Benefits of Investing in a Child Insurance Plan in 2026

Written by : Knowledge Center Team

2025-12-06

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Key Takeaways

Education costs are rising, and a child insurance plan helps parents build a secure financial future without stress.
These plans offer a dual benefit of life insurance and long-term investment with options like ULIPs and guaranteed returns.
Choose flexible payouts (lump sum or annual) aligned with your child’s academic or life milestones.
Get added protection with waiver of premium and disability cover, ensuring your child’s future stays intact even if you are not around.
Plans from Canara HSBC Life Insurance offer customisation, safety, and growth—plus tax benefits under Sections 80C and 10(10D).

Being a parent, it is your primary responsibility to protect your child's future against any unforeseen mishaps.

Did you know that the education inflation is rising by 10-12% annually? So, securing your child’s future has become very important now. A vocational course that costs a few lakhs today could rise to several lakhs in the next few years. Also, healthcare costs are increasing by 7%, which is very scary. In this scenario, a well-structured child insurance plan can help your child meet such expenses without financial strain, even in case you are not around.

Investing in a child insurance plan is a positive first step towards empowering your child so that they may solely focus on their goals without any worries. A child insurance plan not only enables you to create a robust financial security net to protect your child's dreams, but it also provides you with the benefits of long-term investments as well.

Let us explore why a child insurance plan is a must-have in your financial portfolio.

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Dual Benefit: Investment and Insurance

The two main purposes of a child insurance plan are:

Investment: It builds long-term savings that grow over time. Such investments in child insurance plans save you a substantial amount for your child's higher education or other major expenses.
Insurance: If, unfortunately, after a parent's demise, the insurance provider continues to pay the premiums on behalf of the policyholder. This is a promising way to secure your child's financial future.

So, you can choose between growth-oriented and guaranteed-return options when you consider a child insurance plan:

Unit-Linked Insurance Plan (ULIP): A mix of equity and debt funds to maximise returns while managing risk.

Endowment-Based Child Plan: Guaranteed returns with a fixed maturity amount for financial security.

Both options help you systematically build wealth and secure your child's future.

Did You Know?

Investing in early childhood development can bring up to 13% return each year through improved education, health, and economic results.

Source: UNESCO

Flexible Payout Options

One of the key advantages of child insurance plans is flexible payout options. The two prominent ways to receive the maturity benefits are as follows:

Lump Sum Payment: This type of maturity payment is suitable for funding major expenses. Higher education, marriage, starting a business, etc., are a few major expenses that can be covered
Annual Payouts: This is a very systematic way to cover ongoing education expenses. The child gets financial support at different stages of their academic journey.

This flexibility allows parents to plan and meet financial goals without unnecessary stress.

Protection Against Uncertainties

Uncertainties can be anywhere, and if you invest in a child investment plan, you will be relieved of several.

Waiver of Premium Benefit

In a child insurance plan, you will get a waiver of the premium benefit. Like, suppose the parent (policyholder) passes away during the policy tenure. In that case, the insurer takes over the premium payments. This helps the child to continue receiving the promised benefits without any financial interruptions.

Cover Against Disability

There is relief for people who encounter a serious accident or illness, such that they are not able to earn as much as before. If they had a child insurance plan, the insurer would cover all future premiums.

Collateral for Education Loans

Consider acquiring an education loan for your child if they plan on pursuing higher education. Most banks and NBFCs accept child insurance plans as collateral for education loans. This greatly facilitates the acquisition of funds needed for your child’s studies.

Long-Term Savings

Child insurance plans make it possible for you to steadily accumulate an ample corpus over time because they are intended for long-term investments. The funds can be used to cover different life stages, including:

Primary and Secondary Education
Higher Studies in India or Abroad
Marriage & Other Milestones

So, if you invest early in a child insurance plan, you will be able to take advantage of the compounding growth. The savings will grow remarkably by the time your child actually needs them.

Tax Benefits Under Sections 80C & 10(10D)

Along with securing your child's future, a child insurance plan also helps you save your taxes. It provides tax benefits under:

Section 80C: Premiums paid (up to ₹1.5 lakh per year) are tax-deductible.
Section 10(10D): The maturity benefits or any partial withdrawals after the lock-in period are all tax-free.

Emergency Fund and Partial Withdrawal Benefits

There is always a chance of emergencies popping up at any time in life. Several child insurance plans come with a partial withdrawal facility. This is an advantage for a parent to withdraw a portion of their investment if they need it to cover any unexpected expenses. Therefore, the policyholder can meet urgent financial needs without disrupting their child's long-term economic plan.

Top Child Insurance Plans from Canara HSBC Life Insurance

So, now you are well aware of advocating for getting your child's future secure with the best child insurance plan. Canara HSBC Life Insurance offers multiple child insurance products with varied features such as guaranteed returns, flexible premium terms, protection covers, and savings options. Depending on your financial goals, you can review detailed brochures and policy documents to select a plan that aligns with your needs.

1. Fixed Returns, Zero Risks & Worries (iSelect Guaranteed Future Plus)

Four plan options to suit different financial needs
Life cover combined with guaranteed benefits
Additional accidental death benefit
Premium protection cover for added security

2. Don’t Just Survive, Thrive (Guaranteed Assured INcome)

Three plan options offering financial growth and stability
Life cover with guaranteed income benefits
Receive total premiums paid at maturity
Early income benefits starting from the second policy year

3. Save, Dream, Plan. Live Peacefully (iSelect Guaranteed Future Plan)

Five plan options providing flexible savings and security
Choice of premium payment term (PPT)
Tax benefits for better financial planning
Premium protection cover to safeguard your child's future

So, do not wait and waste more time. Never let any financial issues mess with your child's ability to succeed in life. Choose the right child insurance plan and gift your child a strong foundation for economic independence, quality education, and a secure future. Take the first step and invest in a stress-free tomorrow for you and your child!

Glossary

Neuroplasticity: The Brain’s ability to form new connections, especially during early childhood development.
Emotional Resilience: Ability to handle stress and recover from emotional challenges effectively.
Child Insurance Plan: A financial product that secures a child’s future through savings and insurance benefits.
Riders: Optional add-ons to insurance policies offering extra benefits like illness cover or premium waivers.

FAQs

In India, most health insurance policies offer dependent coverage for children until they turn 25 years old. However, this age can differ according to the plan and the insurer you choose.

The minimum age for investing in a child insurance plan with Canara HSBC Life Insurance is 18 years.

When you invest in good child insurance policies, you can get complete benefits. It can include coverage for education, tax benefits, and even unforeseen circumstances. These plans help to secure your child's future financially, irrespective of whether you are planning for their education or other achievements.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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