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A child insurance plan combines the features of a long-term investment option and life insurance. This combination offer financial safety to your child’s future through:
On maturity, the child plan pays a lump-sum amount which can be used for child’s higher education fees and marriage expenses. It offers the needed safety for a child’s future in case of your untimely demise or suffering a terminal illness.
While you are building the corpus to fulfil these goals for your child, the insurance plan provides a safety cushion to the corpus in case of your untimely demise. In the unfortunate event of your passing away before fulfilling the goal, the plan can invest the money on your behalf and give the maturity amount you originally aimed for your child
Child insurance plans from Canara HSBC Life Insurance also offer periodic payouts of the corpus you have built to align with your child’s financial needs. These periodic payments can coincide with the crucial milestones of your child’s life like education, marriage, etc.
Invest 4G Plan
A Unit Linked Insurance Plan (ULIP)
Invest in a diverse portfolio of equity and debt funds
Never miss a market opportunity with automated portfolio management
Boost your corpus growth with Loyalty Additions & Wealth Boosters
Policy returns the mortality charge
Protect your child’s dream with Goal Protection Option
Smart Future Plan
A Unit Linked Insurance Plan (ULIP)
Invest in a diverse portfolio of equity and debt funds
Option to change life cover amount during the policy term
Protect your child’s dream from your untimely death or disability
Manage your investment portfolio automatically
Tax-free partial withdrawals after five years
Jeevan Nivesh Plan
Endowment plan with whole life cover option
Add growth to your investment with accrued annual bonuses
Meet your child’s goal and leave a legacy for her with a single plan
Save tax on investment and tax-free maturity value
Money Back Advantage Plan
Three guaranteed money backs
Guaranteed maturity benefit
Add to the growth with a bonus at maturity
Fulfil multiple milestones in your child’s life with a single plan
Limited premium payment term
Save tax while investing and tax-free maturity values
Smart Junior Plan
Guaranteed annual pay-outs to match your child’s needs
Protect your child’s dream from your untimely death
Faster corpus growth with annual bonuses
Customize the investment and pay out plans as per your needs
Save tax on invested money and tax-free maturity values
A child insurance plan helps you to secure the future of your child by ensuring that his goals are met even if you are not there.
Just like any other insurance plan, a child plan also requires you to pay regular premiums. The premiums you pay are allocated to your chosen funds in the child investment plan. You can choose various modes available to pay your premiums for the child policy. These are:
For instance, Ajeet is starting to save for his 5-year-old daughter’s higher education and marriage. He plans to invest Rs 10,000 monthly in a child savings plan with a life cover of Rs 12 lakhs, for the next 15 years.
Ajeet will be entitled to receive the maturity benefit from the child savings plan. This is the fund value of the investments he has made into the child plan and any bonuses. Depending on the type of child insurance plan, Ajeet can either receive the lump sum or convert the sum into a regular pay-out.
If Ajeet does not survive the policy term, then his daughter will receive the death benefit. This will be higher than the sum assured or the fund value at the time of death. If Ajeet had opted for the premium protection benefit the child investment plan will continue after paying the death benefit. His daughter will receive the maturity value upon the expiry of the plan.
Child insurance plan is a widely available financial product and most insurers offer it with different riders to appeal to a wide variety of customers.
Child Endowment Plans offer a safe investment option for your money by offering guaranteed maturity benefits. These child investment plans are best when you know the amount that you will need for the goal.
Also, with guaranteed benefits and goal protection options you can be sure to achieve the goal even if you cannot be there for your family.
Child Endowment plans offer a savings avenue along with a life cover that ensures your financial goals are well-protected even in your absence.
Child moneyback plans offer a long-term safe investment option for your child’s future. These plans are best when you will need money over multiple years for your child’s goal, for example, a four-year undergraduate course which needs an annual fee.
Money back child plans also offer bonuses to aid the growth of your investment. These bonuses add to your plan’s maturity value.
These are one of the best child plans as you enjoy the benefit of a life cover while getting a portion of the sum assured at regular intervals.
Child savings plans are generally ULIPs that give more freedom to you as an investor. You can choose the amount of risk you want to take on the invested money. You can also use one or more automated portfolio strategies to benefit from market movements.
Child savings plans like Invest 4G from Canara HSBC Life Insurance also offer additional bonuses for long-term investors. You can withdraw money from the accumulated corpus after completing five policy years. Withdrawals are tax-free, so you have the freedom to withdraw at any time after the lock-in period.
Life cover is an integral part of most investment plans from life insurers. A child saving plan also includes a cover on the life of the policyholder. This will protect the child’s dream in case anything happens to the policyholder during the term of the child's policy.
The child investment plan will continue to invest the due premiums in your child’s goal after your untimely demise. This option ensures that your child can achieve their goal even after your death, without having to pay any extra premiums.
Child education plans and endowment plans offer the option of systematic withdrawal or automatic payments from the plan in the final few policy years. This allows your child to meet the financial needs which may arise gradually.
Participating child saving plans and unit-linked plans offer rewards for staying invested for the long-term. While ULIP will add units as loyalty additions and wealth boosters endowment and money-back child plans accrue annual bonuses. These bonuses are payable with the maturity value of the child policy.
Child endowment and moneyback plans acquire cash value after two years of investment. Thus, in case of emergencies, you can take a loan against the policy without having to break the investment. Child ULIPs, on the other hand, offer partial withdrawals after the five-year lock-in period.
Child insurance plans come with a variety of riders. The most prominent add-ons offered with child investment plans are critical illness cover, accidental death cover and the premium waiver option. Some insurers offer the premium waiver option as an in-built feature of the child policy. The critical illness cover protects against a set of terminal diseases, while the accidental death cover provides an additional sum in case of accidental death.
A part of the premium paid for a child investment policy is invested in market-linked assets. The insurance company provides the policyholder with an option to choose from different funds. The funds under the child saving plan invest in equity, debt or money market instruments.
An important feature of a child insurance plan is the premium waiver benefit. In case the policyholder dies in a stipulated duration, the beneficiary gets the sum assured and the insurance company continues to pay the remaining premiums till the maturity date. The child saving plan from Canara HSBC Life Insurance, Invest 4G, provides the premium funding option apart from other features.
After your death, the death benefit is provided in a lump sum, i.e., the whole amount in a single payment. In Child education plans such as Smart Junior Plan, you receive guaranteed pay-outs in a lump sum, starting from the last 5 years of the child policy. This can be used to pay off any debts or loans you left unfulfilled.
The schools and the education system have been getting more and more advanced. Due to this, their fees are constantly rising. For higher education, the cost is even more. So, it becomes important to plan the education of your child keeping in mind the future costs.
That’s where a child education plan can help you. The premiums you pay over some time are invested and can help create a corpus that will be sufficient to meet your child’s education goals such as post-graduation and studying abroad.
The primary focus of a child insurance policy is to safeguard your child's future. But this is not the only way a child investment plan can help you. It can come to your rescue within the policy term as well. Plans such as Canara HSBC Life Insurance Invest 4G has an option of partial withdrawals.
It allows you to withdraw from your corpus from the child saving plan only after five years of starting the investment. The withdrawals are tax-free. These can help you in emergencies such as health issues of your child, or accidents that can dig a hole in your pocket.
Even if you think that you will have enough to fulfill your child’s goals, life is unpredictable and preparation is better. You can ensure that your child’s goals are financially protected, even if you are not there.
Child education plans come with a life cover and premium protection. Your family is provided with a lump sum death benefit. Also, the premium protection feature of the best child investment plan ensures that your family doesn’t worry about the premiums as they will be waived off and paid by the company.
Lump-sum money will help you take care of the larger expenses. But other regular expenses happen more frequently. When you die, your income also stops. This can affect you, even more, when you are the only breadwinner for the family.
Many child insurance plans offer you regular pay out as well. After your death, your child will receive a monthly sum. This can help replace your income and makes sure your child doesn’t suffer.
Child insurance plans are an asset with a value which continues to increase until maturity. You can also use your child policies, especially child endowment plans, as collateral for a low-cost loan. This will help you secure a loan for your child for his education or even for their marriage later on.
Some insurers allow the insured to increase the sum assured mid-way through the policy term without any change in the premium. Changing the sum assured of your child's investment plan as per your life stages and financial milestones can help you in staying aligned with your goals.
Child investment plans like Invest 4G and Smart Future Plan from Canara HSBC Life Insurance have portfolio investment options. You can invest in diversified portfolios of equity and debt securities through these plans.
Thus, your investments in a child plan can earn inflation-beating returns through market securities over the long investment period.
A child insurance plan helps you create a corpus for your child’s needs. Having adequate funds in times of need is critical for your child’s growth. With premium funding option, your child’s future will be secure even if you meet with an unfortunate incident.
Buy an endowment policy as soon as possible to cater to the needs of your child. The best time to buy an endowment plan is now.
If you have to save Rs 12,000 in a year, it is better to save Rs 1,000 every month rather than Rs 6,000 in the last two months. A child insurance plan helps you maintain discipline while saving for your child’s future. With the monthly payment tenure of Invest 4G plan, you can set aside small amounts for your child’s future.
Children are delicate and often fall ill. Child insurance plans provide an option for partial withdrawal of funds without surrendering the policy. The partial withdrawal facility can be used for medical treatment of the child.
A ULIP can help you stay prepared for the unforeseen future in case something happens to you. So, it can be said that ULIP is a good form of investment if you have a resilient financial plan.
The following features and benefits of a child insurance plan help secure your child’s future:
The best child education plan for you should be the one that can solve your purpose in the most optimum way possible. There are some factors that should be considered before you decide to buy a child plan.
Starting early gives your child's savings plan ample time to grow your money. You also get more time to make adjustments and achieve a bigger goal than you initially intended.
Inflation keeps on shifting your goalpost for the child’s plans. However, planning your child plan investments with after-inflation costs would let you catch up to it in the long run.
Premium waiver benefit allows your child's investment plan to continue without the need for additional premiums. This option comes into force if you suffer from a critical illness or accidental disability which affects your income.
Such emergencies do not allow for death benefits but they can affect your plans. However, with the premium waiver benefit, you can rest easy as the child will receive the intended maturity value.
If this feature is available in the plan, then the premiums will be taken care of even after you die. The company funds all the premiums that remain to be paid after your death under this option. Thus, the policy continues even after your death and your child will get the maturity benefit as promised by the company.
This feature makes sure that your family does not have to worry about the premiums.
A partial withdrawal facility allows you to withdraw money from your fund. This comes in handy in the time of emergencies when you are in need of quick cash.
You should look for the policy that provides you the option of partial withdrawals. Policies such as Canara HSBC Life Insurance Invest 4G offers you this option. Partial withdrawals made after the lock-in period of 5 years are tax-free as well.
Riders are the additional benefits offered over and above the policy which enhance the scope of your existing policy. Riders cover those things that are not covered by the base policy. Some of the most popular riders include the following
Though some riders are added by default in some policies, some add to the cost of your premium. You should choose the policy that has the most rider options available to get the best from your policy.
There should be multiple options to pay your premium. You must be able to pay as you like. Many policies have the option of limited payment. This means you pay your premiums for a limited time and enjoy the benefits of the policy for a long.
For example, Smart Junior Plan has a limited payment facility. If you have chosen a policy for 20 years, then you have to pay up to 10 years only.
The purpose of the child insurance policy is to provide your child with the money which will help in his education or other goals. This money should be present when needed.
Plans such as Invest 4G has the option of systematic withdrawals that makes regular withdrawals from your fund. This helps create a regular income stream.
This is also an important factor to look for before you buy a policy. The insurance provider levies charges on the maintenance of the policy. Some of the charges associated are:
Choose the policy that has the lowest charges involved.
Understanding the benefits and exclusions of your child policy allows you to ensure that the policy will be useful in every situation. For example, how much is the regular payment from the plan, which events are covered under the policy, etc.
Before buying a child insurance plan, you must be sure of how much you should invest. Education, as we know, is getting costlier with each passing year. School fees are rising constantly. Also, if you want your child to go for higher education in the field of engineering or medicine etc, then the cost is even more.
Thus, to make sure your child can pursue what they want, your income may not be enough, and you need to invest in a child education plan as well. But how much should you invest?
Well, this depends on the educational course and institution you are targeting. You can plan your monthly savings into the child education plan accordingly.
Here are the steps you should follow to know how much to invest:
Education is one area with one of the highest inflation rates. Thus, it becomes even more important to plan for your child’s education as early as you can.
For example, suppose, you are planning for an MBA for your child, 10-15 years from now. Here’s what your child saving plan can look like:
|Institution||Current Cost||Cost in 15 Years*||Monthly Savings Needed*|
|Premier A||25 Lakhs||52 Lakhs||₹15,000|
|Premier B||20 Lakhs||41.5 Lakhs||₹12,000|
|Premier C||15 Lakhs||31.2 Lakhs||₹9,000|
* Assuming inflation rate of 5% p.a. and CAGR on Child investment plan of 8% p.a.
There are certain things in the child insurance policy that are excluded from the policy. This means that these things are not covered and the insurance company will not provide any benefit if death is due to anything that is excluded.
If the death is due to suicide or self-harm. Under plans such as Invest 4G, if the death is due to suicide within 12 months of commencement of the policy, then 80% of the premium paid or surrender value is paid.
If you die due to consumption of drugs that are not prescribed or excessive intake of alcohol, then also no death benefit is payable.
If you die due to war (declared or not) or any type of civil commotion, your family will not receive the death benefit.
There are certain adventure sports that pose a risk to life such as sky diving, mountaineering, scuba diving, etc. If you die due to participating in these games then your coverage ceases to exist.
If you die during indulging in any activity that is considered criminal or illegal, then this will also not be covered in your child insurance plan.
Child insurance plan is an investment option designed to serve as a wallet for major life goals of a child. Be it higher education, hobby, or marriage child insurance plan gives you the benefit of investing, growing and using your money as per your child’s needs.
If you mean to provide for your child’s education goals the plans can work as child education insurance. The plan will help your child achieve the goal even if you cannot be there.
Few more important reasons to get going with a child insurance plan at the earliest are:
A child education plan is an insurance plan for children and an investment asset to meet their educational goals. A small part of the child education plan is used to provide the financial security of insurance, while a bigger part is invested in market-linked instruments. This combination of insurance and market-linked portfolio investments ensures adequate safety for your child’s future.
Any parent with a child between 0-15 years should buy a child insurance plan. It gives inflation-beating returns for various needs of the child while they grow up. As a child grows up, their financial needs increase substantially.
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:
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.
Child insurance and education plans are life insurance plans. Thus, the money you invest in these plans is deductible from your taxable income under section 80C of the Income Tax Act. Every year you can claim a deduction of up to Rs. 1.5 lakhs by investing in these plans.
After the respective lock-in periods (for different types of child insurance plans) the ULIPs may allow partial withdrawals while other plans acquire cash value. So, in case of an emergency, you can withdraw money from the child plan without stopping your investment. Also, any payments made by the plan before maturity, as in endowment and moneyback child plans, are exempt from tax.
Maturity proceeds from child education plans are also tax-free under section 10(10D) of the income tax act. Only two of the following conditions may apply after the Union Budget of 2021:
While the cost of insurance depends on a host of factors such as tenure, coverage and the mode of payment. You can use the ‘child education planning calculator’ to get an idea of the cost of child education plans. The amount you will need to invest in your child’s education now depends on your child’s current age, the targeted institution and course fees. Also, before you start investing make sure to account for inflation in the higher education cost. For example, if your intended course costs Rs 25 lakhs now, it may cost close to Rs 50 lakhs 15 years later. You will need to save about Rs 15,000 p.m. for 15 years to meet this goal.
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 their 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.
A child insurance plan is the best investment option to provide for your child’s future under every circumstance. Child investment plans can offer you a market-linked return on investment along with a safety umbrella of a life insurance cover. Thus, they are the best investment modes to invest in your child’s higher education and marriage goals. Plans like Invest 4G and Smart Future Plan offer both of these benefits for your child’s future. 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.
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.
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.
If you have opted for the premium protection option, your policy will pay the minimum guaranteed sum assured to the nominees upon your death. But the investments in the policy will continue, where the insurer will bear all remaining future premiums.
However, if you have not opted for the premium protection benefit, the policy will pay the higher sum assured or the fund value upon your death. The policy terminates after paying the benefit.