Insurance is a means of protection from financial loss. It is a form of contract, represented by policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder.
Securing Child's Future
We are living in a world which is full of uncertainties. Every parent worries continuously about securing there child's future in a better way. It has become difficult for families in current scenario to meet both the ends, with the dwindling list of expenses which has no beginning and no end.
To plan and secure a child's future is the first and foremost important aspect for all the parents. Child plans provide welfare of an individual's child even in the absence of the individual. It is developed on the concept of providing financial support to the family for the child's future if the parents meet any uncertainty.
The insurance plans designed for the child do not insure the child. The life insured under the policies are the parent who has a minor child to provide insurance for.
Standard Features of the Child Plans are
- Deferment: It means postponement and is usually applied if the child is the person insured. Under the deferment clause, the risk coverage under the plan starts after the expiry of a couple of years.
- Vesting: The age of the child when the policy vests in the name of the child and when the child becomes the policyholder. The vesting period is when the child attains majority, that is 18 years.
- Inbuilt waiver of premium rider: This concept is used in most of the child plans. The rider states that if the parent who is the policyholder and life insured under the plan dies during the tenure of the plan, all future premiums payable under the plan will be waived and paid by the company. The plan will continue, and the benefits as promised will accrue as and when they fall due.
Types of Children's Insurance Plans
- Traditional Plans - Under this plan the amount payout is guaranteed. The investments are usually made in safe and low yielding products. Though the returns are not high, it will be stable and predictable.
- ULIPs - Under this plan the investments will be made in equity markets and the chances of returns over a long period of time are much higher. The policyholder can even choose to invest in the debt instrument. The risk involved is more.
List of Children Insurance Plans available in India
- LIC New Children Money Back Policy
- Bajaj Allianz Young Assure
- Max Life Shiksha Plus Super
- ICICI Pru Smart Kid Assure Plan
- HDFC SL YoungStar Super Premium
- Birla Sun Life Insurance Vision Star Plan
- LIC Jeevan Ankur
- Reliance Child Plan
- Aviva Young Scholar Advantage Plan (Child Education Plan)
Plans can be purchased as soon as the child is born. Major events in the child's life, like marriage or higher studies, can be planned and financed by Child Insurance Policies if the parent takes adequate plans at the right time.