What Are Endowment Plans For Children
Updated On Jul 16, 2022
Table of Contents
A child endowment insurance policy is a life insurance plan that offers the dual benefits of life protection and savings under a single policy. It gives the policyholders the flexibility to choose the sum assured based on their specific needs and financial goals.
A significant feature of a child endowment policy is that the sum assured is a guaranteed payment upon the parents' death or when the child attains the maturity age. Additionally, the endowment plans also pay bonuses periodically.
Features And Benefits Of Child Endowment Insurance
- The minimum entry age for a child is 91 days, and the maximum change can range between 13 to 15 years, depending on the type of policy you choose.
- The minimum sum assured can be Rs. 1 lakh, and the maximum account can be Rs. 1 crore; there also plans that have no upper limit on the sum assured.
- Since the endowment policy is a long-term financial product, based on the policy you choose, it has a maturity age of 18-24 years. Once the child attains the maturity age, the insurer pays the sum assured and the accrued bonus. The amount can be used for a child's education or marriage.
- The premium paid for the endowment policy depends on the sum assured. It is usually a single premium or the regular premium, where you can pay the amount every month.
- In the event of parents' demise before the policy's maturity, the policy can be continued on payment of further premium until maturity.
- In the unfortunate event of the child's demise before the policy's maturity, the insurance company pays back the premium paid, the interest earned, and the accrued to the parents. However, parents can nominate another child and continue the policy with the same benefits.
- The premium you pay for child endowment policy is eligible for tax benefit under Section 80C of the Indian Income Tax Act to a maximum limit of Rs. 1 lakh in a financial year. The proceeds received on the maturity of the policy are tax exempted under Section 10(10D).
Conclusion
It is said, 'the best time to buy insurance is today.' So, go ahead and purchase a child endowment policy at the earliest and safeguard your child's financial future.
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