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Children Insurance Providers & Plans Select GROUP for Insurance Plan and Details  
Children Plan & Policy : Overview

Child Insurance Plans begin from the Child age 0, so it’s easy for most of the parents to plan the future of their “to-be-born” child. Child Plans – cut only for children are meant to cover the education, higher education and marriage needs. Sum assured or guaranteed returns are the main features of child plan. The main attraction, insurance companies like ICICI Prudential and HDFC insurance companies tap on is the Maturity Benefit Plan wherein the family need not pay further in case of insured parent death during the policy term and the policy continues with sum assured and the bonuses declared.

Tapping on other benefits, which in fact are beneficial, insurance companies are putting up their best. Child insurance plans have some of the basic attractions like cheques when the child reaches a certain grade/class or age and beneficiary concept where beneficiary (in this case the child) is the sole person to receive the benefit. To add to the icing is the Tax benefit. Parent/s who is taking the child policy is eligible for Tax Benefit under Section 80C and Section 10(10D) of the Income Tax Act, 1961.

- Under Section 80C: You can save tax each year as premiums up to Rs. 1, 00,000 are allowed as a deduction from your taxable income.

- Under Section 10 (10D), the benefits you receive from this policy are completely tax-free subject to the exclusions.

Securing ones child future is one of the biggest relief for any parent. With so many insurance companies coming in the child insurance, life insurance field, this should not be a dream too far...

Disadvantage of the children's plans:
These plans do rate poorly both in terms of life cover and investment option. You can buy plain term insurance at lower premium that provides you with very high life cover. For investments, equity mutual funds are the best. You can invest the highest possible amount in these funds at very low fees. Also if the fund tends to perform poorly, you can stop your investment and switch over to another fund, without paying any penalty. This is not possible in case of children's plans as there are heavy surrender charges applicable.
Advantage of a children's plan:
Child insurance provides cover for a child's parent/guardian/grandparent for a specified term. That is, if the parent, guardian, or grandparent were to pass away, your child's future is not in jeopardy and the sum assured plus benefits will reach the child at a predetermined age. This is perhaps the most significant aspect that needs to be factored in before you make your choice.
Should you invest in Children plans?

Is it wise to buy an insurance policy for your children? Is it really necessary? Parents often ponder over these questions.

Yes it is wise. Actually buying a policy of child life insurance leads your child′s life to a future that is financially secured. It helps to keep plans for your child′s carrier alive. Also, as they step into adulthood, the child life insurance policy builds cash value that supports your child′s life with a financial cushion.
Child life insurance policies are affordable as compared to any adult life insurance policies.
Many financial experts consider it as a foolish decision to spent money on any child life insurance policy. But let me tell you how important and beneficial a child life insurance policy could be.

    1. In case your child suffers from illness that may take his/her life, you may be left with medical bills. So the pre existing life insurance proceeds could provide the extra cash you need to settle the worries.
    2. In case of fatal illness of a youngster, you may have to bear huge medical expenses. So the child life insurance policy′s proceeds can support the family with significant financial relief.
    3. If your child develops any serious medical condition while he/she is uninsured, parents may find premiums to be expensive. However, early coverage results in significant cost-savings.

It is agreeable that children hardly show any significant contribution to family′s income, but purchasing some insurance policy for children can really give good financial support under certain events.

You can also collect information about the different child life insurance policies by shopping online and visiting several online insurance companies as displayed above.

If you hesitate to get a separate life insurance policy for your child hen you can add a rider to your own life insurance policy. This will cost you few more but it will make your children future financially supported.
We have gathered all life insurance info you need to know on one source.

Children Insurance Plans: Commitment

What′s the biggest financial commitment of a parent today?

At least two out of three say, It′s to meet the rising costs of their child′s education. The fact is that most financial planners say that as inflation rises, the first thing to get impacted is the education sector. Planning for the child′s future is an important step.

Child insurance plans are one of the tools that help parents secure the financial future of their child. Children′s insurance policies have always been popular in India, but their significance has gone up of late due to rising costs, particularly in education, says Aviva India associate director Vishal Gupta.

Earlier, the trend was that a policy was taken in a child′s name, which was a simple money-back plan. Now, parents take a term cover in their name, which would be replaced if there is any loss of income due to the untimely death of any of the earning parents. So, it has the twin benefits of investment and protection, says Pranav Mishra, senior VP & head products, ICICI Prudential Life Insurance.

How do these plans work?

Most of these child insurance plans aim to meet your financial needs. For example, ICICI Prudential Life has three variants under the SmartKid plan. These insurance plans provide you with funds at pre-fixed intervals, which will help you meet your child′s financial needs at different milestone years.
In addition to this, if a parent signs up for an income benefit rider, the child gets 10% of the sum assured till the child reaches his/her milestone years, which compensates the income loss. Similarly, if you have a Unit Linked Insurance Policies (ULIP)-linked endowment plan in your child′s name, you can prematurely withdraw 20% of the sum assured after 5 years from the effective date of the policy.

In the case of Aviva′s Little Master Plan, you can avail of the benefit of premium waiver. In case of a parent′s death, all future premiums are paid in a lump sum to take back as partial withdrawals during the last five policy years. If the parent opts for a comprehensive health benefit rider, upon contracting 18 listed illnesses, your child can avail of the above benefits.

Similarly, if the parent opts for an income-benefit rider, in case of the death of the parent, the plan provides a regular pre-determined income at every future policy anniversary to meet the present education expenses. These are either conventional endowment plans or ULIPs, which aim to generate handsome returns over and above the insurance cover for the earning parents.

Are they worth the money?

There are various savings instruments available like PPF, MFs, shares, gold, real estate, etc. The insurer pays the sum assured to the nominees immediately after the demise of the parents. Additionally, the insurance company starts putting in the premium amount into the same plan on behalf of the policyholder.

This money keeps growing and is given to the nominee once the policy matures. However, financial planners have a different take. They say a child plan is nothing but an endowment policy, which could either be a ULIP or a conventional plan. Touchstone Wealth Planners certified financial planner (director) Rishi Nathany explains: I would suggest an investor should go for a MF. Insurance is any day costlier.

A parent should go for a term policy be it a working father or a mother, on whose income the child′s future is dependent. That will take care of the child′s financial needs in case of untimely death of any of the working parents. Then, for the child′s future, you should create a specific financial plan through systematic investment planning (SIP) in mutual funds (equity/balanced).

Most parents start planning for their children over 10-20 years before their milestone years. Now, equity is one of the asset classes that generates handsome returns over this time span, he adds. If you are a risk averse investor, you can look for a balanced fund or MIP structure to invest in MFs.

Kotak Asset Management′s Kotak Star Kid aims to provide for a parent′s goal of creating wealth for his/her child, through the SIP route. Explains Kotak Asset Management CEO Sandesh Kirkire, ″Under the Star Kid Plan, which comes with an insurance component, if there is a calamity and you are not able to fund your SIP, the scheme will take care of the remaining unpaid SIPs.″

But then, nothing stops an individual from separating his investments and risk needs. A pure term cover from an insurer coupled with investments from top rated equity/balanced funds should do the trick.