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5 Insurance Plans to Secure your Child’s Education Expenses

dateKnowledge Centre Team dateMarch 23, 2021 views211 Views
5 Insurance Plans to Secure your Child’s Education Expenses

With the imminent rise in inflation, parents are often found questioning “how to provide continued education to the kids?”, or “how much does it cost to raise a child”. From the time they are born to the time they are on their own – approximately, the cost lies somewhere around ₹2 Crore. When you become a parent, you need to look at the entire financial picture to ensure that you are saving enough to cover for bigger risks of life. Financial planning is the practice of setting, planning, achieving and reviewing your goals through proper management of your finances. Child insurance plans are saving cum protection plans that help you save for a secured future of your kids while providing them life cover as well.

Here is a list of 5 child insurance plans by Canara HSBC Oriental Bank of Commerce Life Insurance:

1. Smart Junior Plan

It is a savings cum protection plan designed to fulfil your child’s future needs and aspirations. Build wings for your little ones by planning early to keep up with their changing dreams. This child policy offers comprehensive protection if the policyholder happens to pass away. As responsible parents, you must understand that your child’s dream should never be compromised due to such unplanned events.

Features of Smart Junior Plan

Predicting what lies ahead is daunting. But pulling up our socks in time to fight against all odds that may spring up is what as parents you should do. Consider these features of Smart Junior Plan to understand how it can help you:

  • Guaranteed annual payouts for child’s education.
  • Flexible premium payment terms to help you choose one based on your financial circumstances.
  • Addition of regular annual bonuses along with final bonus, if any, on maturity to boost the child education fund.
  • High sum assured rebate if you make a higher premium commitment for the policy term.
  • Enhanced triple protection - Life insurance protection through payment of lump sum benefit on death.

2. Guaranteed Savings Plan

Educating your children and getting them married are a few important milestones that you cannot leave to chance. You need to be prepared for the crucial milestones of your kid’s life to give them the life they deserve. Guaranteed Savings Plan ensures that your promises made to the loved ones are fulfilled even if you are not around.

Features of Guaranteed Savings Plan

It is a savings cum protection plan that offers guaranteed benefits along with the flexibility to choose your savings horizon for optimising the return you receive against the investments made.

  • Provides life cover for the entire term while you have to pay the premiums only for a limited period.
  • Multiple policy term helps you in customizing your savings horizon according to your financial goals.
  • Availability of high premium boosters ensures that you get additional benefits if you choose to make higher premium commitment.
  • Guaranteed benefits are paid out during maturity of policy term if all the premiums have been paid.
  • Get tax benefits under Section 80C and Section 10(10D) as per the Income Tax Act.

3. Jeevan Nivesh – Whole Life Insurance Plan

Jeevan Nivesh is a savings cum protection plan that offers you life insurance cover along with helping you save for the future of your loved ones. Secure the dreams of your loved ones and leave them a legacy so that they can achieve each of their milestones without any financial setback.

Features of Jeevan Nivesh Plan

We strive to make the lives of our little ones better by saving every penny. Help your child achieve their goals and dreams by investing in a Jeevan Nivesh Plan. Here are some of the benefits of this child policy:

  • Guaranteed savings through guaranteed payout of sum assured at maturity.
  • Flexibility to convert your guaranteed sum assured on maturity to annual payouts payable over the next 15 years.
  • Additional lump sum benefit through payout of accrued annual bonuses and final bonus to build a steady fund considering the impact of inflation.
  • Multiple policy term options allow you to select a plan option that is closely aligned with your financial goals.
  • Life insurance cover throughout the term of the policy and beyond – available under Endowment with Whole Life Cover option.

4. Money Back Advantage Plan

You will get guaranteed money back payouts during the policy term along with guaranteed payout at maturity in lump sum. It can be used to achieve each of the milestones that you had planned for. This child policy could help to fulfil the aspirational needs while providing financial protection to your family.

Features of Money Back Advantage Plan

Be financially prepared and build a legacy for your kids with this child plan. The future of your children depends on how you plan to build a financial cushion for them. Here are some benefits of this child insurance plan that may help you make an informed decision:

  • Three guaranteed money back payouts of 15% of the sum assured to meet your planned milestones.
  • Receive guaranteed lump sum payout at maturity that will be equal to 55% of the sum assured along with accrued simple reversionary bonuses.
  • Provides protection for 16 years through payout of death benefit if the life insured happens to pass away.
  • Offers guaranteed money back payouts at regular intervals. It also offers maturity benefits in lump sum.
  • Limited premium payment term of 10 years to align the child insurance plan benefit according to your finances.

5. Invest 4G

It is a Unit Linked Individual Life Insurance Savings Plan that allows you to customize the plan according to your goals and changing life stages. Invest 4G plan gives you complete control over your insurance and saving needs while also helping you to boost your investments. Plan for a secure future of your kids and build a legacy while safeguarding your wealth.

Features of Invest 4G

Invest 4G has different cover options to choose from for different stages of life. Ensure that your kids meet their goals even in your absence.

  • Mortality charges deducted during policy term for regular and limited premium paying policies will be added to fund value at maturity.
  • Premium Funding Benefit option available under Care Option cover ensures that your targeted savings contributions are made even in your absence.
  • Optimise your returns from the investment that you have made in the policy with multiple portfolio management options.
  • Systematic Withdrawal Option can help in creating additional income stream during the term of the policy.
  • Flexibility of choosing to pay for entire policy term or pay for limited years or choose to pay the premium in a single shot.

Buying a Child Insurance Plan – Best Financial Decision

Child insurance plans build a safety net to help you during unforeseen situations that demand monetary attention. It offers you an avenue for investing in your child’s future that may help them over time. To find the best child insurance plan, compare the available child policies and understand the benefits of each of the plan.

Assess your financial needs, premium paying affordability and your child’s needs and choose a plan that is highly customisable. Such child policies can be tweaked according to changing life stages and needs. To keep yourself on solid financial footing, you need to understand your priorities, and the primary one is to build up your savings into an emergency fund that serves as a safety net against the many uncertainties of life.

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Frequently Asked Questions (FAQs) for Child Insurance

Any parent with a child between 0-15 years should opt for a child insurance plan. It helps you deliver inflation-beating returns for the various needs of the child while he/she grows up. As a child grows up, his/her financial needs increase substantially.

The importance of a good education cannot be overstated. Without quality education, a child may not reach his/her full potential. But the rising cost of education can become an impediment in higher education. A child education plan ensures that you do not have to worry about the money for your child’s education. It is a mix of insurance and investment. A part of child education plan is used to provide the financial security of insurance, while the balance is invested in market-linked instruments. The investible portion delivers decent returns in the long run, helping you accumulate a corpus for your child’s education.

Child plans are tailor-made financial products designed to secure children’s future. Typically, child plans have two components—insurance and investment. The insurance component protects the child in case of the parent’s demise, while the investment helps in accumulating a corpus for the child’s needs such as education and marriage. Child plans have several features that are primarily aimed at financially securing children. Some of the features are:

  • Maturity benefit
  • Premium funding option
  • Partial withdrawals
  • Milestone payments
  • Various investment funds
  • Protection of returns

The right time to buy child plans depends on the financial goal and the type of policy. Child insurance policies are long-term instruments and to generate decent returns it is advisable to invest as early as possible. You can invest in child insurance policies even before the child is born. Child education policies are relatively short-term policies. Child education policies can be chosen according to the financial goal. You can invest in child education policy as soon as the child is born if you plan to fund his/her primary and secondary education through the policy. If the aim is to accumulate funds for the higher education of the child, then you can invest at a later stage. In any case, it is not advisable to invest after the child has turned 15.

Child plans are meant to build a financial buffer for your child’s future needs, so, it is important to have a fail-proof plan. A few things to consider while buying child plans are:

  • Goal: It is pertinent to have a clear goal in mind as it determines the type and tenure of the policy. You should invest in a child plan as soon as the child is born. Starting early gives your investment to grow and helps you prepare better for your child’s needs. Similarly, selecting a long-term policy protects your child for a longer-term.
  • Premium waiver: While buying a child plan, it is mandatory to check if the premium waiver facility is available or not. Not having a premium waiver option can leave your child vulnerable in your absence.
  • Inflation: When you are investing for the long term, external factors like inflation cannot be ignored. Invest in ULIPs to generate inflation-beating returns. Invest 4G plan offers customers an option to choose from seven different funds with varying degrees of exposure to equity.
  • Bonus component: Along with the basic benefits of a child plan, insurance companies also offer additional benefits. Even though these benefits are small, they could add value considerably in the long run. For instance, Invest 4G plan provides benefits such as wealth boosters, loyalty additions and return of mortality charges.

The eligibility to open a child education plan is similar to a child insurance plan. The entry age is generally between 18 and 65 years. The maturity age is between 23 years and 80 years. You can start investing in a child education plan with Rs 5,000 per month or Rs 50,000 per year. The policy tenure varies between 5 years and 30 years.

There is no universal minimum instalment for a child education plan. Every insurer has its own minimum limit, even different plans have a different minimum limit. Invest 4G plan has a minimum limit of Rs 5000 if you choose to pay monthly premiums. The minimum premiums for quarterly and half-yearly payment tenures are Rs 15,000 and RS 30,000, respectively. In the annual mode, the minimum premium is Rs 50,000.

Child education plan can either be unit-linked or non-linked. The interest rate of ULIPs is determined by the fund chosen by the policyholder and the performance of the market. The interest rate for non-linked child education plan is decided by the insurance company.

The policy for premature closure of child education plan deposit differs from insurer to insurer. Some insurers allow premature closure of child education plan deposit. If the account is closed before the lock-in period expires, the fund’s value minus the surrender charges id deposited in the discontinued policy fund. The amount earns a minimum of 4% interest and will be paid to you after the lock-in period gets over. It the policy is surrendered after the lock-in period, the total fund value minus the surrender charges will be given to you. But premature closure of child education plan can be fraught with risks and you may not achieve the stated aim. Invest 4G plan allows you partial withdrawals without surrendering the policy, which essentially disincentivises premature closure of the policy.

Child education plans come with flexible payout options. You can either set up a standing instruction for instalment payment when you buy the policy or inform the insurance company during the policy tenure. Insurance companies generally accept requests for instalment payment a few months before the maturity.

One of the defining features of child education policies is the partial withdrawal facility. Most insurance companies allow partial withdrawal from child education plans to take care of liquidity needs. Invest 4G plan allows partial withdrawal after the 5th policy year.

You can avail a secured loan against a child education plan. The loan can be used to fund the higher education of the child.

Child education plans are like child insurance plans with some slight differences. Child education plans have relatively shorter tenures than child insurance plans. Child education plans have milestone payments coinciding with the educational stages of the child. These plans have a limited scope and are not dynamic products like child insurance plans.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

Child education plan not just secures the financial future of the child but also provides tax benefits to the policyholder. The premiums paid for child education plan are eligible for tax deduction under Section 80C of the Income Tax Act. The maturity amount is also tax-exempt under Section 10(10D) of the income tax law.

While there are several child plans in the market, the Invest 4G plan is the best of the lot. Invest 4G with its unique proposition provides all-round protection to your child. With the online ULIP plan , you can decide the premium payment tenure and also the settlement option.

You can invest in a number of financial products for your child’s education. If you need a long-term savings instrument, the PPF is an eligible option. But if the child’s education is the sole aim of your investment, nothing is better than a market-linked scheme. Market-linked investments, especially equity investments tend to perform better in the long run. Investment in market-linked schemes can ensure handsome returns on your savings by the time your child grows up. Opt for Invest 4G plan to give your child a secure educational future.

Getting insurance required a visit to the bank or the insurer’s branch earlier. But with the popularity of online ULIP plans, getting an insurance plan has become extremely easy. You can buy a host of insurance products directly from www.canarahsbclife.com and get discounts on the premium from the company.

While the cost of insurance depends on a host of factors such as tenure, coverage and the mode of payment. With Invest 4G plan, you can start investing for the financial future of your child with just Rs 5,000 every month. However, if you are not clear about the cost of insurance for your child, you can use the ‘life insurance calculator’ in the ‘tools and calculator’ section of www.canarahsbclife.com. Similarly, you can use the ‘child education planning calculator’ to get an idea of the cost of child education plans.

Considering the flexibility in the premium payment tenure and the payout settlement, Invest 4G is the best scheme for the child. The Invest 4G plan also provides the premium funding option which ensures the financial stability of the child even in the absence of the policyholder.

To choose the ideal child insurance plan, you will have to start with planning the various stages of the plan and your child-specific milestone payments.

  • Paying capability: Just investing in a child insurance plan is not enough, you will have to pay the premiums regularly and timely to keep the policy active. Make a correct estimate of your paying capability and decide the premium payment frequency.
  • External factors: While buying a child insurance plan, consider the external factors such as inflation and interest rates before finalising the maturity benefit.
  • Premium waiver: The premium funding facility is a crucial feature for the success of the child insurance plan. Not having the premium waiver facility can leave a costly chink in your child insurance armour.

To choose the ideal child insurance plan, you will have to start with planning the various stages of the plan and your child-specific milestone payments.

Having life insurance has become a necessity and the earlier you buy one the better. Life insurance plans are cheaper when you are young. Moreover, when you are buying products such as ULIPs that have an investment component, having a long policy tenure helps in compounding your savings.

Most insurance companies have started offering online policies. You can either pay through offline mediums or opt for online ULIP plans. Buying insurance policies online is cheaper and hassle-free. The premiums can easily be paid through the website or mobile app.

There are three major rider benefits provided with child insurance plans.

  • Premium waiver benefit
  • Accidental death and disability cover
  • Critical illness cover
  • The frequency of the payout is decided by the policyholder while buying the insurance plan. Even if you fail to define the frequency of the payout while buying the policy, it can easily be rectified during the policy term.

    You can appoint a minor as nominee for your plan, but you will have to nominate an appointee who will have to give his/her consent to act as an appointee. The appointee will cease to hold power once the minor nominees become majors. In the event of a claim, of your nominee is minor and you did not name an appointee, the proceeds will go to the legal heirs.

    No child should give up on his/her dreams to study in premier institutes like IIT and IIM due to financial constraints. With the rising cost of higher education, investing in a child plan has become extremely important. Child plans help you save in a disciplined way for a secure financial future of your child.

    Canara HSBC Oriental Bank of Commerce offers a plethora of child plans to take care of varied needs. With unique features such as fund switching, premium redirection, change in sum assured and return of mortality charges, child plans from Canara HSBC provide unprecedented coverage.

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