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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 (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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