Introduction 

If we think about our parents, their childhood, and aspirations, it would be hard to believe that our grandparents earned in lakhs and helped their child sail through all the stages of life. But, in the current scenario, parents have taken a different streak of protectiveness, making their kids multitask and sending them abroad for higher studies. Their ambitions have grown, and the necessary education has become prohibitively expensive.

Annual education inflation in India is estimated to be between 10% -12%. Even if we use a reasonable estimate of 6-8 percent inflation, the financial impact would be enormous. 

Let us assume that an MBA costs around 6 –  lakhs. Growing inflation is anticipated to cost more than Rs 15 lakh and Rs 30 lakh in the coming 15 years.

While these numbers just talked about India, countless students wish to pursue their higher education abroad, which again turns out to be a pricey deal. Studying abroad has become a significant life ambition for Generation Z and Alpha. Many students are striving for admission to the Ivy League or other prestigious universities throughout the world in order to further their careers.

But, not every parent has a backup for that kind of money, which is why child insurance is a good deal.

This blog will assist you in equipping yourself about,

• What is a child life insurance plan?
• What are the benefits associated with such a plan?
• What are the best insurance plans to buy in India in 2022?

Are you ready to take an insightful dip of a few minutes to prepare a better future for your child? If yes, then continue to read.

What is a Child Insurance Plan? 

A child insurance plan is intended to assist children in achieving their major milestones in life, including education and marriage. Parents are the life insured in a child insurance policy, and the child becomes the beneficiary. 

It is an insurance plus investment type of plan that helps the parents prepare a safer and secure financial bubble for their child to battle through life and successfully live through the major stepping stones in life without bothering much about the economic part.

They include a life insurance policy as well as alternatives to maximise savings on premium payments. The benefits of such type of plan are placed so that your child can make the most out of it. In certain plans, there is the option to make a partial payout where the parents can leverage partial payout at the time of need.

Moreover, they come with riders (additional benefits) that allow the parents to make the insurance policy more comprehensive and secure for their child to have a buffer-free life in certain stages of life. 

If you ask, ‘what is the right time to buy a child plan?’

Our answer is when they are born because it will assist you to save more money for the maturity amount. In addition, the younger and healthier a person is, the lower the rates connected with insuring them will be. And the maturity period of the child insurance plan arrives when your child turns 18. Therefore, be wise with the time you opt for the plan.

Benefits of Child Insurance Policy

Partial Payout Option when Needed:  One of the most significant advantages of investing in a child insurance policy is the flexibility with which you may make payments. As a parent, you will recognize that your child requires additional financial assistance at critical moments, particularly when pursuing higher education. Most child plans give the leverage to make a partial withdrawal from the sum assured to fulfil the necessity. 

To Help the Child Achieve Major Objectives: Child plans are designed to cover significant expenses when they arise, ensuring no gaps in coverage. They are designed to protect essential milestones such as higher education and marriage. 

Tax Benefits: Section 80C of the Income Tax Act, 1961 allows the life insured to claim tax deductions. However, there is a situation where if the premium paid in a year exceeds 10% of the basic insured amount, benefits can be received only up to 10% of the sum assured amount. Section 10 (10D) provides tax exemptions for interest received on investments if the premium paid in any year does not exceed 1/10th of the principal amount guaranteed. Funds disbursed in the event of the applicant’s death are entirely tax-free.

Medical Back-up for your Child: It permits the life insured to withdraw funds during the term of the child investment plans. For instance, if your child is hospitalised due to an illness, minor accident, or a major medical condition, they can use their rider to make partial withdrawals. 

Financial Relief in Parents Absence: If the life insured dies during the term plan, the insurance company would waive the premium, and the beneficiary pays the death benefit. With the Waiver of Premium perk, the nominee’s guaranteed sum is given while the insurer pays the due premium for the remaining term. 

List of Best Child Insurance Plans in India 

Will you buy anything average for your child? No, right?

It is why we have brought you some of the best life insurance policies for the child are as follows:

ABSLI Child Future Assured Plan

It is a beneficial child insurance policy by Aditya Birla Sun Life Insurance that provides guaranteed payouts to cover critical milestones in your child’s life, such as education and marriage. Some of the benefits curated in this plan are as follows:

Assured Benefit: It provides guaranteed benefits to pay your child’s education, marriage, or future milestones. To get the guaranteed benefits, select one of the following alternatives at policy inception: 

• Education Milestone
• Marriage Milestone
• Education and Marriage Milestone

Education Milestone Benefit guarantees annual payouts equal to a specified percentage of the chosen sum assured. You can customise the payment terms to correspond with your child’s educational milestones such as graduation, post-graduation, and other higher education.

Marriage Milestone Benefit: You will get a guaranteed lump sum payment for your child’s wedding at the end of the insurance term. To be eligible for the policy benefit, your child must be between 24 and 32.

Education and Marriage Milestone Benefit: It is a mixture of education and marriage benefits. Here, the education milestone perk is paid on the due dates specified above, whereas the marriage milestone is paid to the life insured when the term plan expires.

Loyalty Additions: If the life insured pays all the required premiums, you will receive a 20% loyalty addition to your assured benefits towards the conclusion of each periodic payout.

Maturity Benefit: The value of the assured benefit provided at the policy’s termination.

Increased Insurance Coverage: Here, by paying an extra premium at the start of the plan, you can choose this perk as it is equal to 50%, 100%, or 200% of the total assured.

Riders: They are additional perks at a pocket-friendly price; it helps make your plan more inclusive but adds extra benefits. The riders included in this child plan by the ABSLI are as follows:

• ABSLI Accidental Death and Disability Rider
• ABSLI Critical Illness Rider 
• ABSLI Surgical Care Rider 
• ABSLI Hospital Care Rider 
• ABSLI Waiver of Premium 
• ABSLI Accidental Death Benefit Rider Plus 

To know more about this child insurance plan, click – ABSLI Child Future Assured Plan.

ABSLI Vision Star Plan

Aditya Birla Sun Life Insurance Vision Star Plan offers regular guaranteed reimbursements to support your child’s education and safeguard their future even if you are not present. The benefits of this child policy are as follows:

Death Benefit: As per this benefit, if the policyholder meets with untimely death, the beneficiary/nominee will receive a predetermined death benefit. And, after the insurance company settles the death benefit, the plan will be cancelled.

Assured Payout: Beginning in the fifth year after the premium-paying tenure has ended, the policyholder will begin receiving his particular benefit. They are predetermined percentages of the sum assured that you have chosen.

Maturity Benefit: If the life insured manages to live through the plan, the insurer will pay the collected bonus plus any terminal bonus. Once the policy reaches maturity, it will be terminated.

Riders: Extra benefits available at an extra yet affordable cost that can be added to the existing plan to make it more secure.

• ABSLI Accidental Death and Disability Rider 
• ABSLI Critical Illness Rider 
• ABSLI Surgical Care Rider 
• ABSLI Hospital Care Rider 
• ABSLI Waiver of Premium Rider 
• ABSLI Accidental Death Benefit Rider Plus

Want to know more? Then click – ABSLI Vision Star Plan.

Conclusion

All we wish to say is we have served the best on your platter along with their features and added benefits. As responsible parents, it is your choice to research and choose the best based on your future objective.