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Best Saving Plans for Your Kid's Education

dateKnowledge Centre Team dateFebruary 04, 2021 views155 Views
Best Saving Plans for Your Kid's Education

Savings plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance will meet your child's all educational needs. The plan is a protective cover for any unforeseen incidents in future. The bank assures providing the lump-sum payout on the investment made by you.

Benefits Offered by Savings Plan for Kids

  • Annual payouts are provided on the investment made for child education.
  • Bank offers multiple saving plans to ensure that you choose the one which is best suitable for you.
  • Flexible premium payments are offered to ensure that your other saving plans are not affected.
  • Apart from the regular bonus, additional bonuses are also provided on the maturity of the policy.
  • More benefits are provided if you choose the higher premium plans.
  • You can avail the tax benefit and premium benefit under Section 80C and Section 10(10D) of Income Tax Act, 1961.

How Does the Plan Works

  • You can customize your plan according to your child's educational requirements:
  • You can choose plan checking the sum assured like: The Guaranteed Annual Payouts and the Guaranteed Sum Assured when the policy matures.
  • You can choose a plan for checking your child's age. The ideal way of choosing the plan is 22 years of your child's age minus your child's current age.

Choose the Policy Term Based on your Child's Age

Child Age (Years) Suitable Policy Term Premium Payment Terms Available (Years) Start of Guaranteed Annual Payouts Payment of Guaranteed Sum Assured on Maturity with Assured Annual bonuses, and Final bonuses if any, on child age
2 20 years 5, 10, 12 18 to 21 years 22 years
4 18 years 10 18 to 21 years 22 years
5 17 years 9 18 to 21 years 22 years
8 14 years 6 18 to 21 years 22 years
7 15 years 5, 7 18 to 21 years 22 years
10 12 years 5 18 to 21 years 22 years

Product at a Glance

Parameters Descriptions
Entry age Minimum of 18 years

Maximum 50 years

(If the person chooses a monthly plan, then the maximum age will be 40 years)
Maximum Maturity Age 70 Years
Policy Term 2 to 15 years
Premium Payment Term The premium payment will be based upon the chosen policy term, explained below:
Premium Payment Term (in years) Policy Term (in years)
Policy term minus 8 years 13 to 25

(a person can choose any suitable term)
5 12, 15,20
10 9 to 25

(a person can choose any suitable term)
Sum Assured Minimum Sum Assured:

Annually: Rs 3,00,000

Monthly: Rs 5,00,000

Maximum Sum Assured: There is no limit for a maximum assured sum
Premium Payment Mode and Model Factors or monthly mode, the annual premium amount will be multiplied with the factor of 0.09 to get the monthly premium instalment
Minimum and Maximum Premium Minimum Premium: Depends on Age, Sum Assured, Bonuses, etc.

Maximum Premium:

There is no limit for Maximum premium, it depends upon the BAUP of the company.

Benefits of Savings Plan for Kids

1. Survival Benefit

You will receive the Guaranteed Annual payouts when the last four-year policy ends till the maturity year of the policy. The annual amount will be paid, according to the table mentioned below:

At the end of the Policy Year The Payment as % of Sum Assured
Policy Term minus 4 20%
Policy Term minus 3 20%
Policy Term minus 2 20%
Policy Term minus 1 20%

2. Maturity Benefit: On the survival until the policy's maturity, you will get the Guaranteed Sum Assured, which is equal to 20% of Sum Assured you would also get Annual bonuses and Final bonuses if there are any.

Death Benefit

In case of any unforeseen death, the family member of the deceased will be provided, with the following benefits:

A. Immediate Lump Sum Benefit: Which will be higher then

  • Sum Assured
  • Ten times higher then annualized premium
  • 105 % higher than all the premiums paid till date

I. Guaranteed Annual Payout: All the guaranteed annual payment will continue to be payable till the policy ends or till it reaches its maturity year.

Ii. Guaranteed Sum Assured: 20% of Sum Assured will be paid on the maturity of the policy.

Iii. Bonuses: Annual bonuses and Final bonuses (if there are any) will be paid, on the maturity year of the policy

3. Bonuses

  • Annual Bonus: Annual bonus is paid on the policy calculating the percentage of the sum assured. The bonus may be paid, at the end of every year based upon the company's profit.
  • Final Bonus: Final bonus, if there are any, will be calculated based upon profit, the company gets on your policy fund.

There is no guarantee that the person is going to get the annual bonus or final bonus. It is requested to check the term and condition applicable to your policy or contact the authoritative person for more clarification.

What Will Happen if the Person Stop Paying the Premium Amount

If you choose to stop paying the premium amount, it will impact the policy value and your intended goals that you have set to nourish your child's future. If you can't pay the premium amount for a certain time, you can take the policy loan (after checking the terms and conditions).

If you have not paid the premium amount within 30 days, (X=2 and 3 for Premium Payment Term of <10 years and >= ten years), then your policy will be terminated, and you will not receive the insurance cover benefit.

4. Paid Ups

The policy will get the paid-up amount from the 30 days of the policy to the date of unpaid premium from the first two years (or three years). As soon as the policy gets into the paid-up state, the person will start receiving the paid-up amount on the policy's survival or maturity value, whichever is earlier.

The benefits are as follows.

  • Reduced Survival Benefit

    The reduced guaranteed payouts on survival benefits will be 20% of the Sum assured multiplied by the total number of premiums paid by the person and divided by the total number of premiums payable during the policy term. This amount is paid by the end of every year till the maturity of the policy.

  • Reduced Maturity Benefit

    The guaranteed Sum assured on reduced maturity benefit will be the total of, 20% sum assured on the policy multiplied by several premium amounts paid by the person and divided by the number of premiums paid during the policy term. This amount applies to the maturity of the policy. Annual bonus amount is paid, with the final bonus amount. Once all the amount is paid, the policy automatically gets terminated.

  • Reduced Death Benefit

    The immediate amount is paid, to the person or nominee of the account holder. The immediate amount is 105% the total of all the premiums paid till the date of less, or any extra premium paid.

  • Reduced Guaranteed Annual Payout

    It is paid, at the end of each year, till the maturity year. Annual bonuses are only paid, at the time of maturity of the policy.

5. Surrender

A person can surrender the policy anytime they want. The surrender value of the policy is higher than the Guaranteed Surrender Value or Special Surrender Value also the Special Surrender Value will be calculated after the payment of an amount to 10 years. The Guaranteed Surrender Value will be the calculated basis on the total premiums paid.

Other Benefits

1. Loan Benefit

The loan benefit will be available as soon as the policy meets the Surrender value. The minimum loan amount that the person can get is Rs 20,000 and the maximum amount should not exceed more than 80% of the Surrender Value present at a particular time.

2. High Sum Assured Rebate

The plan will offer the Sum Assured will be higher or equivalent to 4,00,000. The Sum Assured is explained, with the help of table written below:

Sum Assured Rebate Amount
Less than 4,00,000 0.0
4,00,000 to less than 5,00,000 0.9
5,00,000 to less than 7,50,000 1.5
7,50,000 to less than 10,00,000 2.2
10,00,000 to less than 20,00,000 2.6
20,00,000 to less than 50,00,000 3.1
More than equal to 50,00,000 3.5

3. Tax benefit

The tax benefit is given to the person under Section 80C and Section 10 (10D), according to the Income Tax Act of 1961, which is changed and amended time to time.

Terms and Conditions to Remember

  • The Age in policy term means the "age on your last birthday,"
  • The advanced premium is to be paid, in the same financial year. Whereas, another financial premium will be collected based on a premium of the previous year.
  • The premium collected on the advance will be adjusted, on the due dates of premiums.
  • Guaranteed Annual Payouts are not given, on the termination or lapse of the policy.

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Frequently Asked Questions

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns if you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

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If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

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Smart Goals Plan is a savings plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable for girl child?

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

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A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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What is a good age to start saving money?

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Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Buy the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits, which makes them a good investment choice for investors looking for income plans.

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