Children’s Day is a call to action, urging us all to protect the dreams and futures of the younger generation. As an insurance partner, Children's Day presents a meaningful opportunity for everyone to go beyond business and truly make a difference by helping parents secure their child’s future through a Child Insurance Plan. While we celebrate their joy and curiosity, let’s also take a moment to think about securing their tomorrow.
What is a Child Insurance Plan?
A child insurance plan is a type of life insurance policy designed to financially secure a child's future. This policy provides a lump sum or regular payout at a key milestone in a child's life, such as higher education, planning to study abroad, or marriage, while also offering life cover to protect the child’s financial needs in case of the parent’s untimely demise.
Significance of Child Insurance Plan
We are all aware that the cost of higher education in India has been increasing at an alarming rate. Today, if one is planning to pursue a four-year engineering degree from a top private college, it will cost around ₹40-80 lakh*, which keeps on increasing annually. Medical education at private institutions is also expensive, ranging from approximately ₹50 lakh to ₹1.2 crore over five years. A child insurance plan is a perfect combination of investment and protection, offering dual benefits:
- Financial Security - Provides financial security in the event of unforeseen circumstances.
- Future Planning - Help parents save for major milestones, such as marriage and education.
- Guaranteed Returns- Many insurance plans offer assured payouts at key stages of the child’s life.
- Tax Benefits – Parents can also benefit from tax deductions under relevant sections of the Income Tax Act.
Types of Child Insurance Plans
1. Child Endowment Plans (Traditional Plans)
One of the low-risk plans, a perfect combination of insurance protection with guaranteed savings. In this, parents must pay regular premiums, and upon maturity, the insurer must pay a lump sum amount. Alternatively, the insurer may pay a lump sum amount in the event of the parents’ unfortunate demise. If you are looking for stability and guaranteed returns, an endowment plan is a perfect option.
2. Child ULIP Plans (Unit Linked Insurance Plans)
It's one of the best market-linked options that combines insurance with investment. Under this plan, a portion of the premium is allocated towards life cover, while the remainder is invested in the market through debt, equity, or balanced funds. It works well for those seeking a long-term horizon and are willing to take market risk.
3. Single Premium Child Plans
This child insurance plan requires a one-time lump sum payment instead of periodic premiums. The parents must make a one-time payment, after which they can enjoy convenience and guaranteed protection for the entire policy duration.
4. Regular Premium Child Plans
This child insurance plan offers the option of annual, quarterly, or monthly payments throughout the policy term. The parent must pay regular premiums to ensure consistent savings and coverage. Helps manage finances better while building a future-ready corpus.
5. Child Money-Back Plans
Under this plan, one has to pay periodic payouts at key stages of a child’s life. In return, the insurer pays a percentage of the sum assured at regular intervals (e.g., during school or college), with the remaining amount paid at maturity.
Also Read: How to buy a life insurance policy?
Bottom Line
On Children’s Day, think about how you can secure your child’s financial future. With rising education costs and life’s uncertainties, it is crucial to start planning early. Savings insurance plans help you build a financial corpus and provide life cover, ensuring your child’s dreams stay within reach. A life insurance advisor holds expertise in simplifying the journey of securing your child’s future by helping you select the most suitable Child Insurance Plan that matches your goals and budget.
Secure every child's dreams today, so tomorrow they can dream even bigger.
