Children are the future of the country. In today's era, parents are keen to do any thing to everything to secure the future of their wards. One such way, wherein the parents can secure their little bundle of joy's future is to invest in an insurance plan which gives the child the much-needed funds at the time of maturity apart from the corpus for education, meet the medical expenses in case of emergency and so on.
Gone are those days, wherein the insurance money was used just for the children's education after attaining maturity. Today's insurance policies are designed to meet all the unforeseen future expenses to benefit the child and its family by providing 360-degree protection.
What is Insurance?
Insurance refers to a means of protection from financial loss. It is a form of risk management in financial terms. Insurance can be primarily used to hedge against the risk of a contingent or uncertain loss.
What is Child Insurance Plan?
The Child Insurance Plan is a form of permanent life insurance that insures the life of a child or minor. It is usually purchased with an aim to provide guaranteed insurance for the lifetime of the child.
The Child Insurance Plan offers guaranteed growth of cash value. This is one of those insurance policies which are issued without any kind of medical examination. The plan provides zero investment and zero interest rate risk associated with cash value growth apart from providing insurance coverage for a nominated beneficiary.
In India, any person who is below the age of 14 is considered as a child as per the Census of India. India has 1.21 billion children and stands at the second position in the world in terms of most populous country. In India, Children constitute 39% of the total population of the country.
Securing their life is the utmost important task of all the parents, not just in India but across the globe. Children are our future and hence giving priority to meet their needs and requirements is an essential part of all the human beings.
Benefits of a Child Plan
Child Education Corpus: Child plans are able to provide better returns even with a minimum premium amount. The plan comes in handy to pay towards the higher educational expenses especially if the child prefers to study abroad.
Income Protection: A Child Income Plan protects the income of those children who start earning early at a very young age. If your child is a musician, artist, performer or an actor who starts working at a very young age, then the same can be utilized beneficially by the child himself/herself after attaining adulthood.
Meets Medical Expenses: A Child Income Plan comes in as handy to meet the partial medical expenses in case of emergency during the tenure of the plan. The plan offers an option to withdraw money to fulfill medical requirements if the child falls ill. The plan actually benefits the parents as it reduces the financial burden which otherwise is a costly affair to most of the families in India.
Supports the Child in the absence of parents: Death is one of the worst unforeseen future event, which traumatizes the child and the entire family. Some of the insurance providers waive off the premium benefit in case of the death of the insurer (the parent who purchases insurance for the child). The premium waiver benefit often comes inbuilt into child plans. If not, then one should definitely opt for this rider. The insured child will be eligible to receive a lump sum amount which was earlier promised at the time of purchase of the plan and then there is no need to pay the balance premium amount.
Collateral for Loans: A Child Insurance Plan has a special feature wherein the plan can be used as a collateral for securing a loan for higher education as the cost of the higher education is increasing not only in India but in abroad as well.
There are numerous Child Investment Plans offered by various investors both government and private players in the country. One such Child Investment Plan offered by the State Bank of India - the country's largest lender, under its umbrella is SBI Life- Smart Champ Insurance.
The plan is an individual non-linked, participating life insurance plan.
Features of SBI Life- Smart Champ Insurance
• The plan offers life and accidental total payment disability coverage throughout the policy term.
• The plan offers one-time premium payment or limited premium.
• Get immediate payment of sum assured and premium waiver in case of any eventuality.
• Earn smart benefits in four equal annual installments after the child attains 18 years of age.
Advantages of SBI Life- Smart Champ Insurance
• Security: In case of unforeseen events, the family receives a lump sum amount to tide over immediate financial challenges.
• Reliability: The child will receive the plan benefits without the payment of any premium amount in case of an eventuality.
• Flexibility: The insurer or the parent or the guardian has the option to choose either one-time premium or limited premium as per there individual requirements.
• Avail Tax benefits: The insured amount is eligible for securing redemption under Section 80C of the Income Tax Act of 1961.
Benefit Received on Survival
The insured child is eligible to get the lump sum amount along with the bonus at the time of the end of the policy. The child will receive the payments on completion of 18,19,20 and 21 years of ages as mentioned below:
|Age of Child||Smart Benefits|
|18 years||25 % of Sum Assured + 25% of Vested Simple Reversionary Bonus|
|19 years||25 % of Sum Assured + 25% of Vested Simple Reversionary Bonus|
|20 years||25 % of Sum Assured + 25% of Vested Simple Reversionary Bonus|
|21 years||25 % of Sum Assured + 25% of Vested Simple Reversionary Bonus + Terminal Bonus, if any|
Who can buy the SBI Life- Smart Champ Insurance?
- Any Child who is in the age bracket of 0 years – 13 years can buy this plan.
- Maximum age of maturity of the plan is 21 years.
- Premium Frequency: single premium/ yearly/ half-yearly/ quarterly / monthly.
|Age at entry||0 years||13 years|
|Basic Sum Assured||Rs 1,00,000 X (Rs 1,000/-)||Rs 1 crore|
|Policy Term||8 years||21 years|
|Premium Payment Term for LPPT Policy||5 yrs||18 years|
Annual Premium Rate
|Half-Yearly: 51.00% of annual premium|
|Premium Frequency Loading||Quarterly: 26.00% of annual premium|
|Monthly: 8.50% of annual premium|
|Premium Payment Mode||Minimum Premium|
Last but not the least, it is important to choose a trusted appointee in case of the Child Investment Plan and the appointee should share a strong relationship with the insurer and should be someone who you can count on to take care of your child in case of your absence. In case of the death of the insurer, the claim amount is received by the appointee till the child reaches maturity age and is capable of handling the lump-sum payout of the sum assured. If the appointee fails to take care of the child and the lump-sum payout then the child will lose to get the benefit amount from its own insurance plan which it is entitled to receive on reaching eligible age.
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