Child Insurance Plan

Premiums: Payable as a lump sum at the start of the policy tenure. You may also choose to pay it frequently on a regular basis or for a limited period of time. Most Life Insurers provide options such as monthly, quarterly, half-yearly, yearly. Premium amount varies as per the sum assured chosen by you in case of traditional child plans.

Sum assured: This is the amount that will be paid out in case of the policyholders’ demise. Most of the time, sum assured should be above 10 times the current gross income of insured.

Maturity: The maturity amount should be chosen with an eye on the future. Assuming your child is 8 years old, and his policy will get matured in 10 years’ time, then you should take into consideration factors such as inflation and interest rates. If you fail to consider these factors, the released funds may fall short of the requirements in future.

Policy Tenure: Mostly meant for children up to the age of 18-21. Here, tenures can be selected from birth until the child reaches a predefined age. The policyholder/insured is not to be 70 plus years at policy’s maturity.

Segmented pay-outs: With child life insurance policies, you can select if the child will get payment as a lump sum, or in yearly instalments. Such a setting will help in paying dues such as college fees, marriage expenses, higher education expenses, appropriate funds for starting a business, etc.

Premium Waiver Benefit: An inherent feature of child plans is that premium waivers become applicable when the insured dies in a stipulated duration of time. In this situation, the sum assured will be paid out to the beneficiary, while the premium for the remaining tenure will be paid by the insurer. At the end of the tenure, the maturity amount will be provided as detailed in the policy document.

Partial Withdrawal Clause: A partial withdrawal clause allows the policyholder to make a partial withdrawal, in case of a financial emergency. Many policies also come with the option of partial liquidity.

Choice of Funds: A child insurance policy such as a ULIP scheme allows a policyholder to select the choice of investment funds (equity, debt, hybrid and money market). You also have an option of a Systematic Transfer Plan and Dynamic Fund Allocation.