Secure future parenting – a close look at child plans

Date : 16/10/2015
Read: 6 mins

With a variety of child plans to choose from, your children’s dreams can soar, and their educational and financial needs can be fulfilled. Here’s how to choose the most suitable plan for you.

secure future parenting a close look at child plans in 2015

As a loving and caring parent, you hope to ensure the best future for your children. Whether they want to fly to the moon as an astronaut, or dig deep to the centre of the earth as a geologist, you want to try your best to make their dreams come true. You dream of the best of everything – the best school, best extracurricular activities, best college, best internship, best job opportunities. But while you are day dreaming about the perfect life for your little ones, how about preparing for the finances needed to make these dreams a reality?

But before we jump in to look at the various offerings provided by insurers today, you need to know what a robust child insurance plan looks like.

Ideally, a child insurance plan must provide an adequate lump sum amount in case of the policy holder’s demise.
At the same time, the waiving of all future premiums after the death of the policy holder is also necessary as this allows the policy to continue even after the policy holder has expired.
From an investment point of view, a good child insurance plan offers you the flexibility to choose between investing in debt and equity markets (in a proportion of your choice).
And for your children to reap the benefits of your investment, a good child plan offers a variety of options for your children to withdraw money from the investment fund.
An exceptional child policy allows for customized pay outs, which means that based on one’s requirements, one can dip into the investment pool and receive benefits as and when a requirement arises.

Though most child life insurance plans offer tax benefits under Section 80(C) and Section 10(10)D of the Income Tax Act, there are certain exceptions. According to IRDA guidelines, these benefits are only applicable as long as the sum assured is 10 times the amount being paid as premium.

Now, to secure your child’s financial future, you need to invest in the best possible plan, but do you know which one that would be? Here is a list of some Child Policy Plans in the country that could help you make an informed decision.

1. ICICI Pru SmartKid Regular Premium Policy: A traditional participating endowment plan with regular premium, ICICI offers guaranteed educational benefits for your children. The SmartKid Policy prepares you for the financial needs of your child’s educational future and allows you the option of spreading out premium payments over the term of the policy. In case of the unfortunate death of the provider, the assured sum is immediately paid out to the insured and the future premiums are waived off and paid by the insurance company till maturity. With your child’s development and educational needs well taken care of, you can be confident they will be secured financially.

2. HDFC YoungStar Super Premium Policy: This is a Unit Linked Insurance Plan which is designed to accumulate savings for your child’s future even in case of absence of the provider. It can cover the education, marriage, home and car needs of your children. The HDFC super premium policy offers the flexibility of 4 fund options to choose from, based on your assessment and planning of risky eventualities. Whether you are looking for high potential returns, dynamic equity exposure, or investments in large cap or mid cap equities, it can all be covered through this single plan. In case of death of parent or provider, this plan also ensures that the assured sum is paid to the child immediately and that the fund value is paid upon maturity with no further premium payment.

Related: ULIPS vs Mutual Funds

3. LIC New Children’s Money Back Policy: This LIC offering is different from other child insurance plans – while most of them provide a cover in case of the parent’s demise, the LIC New Children’s Money Back Policy covers the life of the child. In the unlikely event that the child dies, the parents are the ones who receive the sum assured. For this reason, it is a particularly low-risk investment. It has a minimum basic sum assurance of Rs. 1,00,000 for children aged from 0 to 12 years and a maturity limit that kicks in when the child reaches 25 years of age. It also offers a few choices for maturity benefits. Firstly, your child will receive 20% of the total sum assured at 18, 20 and 22 years of age. Secondly, on reaching 25 years of age, the remaining 40% (plus any bonuses sanctioned by LIC) will be guaranteed to your child. Also, in case of your own demise (the proposer of the policy and the one paying the premiums) there is also an added rider of waiving the premiums so that the policy can continue even after such an event. With its low premium, profit participation and flexible rebates this plan is definitely an option to consider.

4. Kotak Headstart Child Assure Policy: The Kotak Headstart policy is driven to ensure the best possible security for your child’s financial future. There is no limit to the maximum basic sum assured and it has yearly as well as half yearly payment modes with a policy duration that can be chosen as per your preference. In the event of the unfortunate demise of the life assured, the beneficiary will receive a number of benefits under this policy such as immediate payment of assured sum, waiver on the premium to be paid and a full fund value payment upon maturity of the plan.

5. AEGON Religare iMaximize Insurance Plan (Benefit Option II): If you’re in the market for a plan that helps you maximize your investments while at the same time covering the risk of death, the aptly named AEGON Religare iMaximize Insurance Plan (Benefit Option II) is ideal for you. This plan has an alluring offering that few insurance plans provide – no premium allocation charges and 100% premium allocation in a fund from the first year onwards. Apart from the payment of the sum assured and the waiving of future premiums in case of death of the life assured- called the Additional Savings Benefit, the iMaximize plan will also provide the nominee with an amount equal to the annualized premium every year till the end of the policy term, which is called the Income Benefit. The iMaximize plan also offers tax benefits under Sec 80C and Sec 10(10)D and gives your family some extra liquidity. Thus, not only does the Aegon Religare iMaximize plan allow you to invest in your child’s future, it also provides a list of important benefits that most other plans do not offer.

With a variety of plans to choose from, your children’s dreams can soar, with their financial needs being taken care of at all times.