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5 Steps to Remove Financial Barriers from your Child’s Future with an Insurance Plan

dateKnowledge Centre Team dateAugust 02, 2021 views114 Views
Child Insurance Plan | Buy Child Plan Online

A child’s aspiration keeps evolving throughout their childhood and is shaped by their experiences, learnings, and the environment that they are brought up in. At the age of five, your child may think of becoming a pilot that may subsequently change to becoming a scientist when they turn ten. By the age of fifteen, the animation may sound exciting to this teenager.

Whatever be the aspirations and however fickle they may sound, you will still want to plan well ahead of time. Some may want to buy the best child plan, while some may want to open an FD for their child. In the last two decades, several private universities have also come up across India and offer quality infrastructure, academic delivery, and a good learning experience. But these coveted degrees come at a cost. Even government-backed institutions are no longer as affordable as they were in the last century. If your eyes are set west, the costs would swell into crores.

In another unfortunate scenario, if you are not even around in the future to support your child’s career, who will help them realize those dreams that were nurtured all these years. In a hypercompetitive world where there is fierce competition for opportunities, a lack of quality education would be a major and permanent setback.



The best way forward would be to start investing early and do it systematically over the planned period. Investing in the right instruments that give you the required amount, at the right time along with the peace of mind is quintessential. The 5 steps listed below can help you navigate this path with ease.

1. Start With 10% of Your Income

If your child is 3 years old and needs money by the time they turn 18, you have 15 years to build a corpus. Allocating 10% of your income for this goal every year should be enough to start preparing for an uncertain future. So, if you are earning Rs.10 lakhs per annum, you must keep aside at least Rs. 1 lakh per year. This regular saving will give you a cushion to start with. If you can allocate a higher portion of your income, it will be even better. At an 8% interest rate, you will end up building an education kitty of close to Rs. 30 lakhs by the time your child is ready to enter University.

Learn how to build an education fund for your child.

2. Learn About Her Educational & Career Interests

Childhood dreams keep evolving and take shape by the time the child enters the teenage years. To help them make the right decision, you must expose him to a wide variety of opportunities right from middle school. Let them write for magazines, learn to code, play basketball, and even start an entrepreneurial venture.

By trying different ideas, their margin of error, in decision making while pursuing a career, would considerably taper down. Closely observing their inclination, passion and aptitude will give you a direction to work on a specific financial goal. For example, if they are an aspiring filmmaker you may evaluate options of admission to Vancouver.

3. Explore the Possible Scholarship Opportunities

Scholarships are a great way of reducing financial stress especially when you are applying to expensive private universities in developed countries. For the vast majority of research-based programs, Universities offer generous tuition waivers and teaching assistantship opportunities.

a. Non-Returnable Educational Grants

Closer home, you can apply for scholarships by multiple educational and enterprise trusts. Most of the scholarships offered by such foundations are grants that need not be repaid.

b. Interest-Free Loans from Educational Foundations

Interest-free loan scholarships are also very attractive because you end up saving interest on education loans availed from Banks. Few educational foundations offer such loan scholarships for post-graduate studies.

Should you depend on education loan to fund your child’s dreams?

For example, on an education loan of Rs. 30 lakhs, repayable at a 10% interest rate over 10 years, you will have to pay Rs. 18 lakhs as interest. If you avail of an interest-free loan scholarship of Rs. 30 Lakhs, you save a neat Rs. 18 Lakhs

Education Loan
Amount Spent on Education Rs. 30 Lakhs
Amount Spent on Interest Rs. 18 Lakhs

4. Buy the Best Child Insurance Plans

If your child is admitted to a 4-year BE degree program at a prestigious private technology institute, you will need approximately Rs. 25 Lakhs to be paid over 4 years. So how do you fund your child’s dream without straining your finances?

Investing about Rs. 1 lakh each year for 15 years can fetch you a cumulative return of approximately Rs. 25 lakhs. The 1 lakh that you invest each year is deductible from your taxable income, under section 80C of the Indian Income Tax Act.

The maturity value received from the child plans is also exempt from tax. Canara HSBC Oriental Bank of Commerce Life Insurance provides the following child education plans you can meet your child’s goals with:

One of the best features of the child plans is that they also provide financial protection to the child’s goal in case of your untimely demise. In case of your early demise, the insurer can continue investing on your behalf and provide the intended maturity value to your child.

5. Revisit & Revise the Investment Every Few Years

In the initial years, you must aggressively invest in equity funds that can hasten wealth creation. For example, in the Invest 4G plan offered by Canara HSBC Oriental Bank of Commerce Life Insurance, you can specify the exact % allocation to either equity or debt.

Periodic rotation helps you take advantage of market movements and keep your portfolio working in all conditions. In case you are looking for guaranteed maturity value, Guaranteed Savings Plan is a perfect choice.

The key, however, would be to continue increasing your investment as your income grows to maintain the ratio of income to savings. This will help you not only build a better corpus but also meet any unexpected demands in the future. The 5 steps mentioned above will enable a clear thought process and let your money grow while you focus on the apple of your eye!

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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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