Child Education Plans

Child Plans

Being a parent, your top-most priority is to protect your child in every aspect and to offer your beloved children the utmost protection different insurance companies have come up with child plans. A child plan is specially designed by the insurers keeping in mind the future needs of your child that comes up with dual benefits, savings benefits coupled with protection facility. The plan ensures that the parent would build a financial corpus for his child so that he/she can meet his/her future needs such as marriage, education, etc. even when the parent is not around. 

On the other hand, a child education plan in India refers to the kind of insurance plan that protects your savings while it ensures the bright future of your ward in terms of their educational pursuit. These plans usually come with life cover and the opportunities to maximize your savings. At the end of the policy term, a lump sum amount is paid to make your child’s path to higher education smoother and easier. The child plans to make sure that even in the case of the untimely demise of the parent, the child should not suffer a financial crisis.

Benefits of Child Education/Investment Plans

The child plans in India have come up with a sack full of benefits and for that, being a responsible parent, you need to invest in a suitable child plan to secure the future of your child. To know more about the reasons, have a look at the below mentions. 

Financial Corpus – Over time, the child plans help to build a strong financial corpus for your children that can not only help to beat inflation, but also it can fulfil the needs of the child. This amount depends on the terms and conditions of the plan and the amount of premiums paid for the plan over time. 

Overall Protection – A child plan can offer a wide variety of protections to the child ranging from economic protection, life insurance benefits, and educational benefits to protection from different health hazards and many more.

High Returns – Usually market linked child plans offer higher returns, 10 – 12% above. Moreover, a child education plan like a ULIP Plan offers you the flexibility to choose from the different funds that you want to invest in. You can also choose from Dynamic Fund Allocation and Systematic Transfer Plan. 

Withdrawal Option – During the tenure of the child plan, you can also withdraw a partial amount depending on the terms and conditions of the plan. You can use that amount to meet your financial emergency or to treat child your child in case of any medical emergency, minor accidents, etc. the child plans can also act as a cushion to your health insurance plan.

In case of demise of the parent – In case of untimely demise of the parent, the child future can suffer severe crisis and may face different hindrances. But the child plans offer a lump sum amount in such cases that provide financial to the ward. Apart from that, if the Waiver of Premium option is opted for the due premium for the remaining policy term is paid by the insurer. 

Income Benefit – Some of the child plans offer a regular flow of income to the insured children that is equal to 1% of the sum assured only if the parents are not around to pay the premiums.

Loans For Higher Education – As higher education, be in India or abroad is expensive, a child plan helps in that case acting as collateral for loans for higher education. These plans can also be used as collaterals for other child-related borrowings. 

Flexibility – Usually, the child plans are very much flexible in terms of policy terms, premium paying term, revival of the policy, etc. so that you can curtail the policy as per your needs. A child education policy such as ULIP plan offers the facility to choose from the different fund options available with the insurer to invest your money. You can also take the maturity benefit or the death benefit as a lump sum amount or at a periodical interval is suitable for you.

Rider Benefits – To enhance the facilities and the benefits of your child plan, different insurance companies have come up with various rider benefits that can cater to the needs of the individuals such as Accidental Death and Disability Benefit, Critical Illness Rider Benefit and so on.

Tax Benefits – The child insurance plans are eligible for the tax exemption benefits depending on the nature of the plan under Section 80C, Section 10(10D), Section 80DD, and Section 80E of the Income Tax Act, 1961.

Types of Child Plans

As most of the life insurance companies in India offer a wide range of child plans, it becomes difficult to categorize the plans, moreover, the plans can be customized as per one’s needs. But for your better understanding, the general and most common types of child plans are discussed below. 

Single Premium Child Plan – Under this type of child plan, the insured person has to pay the premium one time and under a single premium he/she can not only avail of the benefits of the plan but also can enjoy different discount offers. For this plan, one does not have to worry about the due dates of premium payments.

Regular Premium Child Plan – Under this type of child plan, you have to pay the premiums on fixed interval. The plan offers you the flexibility to choose the premium payment options like yearly, half-yearly, monthly and quarterly.

Unit Linked Child Plan – ULIP plans come with the double benefits of an investment plans and life coverage facilities. Here, you can build the financial corpus for your child by investing in different funds available with the insurer depending on your priority. You can also switch among the funds paying the switching charges after a certain period. Though these plans are subject to market risks, it reaps more returns than the usual endowment plans.

Traditional Endowment Child Plans – It is essentially the traditional investment plans that come in the combination of savings and security. On the maturity of the plan, you can get a limp sum amount along with several bonuses. Under this plan, the financial objectives for the benefit of your child will be fulfilled.

Best Child Plans Available In India

In India, most of the popular life insurance companies have come up with different types of child insurance plans that can be customized according to your needs. Most of the plans have various variants to cater to your varied needs of yours. In the following table, the best child plans are mentioned that are available in India, along with their eligibility criteria.

Plan nameEntry age Age at maturity Basic sum insured Policy termPremium paying term
SBI Life – Smart Champ Insurance Plan

Life assured:

Minimum – 21 years

Maximum – 50 years

Child:

Minimum – 0 years

Maximum – 13 years

Life assured:

Minimum – 42 years

Maximum – 70 years

Child – 21 years

Minimum – Rs. 1 lakh

Maximum – Rs. 1 crore

21 minus Child’s age at entry

Minimum – 8 years

Maximum- 21 years

For LPPT policy:

18 minus child’s age at entry

Minimum – 5 years

Maximum- 18 years

ABSLI Child Future Assured Plan

18–65 years

(50 years if Enhanced Insurance cover is chosen)

Maximum- 75 years

Minimum – Rs. 4 lakhs

Maximum – No upper limit

Education Milestone Benefit: 10 to 29 years

Marriage Milestone Benefit: 8 to 32 years

Education and Marriage Milestone Benefit: 11 to 32

Minimum:

Education Milestone Benefit/Marriage Milestone Benefit: 5 years

Education and Marriage Milestone Benefit: 6 years

Maximum: 12 years

HDFC Life
YoungStar Udaan

Classic:

Option 1 Aspiration (minimum) – 30 days

Option 2 Academia and Option 3 Career (Minimum) – 8 years

Maximum – 60 years.

Classic waiver:

Minimum – 18 years

Maximum – 55 years

Classic:

Option 1 Aspiration (minimum) – 18 years

Option 2 Academia and Option 3 Career (Minimum) – 23 years

Maximum – 75 years.

Classic waiver:

Minimum – 33 years

Maximum – 75 years

NA

Minimum – 15 years

Maximum – 25 years

7 years

10 years

Policy term minus 5 years

Bajaj Allianz Young Assure Plan

Minimum – 18 years

Maximum – 50 years

Minimum – 28 years

Maximum – 60 years

10 times of annualized premium10, 15, and 20 years5, 7, 12, 15, and 20 years
Max Life Future Genius Education Plan

Minimum – 21 years

Maximum – 45 years

Maximum – 66 years

Minimum:

8 pay variant – Rs. 3,27,000

Limited pay variant – Rs. 2,12,000

Maximum – No upper limit

13 years to 21 years

8 pay variant – 8 years

Limited pay variant – Complete policy term minus 3 years

Future Generali Assured Education Plan

Adults:

Minimum – 21 years

Maximum – 50 years

Children:

Minimum – 0 years

Maximum – 10 years

Minimum – 35 years

Maximum – 67 years

Premium payable

17 years minus age of the child at the time of purchase

i.e., Minimum 7 years if the child’s age is 10 years

Maximum 17 years in case of a new-born child

Same as policy term
Minimum – Rs. 20,000 Annually OR
Rs. 2,000 MonthlyMaximum premium: No Limit
LIC’s New Children’s Money Back Plan

Minimum – 0 years

Maximum – 12 years

25 years

Minimum – Rs. 1 lakh

Maximum – No upper limit

25 years minus age at entrySame as policy term

1. SBI Life – Smart Champ Insurance Plan

It provides benefits for their future educational needs as soon as they turn 18 years of age and ensures that your child’s every dream comes true. Under this policy, you can pay the premium at one time or can choose to pay either yearly, half-yearly, quarterly or monthly mode as per your choice.

Key highlights of the policy:

  • Under this plan, Guaranteed Smart Benefits are payable in 4 equal installments after the child attains 18 years of age till he/she turns 21 years of age to ensure your child’s higher educational needs are met.
  • The plan offers triple protection of your child by way of lumpsum pay out, premium waiver and Smart Benefits.
  • Under this plan, you are eligible for Income Tax benefits or exemptions as per the prevailing income tax laws in India, which are subject to change from time to time.

2. ABSLI Child Future Assured Plan

It is a life insurance savings plan, which offers assured benefits not only to take care of the important milestones in your child’s life such as education but also marriage. The policy offers Maturity Benefit that is equal to the amount of Assured Benefit at the end of the Policy Term.

Key highlights of the policy:

  • In case of the unfortunate and untimely demise of the life insured during the policy period, the death benefit will be paid to the nominee or beneficiary and all the future premiums will be waived off.
  • If the insured person pays all the due premiums, a 20% loyalty addition is added to his/her assured benefits at the end of each scheduled pay-out.
  • Under this plan, at the start of the policy, you can also opt for Enhanced Insurance Cover that is equal to 50% or 100% or 200% of the sum assured, by paying an additional premium.

3. HDFC Life YoungStar Udaan

It is a Non-Linked Participating Life Insurance Plan with customizable money back plan for your child’s various life goals that have come up with three variants to choose from and they are Aspiration Option, Academia Option, and Career Option. Under this policy, the guaranteed additions are paid to boost your policy benefits.

Key highlights of the plan:

  • Under this plan, the maturity benefits (money back or endowment payouts) are paid at the end of each year for a premium paying or a fully paid-up policy for the 3 plan options.
  • In case of the unfortunate and untimely demise of the life assured during the policy tenure for an active policy, the death benefit is paid to the nominee or the beneficiary and it depends on the type of the plan chosen.
  • One can avail of the facility of policy loan to meet the financial emergency that is subject to the terms and conditions of the policy.

4. Bajaj Allianz Young Assure Plan

It is a non-linked, participating, life insurance plan that has come up with guaranteed maturity benefits along with guaranteed additions to offer your child the best protection to achieve his/her life goals. You can even choose to receive the maturity benefit over 3, 5 or 7 years as per your child’s needs.

Key highlights of the plan:

  • In case of the death of the insured person, the nominee receives the higher of the sum assured or the GMB immediately and the policy will be covered to a fully paid-up policy and will continue to accrue future GA, bonuses till the end of the maturity.
  • The policy offers five rider benefits to offer more security and savings for your child and that can be availed of by paying a little extra premium.
  • The premiums for the policy can be paid either yearly, half-yearly, monthly or quarterly mode.

5. Max Life Future Genius Education Plan

This plan has been specially designed to help the parents to manage their child’s higher educations costs through disciplined savings. With this plan, one can get 4 money backs that are payable annually in the last 4 policy years of the policy term.

Key highlights of the policy:

  • The insured person can take the surrender value of the accrued PUA either partially or in full. The remaining PUA will continue to participate in bonuses.
  • The plan offers you three bonus options such as Cash, Premium Offset, and Paid-Up Additions.
  • Under this plan, the death benefit is paid immediately. The maturity benefit will be the Accrued Paid-Up Additions, or Cash Bonus and Terminal Bonus.

6. Future Generali Assured Education Plan

This child education plan enables you to save systematically until your child turns 17 years for his/her higher education. As it is a type of Guaranteed Income Plan, it offers you three options to receive Guaranteed pay outs depending on your child’s education milestones so that you receive the money when it is actually needed.

Key highlights of the plan:

  • The premiums can be paid in Annual or Monthly modes. Monthly premiums can only be paid by Electronic Clearing System (ECS). The premium for monthly mode is 8.83% of annual premium
  • Under this plan, 3 rider benefits are available and they are – Future Generali Non-Linked Accidental Death Rider, Future Generali Non Linked Accidental Total and Permanent Disability Rider, and Future Generali Accidental Benefit Rider.
  • If you are not satisfied with the terms and conditions of the policy, you can return the plan to the company within 15 days (30 days if the policy is sold through the Distance Marketing Mode) of its receipt for cancellation, stating your objections.

7. LIC's New Children's Money Back Plan

It is a Non-linked, Participating, Individual, Life Assurance money back plan that is specially designed to meet the educational, marriage and other needs of growing children through Survival Benefits. The plan can be purchased by any parent or grand-parent for a child aged 0 to 12 years.

Key highlights of the plan:

  • The policy will participate in the profits of the Corporation and therefore, will be entitled to receive Simple Reversionary Bonuses declared as per the experience of the Corporation, in case of an active policy.

The individual can receive the death or the maturity benefit either yearly, half-yearly, quarterly or monthly mode for a certain period of time to generate a regular flow of income instead of lump sum amount.

  • A loan can be availed of under the policy only if at least two full years’ premiums have been paid and that is subject to the terms and conditions of the Corporation.

Factors To Keep in Mind Before Buying a Child Plan

As the insurance market in India is filled with different types of life insurance companies offering a wide range of child insurance plans with lots of variants and varied benefits, it becomes really confusing for a policy-seeker to find out the best insurer with suitable plan option for his ward. But if you keep in mind certain factors and parameters, the work will be easier for you. Here are some important factors that you keep in mind before selecting any insure for a child plan for your child.

Background of Company – It is very important to do a through check of the background of the insurer. Look for the history, the solvency ratio, the equity share, the premium unwritten by the company, etc. for the past few financial years of the company that can be available in the IRDAI Annual Reports. Only then you can understand whether the company has the capability to handle the financial crisis in the near future and can also pay off the lump sum amount of its customers. 

Claim Settlement Ratio – We buy an insurance plan so that it can help us in our most needed time. For this, the claim settlement ratio of the insurer plays a pivotal role as it shows the commitment of the company to its customers. You can find the same in the IRDAI Annual Report. Usually, the higher the ratio is, the more the company is reliable.

Understand Your Needs – Before buying any insurance plan, it is very important to understand your requirements explicitly. If you buy a child plan, which would not provide you with any profitable benefit, then that plan will not work for you. So, at first, understand your needs and your child’s future needs and only then go for any child plan.

Understand Child Plan – It is very important to know how child plans work in India. There can be different types of child plans as mentioned previously and each type comes up with varied benefits and they all work differently. Therefore, find out the most suitable type for you and your child and then proceed.

Terms and Conditions – You should go through properly the child’s education plan’s policy. Many child plans have come up with some unique features and that should be interpreted properly. Otherwise, that may pose problems and financial constraints in future. 

Your Financial Stability – If you buy a child plan that feels heavier on you, then that will not be suitable for you. Again, if you go for the cheaper plan but with no such benefits, again that will not be ideal for you. You need to understand your budget, your financial capability, the inflation rate and your child’s future aspirations and then only settle for one company or child plan.

Premium Waiver Benefit – For most child policies, in case of the unfortunate demise of the insured person, the insurer waives off the premiums meaning after the demise the future premiums will be paid by the company whereas the policy will be in effect or work as a paid-up policy. It helps the family or the child to continue the policy without having much financial burden.

Choose Partial Withdrawal Option – The child plans with a partial withdrawal option that allow you to withdraw a certain amount of money after a specified period of time. This feature helps you battle against financial emergencies. You may use this amount for your child’s medical treatment or minor accidental treatment or in any way as per the situation.

Fund Options – The ULIP Child plans offer you different fund options to invest your money to build a financial corpus for your child in the long turn. Though this is open to market risks, it offers higher returns in comparison to the traditional endowment child plans. Investment Options like Systematic Transfer Plan and Dynamic Fund Allocation help in safeguarding investments against market instability.

Benefits and Facilities – While opting for a child plan, it is very important to go through the benefits and facilities offered by the plan. Most child plans come up with different rider benefits to strengthen your plan. Which rider plan you will be opting or whether it is necessary to go for any rider plan – understand all these clauses well.

Start Early – If you have made up your mind to purchase a child plan for your ward, it is better to start early as the earlier you start, the more financial corpus you can build for your child and also can receive the maturity payout early, if available with the insurer. The overall benefit of a child education plan is higher if one starts to invest early.

Different Riders Available For Child Plans

Most of life insurance companies have come up with different riders for child plans to offer maximum protection and security to children. The general available riders are as follows.

  • Accidental Death and Disability Rider – With this rider benefit you can avail of some extra sum assured in case the life assured meets an accident that leads to unfortunate demise of disability.
  • Critical illness rider – This type of rider acts as a cushion to your health insurance plan for your child. It provides coverage for some specified and pre-defined critical illnesses.
  • Child Term Rider – In case of the unfortunate and untimely demise of the child before a certain age, this rider offers death benefits. But, if the child reaches the age of maturity, the child plan can be converted to a permanent insurance cover up to 5 times the original amount without any pre-policy medical tests.
  • Premium Waiver Rider – Under this rider, in case of unfortunate demise of the insured person, the future premiums for that child policy are waived off and are paid by the insurer. In that case, the beneficiary or the nominee will get the benefits at maturity.
  • Income rider Benefit – Few child insurance plans offer this rider where the child is entitled to receive 15 of the rider sum assured every month in case of the following circumstances:
    1. Death of the parent
    2. Permanent disability of the parent due to an accident
    3. Parent being diagnosed with any of the critical illnesses that are mentioned in the policy wordings.

How Does a Child Plan Work?

Endowment and ULIP and money back type of child plans work in different ways. For your better understanding, all the ways are discussed with two sample illustrations.

Endowment Child Plans:

This type of policy provides maturity benefit as lump sum amount that can be used for child’s higher education, marriage or any other purposes.

Mr. Das, a 37-years-old businessman has brought SBI Life – Smart Chap Insurance Plan for his daughter, Payel who is of 4 years. Let us find out for below parameters, how much maturity benefit he will get for his daughter.

Policy termPremium term optionPremium frequencySum assuredPremium amount (Excluding taxes)Maturity benefit (at assured rate of returns)
17 years14 yearsSingleRs. 3 lakhsRs. 2,25,783

At 4%:

Rs. 3,62,790

Or

At 8%:

Rs. 5,89,800

ULIP Plan:

Suppose, Mr. Bose a 37-years-old self-employed person has bought Max Life Future Genius Education Plan for his son. Let us find out for the following criteria what benefit and returns he will reap after 6 years.

Payment frequencyInvestment amount (excluding GST)Wants his IncomePaying forLife coverMonthly incomeAnnual premiumTotal investment in 6 yearsTotal returns
AnnuallyRs. 60,000Monthly6 yearsRs. 6.60 lakhsRs. 6809Rs. 62,700Rs. 3.60 lakhsRs. 4.90 lakhs

Claim Process of Child Plans

It is always better to go for that insurer that has a higher claim settlement ratio. If any such scenario arises where you have to file a claim, follow the below easy steps to avail of a smooth claim process.

  • At first, intimate the insurer as soon as the incident occurs. You can do that online by writing an email to the company or you can also file the claim by visiting their official website if the facility is available. Else, you can call on the contact number to be guided through the claim process or also can visit the nearest branch of the insurer.
  • Submit the duly filled and signed claim form along with all the necessary documents such as date of the incident, FIR report, if any, account details, cause of the incident, nominee name, address, etc.
  • All the authentic documents are needed to be produced as soon as the claim is registered.
  • On behalf of the company, a surveyor will be appointed to verify the documents and evaluate the gravity of the incident.
  • If no discrepancy is found and your claim is authentic, the insurer will process the claim procedure further and you will receive the claim amount within a stipulated time.
  • Once the claim is settled, you will receive the notification and document about the same in your registered mail ID or/and phone number.
  • If your claim is denied, the same will be informed with the details, reasons, etc via call, email, SMS or post.

Required documents for filing a claim:

  • Duly filled and signed claim form
  • Original policy document
  • Medical certificate
  • Death certificate
  • Concerned doctor’s reports, pharmacy bills, diagnostic reports, prescriptions
  • Post-mortem report, FIR copy, if any
  • NEFT details
  • KYC details of the nominee and the policyholder

General Exclusions of Child Plans

Though the child insurance plans have come up with a sack of benefits and facilities, it has certain exclusions too. The general exclusions are as follows.

  • Suicide or self-inflicted injury is not covered under this plan.
  • In case of the death of the policyholder due to an overdose of drug, alcohol or any intoxicating or unauthorized substances, the beneficiary will not receive any benefits.
  • If the insured person takes part in any kind of adventurous sport such as skiing, sky-diving, scuba diving, etc, and that leads to death, the policy will not take any liability for that.
  • If the policyholder is involved in any kind of terrorist activities or unlawful activities and death occur due to that reason, the beneficiary is not entitled to receive any kind of benefits.
  • In the case of the insured person due to radiation or any kind of atomic activity, the policy does not compensate for that.

Frequently Asked Questions

For checking the claim status of your child plan, you need to register yourself to the e-portal of the insurer, first. Then, you need to log in to your account using your username and password to check the claim status.

The premium rate for this plan is as below:

MinimumPremium payment modePremium amount (exclusive of applicable taxes)
MonthlyRs. 500
QuarterlyRs. 1,500
Half-yearlyRs. 3000
AnnuallyRs. 6000
SingleRs. 66,000
MaximumBased on the maximum basic sum assured, as per the Board Approved Underwriting Policy

To strengthen your policy and to offer extra protection to your child, ABSLI Child Future Assured Plan provides various rider options that can be availed of by paying a little extra premium. The options are as follows:

  • ABSLI Accidental Death and Disability Rider (UIN: 109B018V03)
  • ABSLI Critical Illness Rider (UIN: 109B019V03)
  • ABSLI Surgical Care Rider (UIN: 109B015V03)
  • ABSLI Hospital Care Rider (UIN: 109B016V03)
  • ABSLI Waiver of Premium (UIN:109B017V03)
  • ABSLI Accidental Death Benefit Rider Plus (UIN:109B023V02)

It is important to know that you can opt for either ABSLI Accidental Death and Disability Rider or ABSLI Accidental Death Benefit Rider Plus, but not both.

In case of accidental total permanent disability to the life assured under this plan, the policy will be covered by a fully paid-up policy and will continue to accrue future GA, bonuses till the end of the maturity.

A beneficiary or a nominee plays a pivotal role in a child plan. If the parent of the insured person dies, all the money and the authority will be handed over to the nominee or beneficiary only.

The frequency of payouts of a child plan is fixed by the insured only as per the terms and conditions of the company and it will be mentioned in the policy document.

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