Starting a family is certainly one of life’s greatest joys. Holding your baby for the first time and their first day of school, these are very special moments that one cherishes forever. As parents, we always look for the best in our kids. We want them to be great college students and follow their dreams, and the good thing is not to have any money worries.
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What is a Child Insurance Plan?
Child insurance plan is an insurance policy aimed at helping you prepare financially for your child’s major life events, such as higher education and a wedding. The plan delivers two things:
- Investment: A fixed amount of money is invested regularly through the plan. However, child insurance plans, especially traditional ones, do not guarantee high returns. In market-linked plans like ULIPs (Unit Linked Insurance Plans), returns depend on market performance and can go up or down over time. The primary goal of these plans is financial protection and disciplined savings, not high investment growth.
- Protection: This is the “insurance” aspect of the plan. In case of the parent’s untimely death, the insurer provides a death benefit as per the policy terms. However, not all child plans offer both a lump-sum payout and future premium funding. The exact benefits depend on the product structure, sum assured, and policy conditions. Some plans may continue the policy by waiving future premiums, while others may only provide a one-time payout. Always check the specific plan details to understand what is covered.
Why a Child Education Plan Calculator?
You need a target in place before you open a savings account. A child education plan calculator will show you how much you need to put aside for specific courses like a medical degree or engineering, which will become expensive 15 years down the line.
What it does:
- Inflation: It gives you an estimate of price hikes in future years.
- Your Target: It basically maps out the savings plan monthly that will see you through to your goal.
- Simple Comparison: You get the option to change numbers around and try out different plans to see which one suits your financial situation each month.
In fact, a child education plan calculator will turn your guessing game into a strategic move. Rather than “hoping” you have money enough, you will “know” you have money enough.
Child Insurance Plans for Kids
There are numerous plans available at present. Here are few of the well-known plans that parents have shown faith in:
1. HDFC Life Sampoorn Nivesh Plus
It is a unit-linked insurance plan (ULIP) that combines life cover with market-linked investment. It offers flexible premium options, multiple fund choices, and customizable benefits. The plan provides loyalty additions after 10 years, tax benefits, and partial withdrawals. It is suitable for long-term wealth creation along with financial protection.
2. ICICI Pru Smart Kid Solution
The strength of this plan lies in the fact that you are offered the freedom to invest a part of your portfolio with minimal risk and the other part with high risk.
- Highlight: It comes with “Loyalty Additions”; the company hands over some extra money into your account for sticking with them for a longer duration.
3. SBI Life Smart Champ Insurance
Should you not want to risk your capital in the volatile stock markets and be okay with your money not growing by leaps and bounds, then this is a “traditional” plan. It is more of a savings plan that will provide guaranteed payouts.
- Greatest Advantage: The corpus will be disbursed in four equal installments as and when the child attains 18, 19, 20, and 21 years of age. This schedule of payment conveniently coincides with the four years of a regular college degree.
4. LIC New Children’s Money Back Plan
There is a reason why the name LIC is known in almost every household. This product is very secure and simple to comprehend.
- Main Perk: It returns the amount at fixed ages (18, 20, and 22). This will be very handy in covering the costs of smaller things like entrance exams, or if the child has to move to a different city for studies.
How to Choose the Right Plan
The process of narrowing down the options to one child insurance plan is very simple if you just follow some basic guidelines:
First of all, start at a very early age
The amount of money you have to dedicate to each monthly saving is going to be the least if you start when your child is young. Even a small sum accumulated over 15 or 20 years can become a sizable amount.
Find out the “Waiver of Premium”
Without a doubt, this is the feature you should emphasize the most. This means that, in the unfortunate case of the parent being no more, the insurance company will settle the outstanding premium payments. Hence, the child will still be entitled to the full payout at 18 or 21 years.
Get the Calculator to help you
Don’t forget to put your figures through a child education plan calculator. It will compare saving ₹5,000 and ₹10,000 a month for you. It also gives you a glimpse of what to expect in the future.
3. SBI Life Smart Champ Insurance
Should you not want to risk your capital in the volatile stock markets and be okay with your money not growing by leaps and bounds, then this is a “traditional” plan. It is more of a savings plan that will provide guaranteed payouts.
- Greatest Advantage: The corpus will be disbursed in four equal installments as and when the child attains 18, 19, 20, and 21 years of age. This schedule of payment conveniently coincides with the four years of a regular college degree.
4. LIC New Children’s Money Back Plan
There is a reason why the name LIC is known in almost every household. This product is very secure and simple to comprehend.
- Main Perk: It returns the amount at fixed ages (18, 20, and 22). This will be very handy in covering the costs of smaller things like entrance exams, or if the child has to move to a different city for studies.
How to Choose the Right Plan
The process of narrowing down the options to one child insurance plan is very simple if you just follow some basic guidelines:
First of all, start at a very early age
The amount of money you have to dedicate to each monthly saving is going to be the least if you start when your child is young. Even a small sum accumulated over 15 or 20 years can become a sizable amount.
Find out the “Waiver of Premium”
Without a doubt, this is the feature you should emphasize the most. This means that, in the unfortunate case of the parent being no more, the insurance company will settle the outstanding premium payments. Hence, the child will still be entitled to the full payout at 18 or 21 years.
Get the Calculator to help you
Don’t forget to put your figures through a child education plan calculator. It will compare saving ₹5,000 and ₹10,000 a month for you. It also gives you a glimpse of what to expect in the future.
Common Questions Parents Ask
Is a child insurance plan better than a regular savings account?
Absolutely. A savings bank account won’t provide you with life insurance cover. On discontinuing your savings in a bank, the growth ceases. However, with a child insurance plan, the target is assured even if you are not around to do the work.
Is it possible to withdraw money early?
Typically, plans require a “lock-in” period of five years. Once the period is over, many plans will allow you to withdraw a small amount for emergency use, such as an unexpected medical bill.
Are there any tax advantages?
Mostly, the money you invest in these schemes results in lowering your taxable income. The amount received by your child in the end is generally tax-free. It’s a double benefit!
Conclusion
The future of your child is full of possibilities. They may aspire to be a pilot, a doctor, or an artist. As a parent, you want to give them wings to fly. By opting for the right child insurance plan and using a child education plan calculator, you are ensuring that financial constraints do not hinder their gift.
Spend a couple of minutes today to look at a calculator. You could be surprised to learn that the cost of securing your child’s whole future is lower than your monthly internet bill. There’s no time like the present to begin!