Salient features of Child Insurance Plans
A child plan offers comprehensive coverage providing both protection and an investment opportunity and are available in both non-linked and linked types.
Sum Assured (SA)
The sum assured (SA) in such a plan is the monetary benefit that is paid out in event of the unfortunate or untimely demise of the policyholder(mostly the income earning parent) and can go upto 10 times the gross earning of the policyholder at the time of taking the plan.
This is the amount paid by the policy holder to avail this policy and is dependant on the sum assured opted for, the maturity benefit planned, the tenure or policy paying period and the age of the insured. One may opt to pay the premium annually, semi-annually, quarterly, and monthly mode of payment or even a single premium depending on their financial situation.
The Parent should choose the maturity amount based on the future requirements of the child’s future. Depending on the amount of money needed for future education, marriage, and the time (age of the child) at which it will be needed, the parent can ensure they plan for an appropriate maturity amount under the chosen plan.
Similar to the maturity amount, the policy term for the opted plan should also be in line with the financial corpus required at a future date and the premium paying capacity of the insured.
Waiver of Premium Benefit
Waiver of Premium (WOP) is normally a default rider of a child education plan because of its relevance to such a plan. This feature comes into if the policyholder dies or contacts a critical illness during the period of the policy and the insurance company waives the future premium payable under the said plan without reducing the insurance protection. The sum assured will be paid to the nominated beneficiary, while the due premium for the remaining policy term is waived by the insurance company.
This is an option which allows the parent’s to withdraw a part of the accumulated corpus under the said plan for any financial emergency that may arise during the tenure of the policy.
A ULIP Child education plan allow the policyholder to choose the type of fund in which they would like to make an investment (hybrid, debt, and equity)q as well as Dynamic Fund Allocation and Systematic Transfer Plan also.
Add On Riders
To ensure there is a more comprehensive coverage under the policy, there are a few riders that can be opted for by the policy holder. These riders include:
- Accidental Death and Disability Benefit – The Accidental Death and Disability Rider Benefit pay the extra sum assured in the event of your unfortunate mishap causing death or disability.
- Premium Waiver Benefit – This rider may be already added to the best child education plan, so check your policy document in this regard.
- Critical Illness Rider Benefit – Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases.