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What is a Child Endowment Plan?

dateKnowledge Centre Team dateDecember 09, 2022 views190 Views
Deferment Period Under a Child Insurance

Child endowment plans are life insurance plans which can help parents look after the responsibility of their child’s future. The challenges faced by parents are plenty in today’s fast-paced world. Parents not only have to provide for the necessities of their kids but also ensure that they get the best education, health care and career.

Sometimes, despite hard work and dedication, there are limits to what parents can do. Here’s where child insurance plans come into play.

Child Endowment Plan – Definition

Child endowment plans are a type of life insurance plan that helps parents to save money for the future expenses of their children. This savings plan offers tax benefits and is specifically designed to help parents make regular contributions into their child's education, wedding, or other major financial goals. The maturity benefit is paid to the child at the time of the occurrence of the event as per the plan.

There are many things to consider when planning for a child's education. The first step is to decide how much money you are willing to spend on education. Once you have decided how much you are willing to spend, you need to start saving for your child's education. After all, some goals such as quality education cannot be compromised.

Features of Child Endowment Plan

A child endowment policy is a life insurance policy with the added advantage of having a guaranteed maturity benefit. Some of the features of a child endowment plan are listed below:

  1. It helps you secure your child’s future: It is one of the best and most affordable ways to ensure that your child’s future is secured, even in case you are not around. Since it is a life insurance policy, it pays out a lump sum to your beneficiaries upon your death. The policy proceeds can be used to pay for your child’s education or any other expenses.
  2. It builds a habit of saving early: A child endowment plan encourages your child to start saving at an early age. As you know that the money saved will be used to secure your child’s future, you are
  3. It helps you avail tax benefits: A child insurance plan helps you avail tax benefits under Section 80C of the Income Tax Act, 1961. The premium you pay towards this policy is allowed as a deduction from your taxable income up to a maximum of ₹1.5 lakh. Moreover, the maturity benefits you receive are also exempt from tax.
Tax Benefits of chield Insurance Plan

  1. Enhanced Triple Protection (Smart Junior Plan): Life insurance sum assured paid on death, waiver of remaining premiums and Guaranteed Annual Pay-outs as committed to meet child's education needs.
  2. Premium Payment Terms: Flexible premium payment terms are available that can align with your goal and financial capability.
  3. Flexible Policy Terms: With child insurance plans, you may opt for any tenure between 12 and 25 years

When should you Invest in a Child Endowment Plan?

Child endowment plan is a great way of securing your child’s future. You invest in this policy for your child as a way of providing for their education and other future needs. The best time to invest in a child endowment plan is when the child is young. This is because the younger the child is, the longer the policy term can be.

Some factors to consider when deciding to invest in a child endowment plan include:

  • Safeguarding the child's future: The plan can help to secure the child's future by providing them with a financial safety net.
  • Supporting the child's education: A child endowment plan can help to fund the child's education, whether in a private school or university.
  • Funding the child's marriage: It can also help to fund the child's marriage if desired.
  • Gifting the child a fund pool for start-up ideas: Such plan can be used to gift the child a fund pool to help them start their own business.
  • Saving on taxes: The plan can help to save on taxes, as the money invested is not subject to taxation.
  • Supporting the child's future expenses: It can help to support the child's future expenses, such as buying a house or a car.

Child Endowment Plans from Canara HSBC Life Insurance

Canara HSBC Life Insurance offers the following plans that should give you assurance and peace of mind about your child’s future goals:

  1. iSelect Guaranteed Future

    • Protection: Life insurance cover throughout the policy term
    • Guarantee Maturity Benefit: Guaranteed Maturity Benefit to support your financial goals
    • Guaranteed Addition: Guaranteed additions during the last five policy years
    • Premium Protection Cover: Your family will be financially secure even if you are not around
    • Flexible Term: Pay premiums for 5,7, or 10 years depending on your financial goal
    • Tax benefits: Applicable as per prevailing tax laws

    Know more about - iSelect Guaranteed Future.

  2. Smart Junior Plan

    • Guaranteed maturity benefit
    • Life Insurance and Sum Assured in the event of unfortunate demise
    • Guaranteed annual pay out
    • Bonus: Accrued annual and final bonus, if any, will be paid on maturity.
    • Rebate: This plan offers a rebate on the premium payable if the Sum Assured is higher than or equal to Rs 4 lakhs
    • Loans: You can avail of a loan against this policy, once the policy acquires a surrender value.

Children should always have the best they can get. They should have the best schools, the best guidance, and a secure future. Unfortunately, this will not be the case if the sole breadwinner of the family passes away. Child endowment plans are designed to mitigate this risk so that the child’s future is not affected.

While the life cover is always there, you can also protect the maturity benefit. of the plan with the premium protection feature. This will allow the insurer to invest on your behalf and provide your family with the maturity value apart from the death benefit after your early demise. Thus, you guarantee your child’s future with a child endowment plan.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

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