the Insurance company into the Policy fund, thus ensuring continuation of investment even in case of death of the parent. 

Also see: 4 reasons why child plans make good sense