What Is A Child Insurance Plan - Canara HSBC Life Insurance

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

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

Besides the lump-sum pay-out, child insurance plans from Canara HSBC Life Insurance also have periodic payments. These periodic payments coincide with the crucial milestones of your child’s life like education, marriage, etc.

Child insurance plans are generally customisable with options to add a variety of riders that enhance the plan as per your child’s specific needs.

How does a Child Insurance Plan Work?

Child insurance plan helps you meet the following two objectives of your investment:

1. Future financial need for the higher education goal of your child

2. Need for the financial protection of this goal from your untimely death

Considering you are 30 years old at the time of starting your investment in a child insurance plan from Canara HSBC Life Insurance. Your child is three years of age and you want to accumulate Rs. 40 lakhs when she turns 18.

Is a Child Education Plan Tax-Free?

The child education plan is a life insurance cum investment plan and provides the same tax-benefits as most life insurance plans. Following are the tax exemptions available with a child insurance or child education plans:

• Deduction of Invested Amount: Investment of up to Rs. 1.5 lakhs in child plans is deductible from your taxable income in a financial year.

• Partial Withdrawals: Partial withdrawals from the child insurance plans after the lock-in period is exempt from tax.

• Maturity Proceeds: Amount received from a child insurance plan at maturity is exempt from tax under section 10(10D) to the extent of the following:

• Your investment in any financial year has not exceeded 10% of the life cover in the policy.
• Your annual investment in Child ULIP plans purchased on or after 1st Feb 2021 does not exceed Rs. 2.5 Lakhs in a financial year

• Death Benefit: Death benefit your family would receive from the life insurance policy will be exempt from tax.

Benefits of Child Insurance Plan

Guarantee of Support to Child’s Goal

Child plan will help you provide for your child’s important life goals regardless of your presence in his or her life. With life cover and goal protection options, a child plan alone is enough to protect your child’s future whether through investment or life cover.

Boost to the Growth of the Investment

Child education plans like Invest 4G from Canara HSBC Life Insurance, offer loyalty additions and other bonuses for long-term investors. The longer you stay invested the better your benefits become.

Tax Benefits

Tax Benefits of child insurance plans are well known. You can reduce your taxable income by up to Rs. 1.5 lakhs every year if you invest in child plans. The maturity and partial withdrawals from the plans are also exempt from tax.

Smart Junior Plan

Canara HSBC Life Insurance Smart Junior Plan is an Individual Non-linked Par Life Insurance Savings cum Protection Plan designed to fulfill your child's future education needs, whether you are around or not.

Smart Junior plan provides Guaranteed payouts during the last 5 years of policy which can be aligned to child's educational milestones. Further, the plan also provides Annual bonuses and Final bonus, if any, on maturity.

This plan provides comprehensive protection - in case of the unfortunate demise of Life Assured - a lump sum amount is paid immediately and the remaining due premiums, if any, are not payable. The policy continues to be in-force & policy benefits are paid as scheduled.

Conclusion

Any investment needs time to grow. The longer you can stay invested, the better your money would grow. Thus, the best time to start investing in your child’s education is with their birth. Majority of the financial support your child will need is during her graduation and post-graduation studies. Meaning, you should have built a significant corpus by the time your child turns 18.

Also Read: Child Education Plan Insurance