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What Is Child Insurance Policy?
Why do we need child insurance?
Being a parent is a matter of great pride, but at the same time it is also a big responsibility. Every parent desire a secure future for their child. So, investing in a child insurance policy is the right step towards ensuring safe and secure future for the child.
What is child insurance?
It is a life insurance product designed for children in which the insurance company ensures that the future dreams of child are fulfilled even when the parents are not around. The insurance meaning with respect to child insurance is securing the future of the child by opting a child insurance plan.
In the child life insurance, the parent, who is the proposer, gets the life insurance cover and the child who is the beneficiary, gets the benefit of insurance policy. In another variation, grandparents can be the sponsor for child life insurance and the child becomes policyholder once he becomes an adult.
The entry age of child for this insurance is as early as the birth of the child, and the suggested age for the proposer is 18-21 years.
In case the parents die during the policy period, the policy will not lapse, and will continue till it reaches maturity. The premium which was being paid by the parents gets waived off due to waiver of premium rider and the policy continues as it is.
One can plan payout options in the child plan according to the future needs of the child.
The premium paid is eligible for income tax rebate under section 80 C of the income tax act 1961, and the benefits drawn are also eligible for tax rebate under section 10 (10D) of the income tax.
Child life insurance plans are the best method to save for the future requirements of the child like higher education, marriage, business or any other requirement that requires lots of money. The cost of education is rising day by day and rupee is losing its value due to inflation. The sum of money invested in child plans will grow over a period of time thus investments made in right time at right place helps in combating inflation.
Types of child life insurance -They are mainly of two types-
Unit linked plan (ULIP) – In this plan a portion of the premium paid is invested in the market. This gives higher maturity benefits.
Traditional endowment plan- These plans give fixed returns and the maturity amount is equal to the sum assured and the applicable bonus.
Further benefits of child plan:
The best child plan will have some additional features like option to avail loan facility on the amount of premium paid and in-built waiver of premium rider. Apart from this, the plan should have flexibility to accommodate other riders that are generally available with child plans like accidental death and disability rider and accidental total and permanent disability rider.
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