A child insurance plan is a good investment to make sure your child achieves your goal. The moment you have a child, you start planning for his future. You want nothing but the best for your child. One of the ways to ensure a stable future for your child is to offer a good education.
However, premier institutions at times have a higher cost, and the only way to meet these costs is to save as your child grows up. Child insurance plans are one of the strong investment options for your child’s goals. With child education plans you have two options of investment:
1. Invest safely towards a guaranteed sum of money in future
2. Invest aggressively and build a large corpus for your child
Both options offer adequate investment tenure. However, the child plan with an aggressive investment option lets you stop investments once your goal has been achieved.
For example, if you aimed to build a corpus of Rs 50 lakhs when your newborn child reaches 20 years of age, you have 20 years to build it. However, if your investments happen to achieve this within just 15 years, you can stop further investments.
This way, you can direct your savings to other financial goals while your child’s future goal is secured.
What is Waiver of Premium Rider?
Planning for a goal takes some effort. Even if you plan and think that you will get through with the plan, life may have other plans.
Suppose you have bought a child education plan for your little one. What will happen if you die unexpectedly and the policy still has time to mature? In this case, will your family be able to pay your premiums?
Will the death benefit that your family will receive be enough at the time your child attains the higher education age.
To tackle problems like these, you should consider the policies which offer the Waiver of premium rider option.
Waiver of Premium Rider in Child Insurance Plans
As the work of every rider, Waiver of Premium rider also enhances your existing policy’s scope. If you have opted for this rider, then the company will take care of the remaining premiums if you die during the policy term.
The investment portfolio of the policy continues even after your death, with the planned remaining investments as if you are still alive.
Thus, this rider ensures that your child will have the corpus you had planned upon maturity even after you are not there.
How does Waiver of Premium Work in Child Insurance Plans?
When you buy a child insurance policy, you are given an option to choose riders. While most of the insurance companies have this as an add-on to the policy, some have it included with the policy itself.
Let's consider an example to understand the working of this rider.
Ranveer takes a policy for his little girl when she turned 6. He took the policy for 15 years so that when his child turns 21 and starts his higher education, he would have enough funds to cover it.
However, Ranveer loses his life in an accident. At the time of his death policy still had five years’ premium due.
Since he had opted for a waiver of premium rider, the remaining premiums were waived off for the family.
Now the insurance company will take care of them. The policy will continue and his child will receive maturity benefits when he turns 21.
Benefits of Premium Waiver Rider
The waiver of premium has the following benefits
1. Reduces the burden on the family members
If you are the sole earner of the family then you should consider this rider to reduce the burden on your family.
2. Protects against critical illness and disabilities
If you suffer from a critical illness or lose your life due to an accident, etc, your remaining premiums are taken care of by the insurance provider.
Premium benefit rider will also be active when you developed a permanent disability that has restricted you from working and you cannot pay the premiums.
3. Helps you save tax
The premiums you pay will be eligible for tax deductions. You can avail of a deduction of up to Rs 1.5 lakh towards the premium that you pay for your child insurance plan u/s 80C.
4. Keeps your policy running
Your policy will not be ended once you die. It will continue to run and the benefits will be receivable by your child.
Child Insurance Plans With Premium Waiver Benefit
Child plans from Canara HSBC Oriental Bank of Commerce Life Insurance, such as Invest 4G and Smart Junior Plan, offer this rider.
Both these plans have Premium Funding Benefit. Here the company will itself pay the premiums that remain to be paid after your demise and that too in the same premium payment mode.
Additionally, both plans offer diversified investment options for your child’s future.
This ULIP gives you the benefit of both insurance and investment in a single product. It is a great option if you are planning to fund your child’s education. ULIPs give you a chance to invest in the fund of your choice and build a solid cash value for yourself.
Apart from Waiver of Premium Rider It also offers:
1. Multiple automatic portfolio management strategies to ensure your money continues to work and grow even when you are not watching
2. Flexibility in choosing the mode and the frequency in which you will pay your premiums. Options include
a. Single paymentb. Regular paymentc. Limited payment
3. Mortality charges that have been incurred are returned to you if you survive till maturity
4. Eligible for tax deductions u/s 80C and 10(10)D. Tax-free partial withdrawals after the lock-in period of 5 years
5. Loyalty additions and wealth booster bonuses added to your fund for:
a. Investing continuously for more than five yearsb. Staying invested for more than 10 years
6. Systematic withdrawals can help you pay the yearly fees of your child’s higher education without having to reinvest the money elsewhere
SMART JUNIOR PLAN
This plan is specifically designed in a way that can help you meet your child’s education without facing any obstacles.
It offers the following benefits:
1. Guaranteed Annual Payouts: In this policy, you will start receiving annual payouts starting from the 4th last year before the maturity year. This will help in making the yearly payments of schools or college fees.
2. Bonuses are accrued every year and get added to your fund value. Final bonus over and above regular bonuses are also provided.
3. Ability to take loans through the policy provided the policy has built a surrender value.
4. The higher you select your sum-assured, the more rebate you can avail. Having a sum assured of more than Rs 4 lakh will make your policy eligible for a rebate.
5. Eligible for tax deductions u/s 80C and 10(10)D
Thus, child education plans like Invest 4G and Smart Junior Plan can offer not only a great venue to save for your child’s future, but also safeguard it from mishaps. Do make sure to check the premium waiver or funding option while buying the plan.