In the current pandemic where the risk awareness and risk aversion is significantly rising, protecting child’s dreams and goals have become a matter of utmost importance. A suitable life insurance plan for children can, hence, act as a wise choice by offering a mix of guaranteed returns and protection.
According to Parag Raja, managing director and chief executive officer, Bharti AXA Life Insurance, one of the key benefits of having a life insurance policy for children is that they will always be covered regardless of their future health.
"A child insurance plan helps plan children's future educational and financial requirements by creating funds over a period of time. Parents can buy it as it helps account for uncertainty in life and also acts as an emergency fund to meet other life goals," Raja suggests.
The types of child plans, however, vary from one insurance provider to another.
Here are some of them, as suggested by Naval Goel, chief executive officerand founder, PolicyX:
Single-Premium Insurance Plan
This child plan requires a one-time investment, which is also subjected to discounts and other benefits.
Regular Premium Insurance Plan
This requires policyholder to pay the premium at pre-fixed intervals. The frequency of premium payments may be monthly, quarterly, half-yearly or annually (as agreed upon).
Child Endowment Plan
By choosing this plan, policyholders authorise the insurance provider to invest in the instruments of debt. Endowments plans provide capital appreciation, while steadily adding to the growth of the fund with returns from investments.
Unit-Linked Insurance Plan (ULIP)
ULIP plan is a combination of investment plans and life coverage. They invest the premium paid in equity instruments and debt instruments. Although, the plan carries some amount of risk, it yields more returns than endowment plans in the long term. The policyholder also has the option to switch between funds after a certain waiting period.
Some of the child plans, currently, available are Aditya Birla Sun Life’s 'Child’s Future Assured Plan' and 'Bharti AXA Life Shining Stars'.
In words of Kamlesh Rao, managing director and CEO, Aditya Birla Sun Life Insurance, "The 'Child's Future Assured Plan' offers the flexibility to choose periodic pay-outs and provides additional loyalty benefits of 20 percent of each pay-out for policies, where all the premiums have been paid through the premium paying term (PPT). This gives the policyholder the benefit of protection along with guaranteed returns for a secured future. Moreover, the plan has an in-built waiver of premium element that ensures that the policy continues in case anything unfortunate happens to the life insured. In a child plan the waiver of premium element is a valuable feature which ensures protection to a child’s future even if something untoward happens to the premium paying parent."
On the other hand, 'Bharti AXA Life Shining Stars' provides life cover to parents and protects their children and family from any financial instability.
First Published: IST