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Key Features of the Best Child Insurance Plan

Published On Aug 07, 2021

A child insurance plan offer lots of useful features to the policyholders in order to ensure a protection and high returns. It is very important for each and every parent to have a child insurance plan in order to safeguard the future of their children financially. These insurance plans are available in both linked and non-linked categories.

Here’s a list of some of the useful features offered under the best child insurance plan:

1. Waiver of Premium Benefit

An inherent feature of a child insurance plan is the waiver of premium benefits. It is applicable in case of the demise of a parent in a specified time period. In this case, the payment of the sum assured would be done to the nominated beneficiary, whereas the premium due for the remaining policy duration is done by the insurer. At the policy maturity, a child is entitled to get the maturity amount mentioned in the policy document.

2. Sum Assured

A sum assured is the amount of money paid by the insurance company to the nominee in case of the unfortunate demise of the policyholder. Generally, it is recommended for a sum assured to be more than 10 times the present gross salary of the customer.

3. Higher Returns

All the market-linked child insurance plans provide returns to the policyholder of more than 10-12%. Most of the government insurance schemes such as Sukanya Samridhi Yojana provide much lower returns and cannot beat the inflation.

4. Partial Withdrawal

It is quite often observed that parents instead of waiting for the insurance plan to mature, wish to withdraw the fund value in several portions as and when they need it. This is commonly done to satisfy the financial requirements of their child at specific life phases. Various child insurance plans come forward with an option of partial liquidity once the child turns the age of 18 years.

5. Financial Protection

In the event of the demise of a parent, a child insurance plan pays a lump sum amount to the nominee. This amount is totally free of tax and is generally enough to pay off any immediate debts so that the education of a child is not impacted.

6. Additional Riders

There are some riders available, which enhances the coverage of your child insurance plan. These are again divided into three sub- categories:

7. Premium Waiver Benefit

It is possible that this rider option may already be included in your best child plan, therefore, make sure to check your policy documents.

8. Critical Illness Rider Benefit

This rider benefit provides coverage for a pre-specified set of critical diseases.
Accidental Death and Disability Benefit: This rider pays an additional sum assured in case of any unfortunate accident or mishap leading to disability or death.

9. Tax Benefits

All the plans under the child insurance falls under the bar of highest tax exemption i.e. E-E-E category. This is the highest tax benefit grade accorded by Indian Tax Laws to schemes such as the Public Provident Fund or PPF.

At the time of buying a child insurance plan make sure to check for all of the afore-mentioned features in order to secure the best child plan.

You may also like to read - Benefits of a Child Insurance Plan

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

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