Key Features of Child Insurance Plans

A child insurance policy comes with a wide range of useful features that ensure a rewarding return and protection. Often, a child insurance policy offers safety to the child in case the parents face any financial crunch when making any important decision related to their child’s life. Hence, for obvious reasons, a child insurance policy is a must-have for every parent. 

Key Features of Child Insurance Plans

Child plans come in both linked and non-linked types. Here are some common features of child health insurance plans which will help you understand them better:

1. Waiver of Premium Benefit: It is an inherent feature in any child education plan, that is applicable in the misfortune event of death of the parent within the stipulated period. In this case, the nominated beneficiary gets the sum assured, and the insurance company pays the remaining premium for the rest of the policy tenure. When the policy matures, the child is entitled to receive the maturity amount as specified in the policy document. 

2. Partial Withdrawal: Many child insurance plans come with an option of partial liquidity once the child reaches the age of 18 years. This helps the parents who want to withdraw the fund value in different fragments whenever they need it, instead of waiting for the policy to mature. It allows them to meet financial requirements in case of need.  

3. Sum Assured: Sum assured is the amount of money that is paid out in case of an unfortunate or untimely demise of the parent. When buying a child plan, it is recommended to choose an education plan that has a sum assured not less than 10 times the earnings of the policyholder. The regular premium payment mode allows you to pay a premium on a regular basis, which can be annually, semi-annually, or quarterly. Whereas in a single premium mode, the payment has to be only once. 

4. High Returns: Usually, market-linked child plans offer returns over 10-12%, which help you beat inflation. However, most government plans such as Sukanya Samridhi Scheme offer lower returns.  

5. Tax Benefits: On the premium paid for child insurance plans, you can avail highest tax benefits under Income Tax Act, 1961. 

6. Policy Term: The time when you realise that your child is ready to get on his/her feet is the right time for the policy to mature. So, when deciding the policy term, you can calculate the exact term for the same. For instance, if your child is aged 5 years, then you can buy the plan for 13 years. 

7. Premium Amount: Premium amount depends majorly on the sum assured that you have chosen under your child insurance policy. You get to decide on the premium payment frequency as per your convenience. You can either pay the premium frequently on a regular basis (annually, quarterly, monthly, or semi-annually), or one time. 

8. Riders: There are several riders available in child plans which you can choose as per your requirement and budget. These include accidental death and disability benefit, premium waiver benefit, and critical illness rider benefit. They are not mandatory to buy but offer greater coverage and protection to you. 

Bottom Line

There are a variety of child insurance plans in the market which may differ in terms of features and benefits. So, before you invest in anyone, you must go through and understand the policy benefits as well as features thoroughly so as to make the best buying decision.   

Also Read: 

Features of Child Insurance Plan which Make it a Must have Cover

How To Check Details of Your Child Insurance Plan?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.