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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.
Tata AIA Life Insurance
Child Insurance Plans
Secure the financial future of your child today with our savings plans.
Life insurance is meant to secure the lives and the future of your loved ones, and as far as your children are concerned, you would want to give them the best life insurance coverage. However, some policies for children are also designed such that one of their major milestones – education – can be completely taken care of with a bit of planning and preparation in advance.
With Tata AIA Life Insurance, you can avail of a child insurance plan or a child education insurance plan that not only secures your child and their future against unforeseen uncertainties but also provides financial support during their educational journey and future aspirations.
Use our online Savings Calculator to know how much you need to invest today to secure your child’s education and financial future.
Non-Linked, Non-Participating, Individual Life Insurance Savings Plan (UIN: 110N158V06)
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What is a Child Insurance Plan?
A child education insurance plan is a type of comprehensive life insurance policy that enables you to create a savings fund for your child and protect them with a life insurance cover.
Such a plan comes with multiple benefits, such as a maturity benefit and a life cover that ensure a financially secure life for your child, be it today or in your absence.
Planning a child insurance plan in advance can help you build a financial corpus during the policy term you choose. Then, once the policy reaches maturity, the financial benefits can be availed of and can be utilised to pay for the child’s education, vocational training and so on.
Under a child insurance plan, the life insured is not that of the child but of the parent who purchases the policy. If case you have opted for the waiver of premium rider^, in the event of the insured’s untimely death of the life assured during the policy period, which removes the burden of the policy’s premium payments from the child’s shoulders. Hence, until the end of the policy term, your child can enjoy the policy coverage and then also receive the maturity benefits for their financial security.
Why Do You Need a Child Plan for Education?
Like any other service or commodity in today’s time, quality education has become quite expensive and is still not affordable for many people. This becomes a problem since the expense of getting access to good education is a roadblock for several children who are keen to learn and grow. Parents can choose to dip into their savings funds to educate their children but risk destroying a financial emergency backup.
This is why an insurance policy for children has become important. With such a plan in place, parents can plan ahead and save for their children’s education so that there are no shortcomings when it comes to giving their children the best education money can buy!
Given below are some more factors why one should buy a child savings insurance plan:
Financial Security
Financial Security
In case of an unfortunate event, if the parent passes away, the life insurance policy will pay out a lump sum amount to ensure that the child is able to continue their education even in the absence of the premium payments resulting from the parent’s death. This tax# free amount can pay off the fees and any pending debts so that the child’s education is not obstructed.
Shield against Inflation
Shield against Inflation
The rate of inflation in the education sector is close to 11-12 per cent*. Suppose your child wants to pursue their education in a good school; immediately making such arrangements will compromise your emergency savings. Hence, it is better to opt for a child education insurance policy that can pay for the tuition fees of your child, no matter which educational institution they choose.
Cost of Foreign Education
Cost of Foreign Education
If you get a good life insurance education plan for your child well in advance, it can help you choose a renowned university for them if you plan to have them pursue their further education abroad. Even specialised courses can be really expensive, but with the help of a good insurance policy for education, these expenses can be conveniently covered.
Savings for Education
Savings for Education
Depending on the type of policy and the sum assured you choose, a life insurance education plan for your child can offer sufficient funds needed for your child’s educational needs. Be it tuition fees or additional coaching, the plan ensures that your child has everything they need!
For Medical Emergencies
For Medical Emergencies
A child insurance plan can offer a provision for making partial withdrawals or offer payouts in the event of a health emergency, such as sickness or an accident leading to hospitalisation and the need for medical care. Such a benefit may come in the form of an optional rider^ or an inbuilt plan feature.
Income Protection in the Absence of Parent(s)
Income Protection in the Absence of Parent(s)
Once the policy reaches maturity, the child will be able to receive the maturity benefit as a lump sum amount as specified during the policy purchase. In addition, if the parent (the insured) passes away during the policy term, not only will the premiums be waived off (if a waiver of premium option is chosen), but also a regular income option can be offered to the child.
Education Loan Against the Policy
Education Loan Against the Policy
If your child opts for higher education at a good university in India or abroad, the expenses may exceed your savings funds. However, a child insurance plan can help you out as it acts as collateral if you want to secure an education loan to fulfil your child’s higher education needs.
Flexible Plan Options
Flexible Plan Options
Child insurance policies offer several options when it comes to the policy terms and premium payment terms under the plan. You can choose to pay the premiums at regular intervals or also opt for a limited pay plan. There is also flexibility in choosing the premium payment mode – annually, semi-annually, quarterly, and monthly.
Child Expense Calculator
Use our Child Expense Calculator to find the cost required to finance their education and the lifestyle they deserve!
Benefits of a Child Insurance Plan
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Disciplined Savings Habit
A child insurance plan instils the habit of savings in children from an early age when the policy is in effect. As they grow up, the regular savings in a child plan can help the insured and the child understand the importance of disciplined and regular savings in the policy.
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Tax* Benefits
Since child insurance plans are meant to provide maximum benefits to the child, the tax* benefits of child education plans come under the E-E-E (exempt- exempt- exempt) category. This enables the insured to claim tax# benefits on the premiums paid towards the policy as well as on the maturity proceeds paid out for the child’s education, lifestyle and emergency needs.
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Additional Riders^
You can choose from different riders^ that can further enhance the policy coverage of a child insurance policy. For instance, you can opt for an accidental death and disability benefit, which can protect your child in case of your unfortunate demise or total disability.
Likewise, a critical illness benefit can come to the aid of the insured if they are diagnosed with a critical illness. This prevents the benefits of the base policy from being interrupted due to a critical illness.
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Flexibility of Plans
The policy terms and the premium payment terms under an insurance policy for education are varied. You can choose a policy sum assured to further ensure that the plan is customised as per your child’s needs. Depending on your child’s future plans and aspirations, you can plan the policy such that the benefits are paid out when the child needs them.
How to Get a Good Child Insurance Plan?
To be able to get a good child education plan, here are some of the factors you will need to consider since there is a range of child insurance plans available as per your needs:
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Make an early start
If you want to buy a child insurance plan, start saving and investing in the same as early as possible for a better scope of financial freedom. This should happen well in advance before the expenses to be covered arise. For instance, if you are saving up for your child’s college education, the investment should start in their primary or secondary school years.
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Consider all economic factors
Inflation plays a major role when it comes to the rising cost of education and lifestyle in general. However, if the inflation rate is accounted for, then you can get a child insurance plan that can help you save adequate funds for your child’s needs. Hence, even in the future, inflation will not affect the benefits of such a plan.
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Note the Terms and Conditions
Be sure to look into the terms and conditions of the child insurance policy that you choose. Child insurance plans and their features will vary, and the plan you choose will determine when you can avail of the benefits and payouts. Also, look out for the exclusions, as certain situations may not be covered under the plan.
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Understand the Payouts
Many education fund insurance plans start offering benefits once the child is 18 years of age to cover any major milestones in the child’s life. To ensure that these payouts and benefits are applicable to the child, start investing early in the child insurance plan. This will not only provide enough time for the investment to grow but will also allow you to fully understand the policy as time goes by.
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Compare different plans
As you may know, all child life insurance policies are different in terms of their offerings; and so, to find the right one for your child’s needs, it is essential that you compare all the plans before choosing one that covers all the milestones and situations you want to secure your child’s future against.
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Know the Withdrawal Clause
Child plans tend to offer benefits and payouts during the policy term. But if you choose a ULIP@-based child life insurance plan, there could be a lock-in period. In case you need to make emergency withdrawals before or soon after the lock-in period, you will need to know how the clause of partial withdrawals works. This will help you protect your child in uncertain times.
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Choose a Trusted Appointee
In the event of the insured’s death, an appointee can be nominated to manage the education fund insurance until the child is an adult and can manage the policy themselves. Therefore, the appointee should be a trusted person who is capable of handling the policy in the absence of the parents or the insured till the time the child is of 18 years of age and can understand the child insurance plan.
How Much Should You Invest in a Child Insurance Plan?
The ideal coverage for the child life insurance plan you choose should depend on your child’s needs. For one, understand how the cost of education, healthcare and other lifestyle aspects are on the rise. This should help you understand how inflation plays an important role in your current savings and investments towards the child insurance plan.
When it comes to getting quality facilities for your child in any field of education, the cost could run into Lakh of rupees. Therefore, to ensure that your child does not face a shortage of finances when they go to college or suffer financial drawbacks in your absence, select a coverage amount that can comfortably cover the education as well as any emergency requirements while also covering the future rate of inflation and its impact on the policy.
How Does Child Insurance Plan Work?
A child insurance plan can be availed of as a Unit-Linked Insurance Plan, a money-back policy or even as an endowment policy. Depending on which policy you choose, here is how a child insurance plan works:
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Money-back Child Plans
Money-back child plans are often chosen because they offer the benefit of payouts during the policy period without affecting the other benefits available under the plan. In addition to these survival benefits, the maturity benefit will also be paid out, and in case of the insured’s death, the child can be supported with a waiver of premium benefit until the policy is mature.
This type of education insurance policy for your child can be useful if there are education fees or other expenses to be handled before the maturity benefits are paid out at the end of the policy term.
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ULIP Child Education Plans
Unit-Linked Insurance Plans, or ULIPs, as the name suggests, can be available as child insurance plans. However, as opposed to traditional child insurance plans, ULIP@ child insurance plans are market-linked. And therefore, the investment and returns in such plans will be based on the market performance. While these plans can offer the benefit of partial withdrawals before the policy maturity and may provide high returns, it is advisable to understand how these child insurance policies work before you choose them to secure your child’s future.
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Endowment-based Child Plans
Child insurance plans also come in the form of endowment plans or child education endowment plans, whose features are designed to match the child’s needs. For example, such a policy offers a lump sum amount on maturity along with bonuses2, if any. Such a savings plan can help you save for your child’s future, and the returns are guaranteed1. In addition, since these plans are quite flexible, you can choose up to the maximum sum assured to ensure greater protection for your child’s future.
Myths Associated with Child Insurance Plans
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01Child insurance plans are inauspicious as they insure a child’s lifeEven though child insurance plans offer benefits to a child, the insured is the earning parent, not the child. Therefore, these plans are meant to secure the child’s future and fulfil their educational aspirations in case of the insured’s (parent’s) untimely demise during the policy term.
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02A child Insurance plan expires once the insured (the parent) is no moreMost life insurance policies offer a waiver of premium, either as an inbuilt feature or as a rider^ to be added to the child insurance plan. Hence, in case of the parent’s death, the future policy premiums are waived while the policy benefits are offered to the child.
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03A child insurance plan only covers the education costs of the child.Child life insurance plans are comprehensive and don’t just secure the child’s educational expenses. Since the insurance payouts are made at regular intervals during the policy term and at maturity, the child can decide how they would like to utilise the funds as per their financial commitments.
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04A child insurance policy has a long lock-in investment periodChild insurance policies have flexible policy terms, and in the case of market-linked plans, the tenure can be between 5 to 25 years. With this kind of flexibility, the insured (the parent) can make partial or full fund withdrawals from the policy as and when the need arises.
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Frequently Asked Questions (FAQs) about Child Insurance Plan
When should you buy a child Insurance plan?
It is advisable to buy a child insurance plan as early as possible so that you can save and invest adequate funds for your child’s future and educational needs. Hence, if you want to fund your child’s college education or university courses with a child education plan, start planning the policy when your child is in school. Then, you can choose a suitable policy term accordingly.
How does a child insurance plan help your child?
A child education plan mainly enables you to create an investment or savings for your child’s future educational requirements. You can start investing in the policy years before your child wants to pursue higher education, and depending on the type of policy, you can either make partial or full withdrawals at that time or use the maturity benefits to fund your child’s aspirations.
A child insurance plan also offers a life cover to the insured (the parent), and hence, in case of the untimely demise of the insured, the plan can continue offering coverage to the child, a waiver of premium benefit and also the maturity proceeds when the policy reaches maturity.
How to get a fair estimate of the cost of a child insurance plan?
To get a fair estimate of a child’s education plan, consider all of your child’s future needs in terms of education. For example, suppose you have plans for them to study in a foreign university, find out the cost of the tuition and accommodation and factor in the inflation rate to start planning the coverage in advance. It would also be wise to take into account any unforeseen emergencies so that your child has adequate financial support even in your absence.
Alternatively, you can also use a child expense calculator to understand how to select the most suitable coverage for your child’s future needs.
Do child insurance plans have tax* benefits?
Yes, as per Section 80C of the Income Tax* Act, all the premiums paid towards all life insurance plans are eligible for tax* deductions of up to ₹1.5 Lakh. In addition, and subject to the terms and conditions of the policy, the maturity proceeds, as well as the death benefit, will be eligible for tax* benefits as well.
How to choose the best coverage of a child insurance plan?
All child insurance plans are different when it comes to the benefits and features that they offer. To be able to choose the best coverage for the child insurance plan of your choice, account for the various situations and expenses to be covered by the child insurance plan. In addition, it is helpful to choose a sum assured for the policy that offers adequate coverage to your child once they need it.
In case you already have a sum assured in mind, you can also do a cost-benefit analysis of different plans to see which one offers the best coverage for your needs.
What should be the tenure of the child insurance plan?
The tenure of a child insurance plan will depend completely on your insurance needs and for how many years you want the policy to offer comprehensive insurance coverage to your child. With flexible policy terms and different types of child insurance plans, you can select a tenure of between 5-25 years and invest in the policy as per the financial goals to be fulfilled.
Disclaimer
#Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfillment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implication mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
^Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry.
2These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
Past performance is not indicative of future performance.
All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
Please make your own independent decision after consulting your financial or other professional advisor.
Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
This publication is for general circulation only. This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company and this document is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
- *Source: https://www.moneycontrol.com/news/business/personal-finance/childrens-day-how-to-save-for-your-kids-expensive-college-education-7711131.html Date of Publication: November 14, 2021.
L&C/Advt/2022/Oct/2625
