Child education plans are financial tools for securing a child's future, especially for higher education needs. They combine life insurance with savings, where parents pay premiums that accumulate into a maturity benefit for the child's education. These Child plans offer life cover, and in case of a parent's demise, they provide additional benefits like covering remaining premiums.
A child education plan is a special type of plan which is designed for parents to secure their child's future financially in a structured way. The parents have to pay a certain amount of premium and they will receive a certain maturity benefit for the child's higher education. Moreover, the child plan also provides life cover from the insurance element of the policy.
The premium can be monthly, semi-annually, annually or a one-time payment. In the unfortunate death of one of the parents, a child plan can offer triple benefits to beneficiaries. This includes a life insurance cover, payout of the maturity benefit and the payment of insurance premiums by the insurer. This payout can be received as a single lump sum upon maturity or periodically at different ages of the child.
In this policy,the investment risks in the investment portfolio is borne by the policyholder
A unit linked plan to finance your child’s big moments.
UIN: 101L068V03
Choose to invest in any or a combination of funds
Option to choose between Save and Save-n-Gain benefit options.
Secure yourself against unfortunate demise and diagnosis of critical illness.
Option to withdraw from your funds after 5 years of your policy to plan for the various needs of your child.
A traditional money back plan with customizable payout options for your child’s various life goals.
UIN: 101N099V04
3 payout options designed to suit your child’s various goals in life.
Get a lump sum payout of up to 140% of sum assured and additional bonuses (if declared) on maturity.
Pay premiums for limited period and enjoy coverage throughout the policy term.
Under Classic Waiver Death Options, your nominee receives lump sum on death, all future premiums are waived and receives all survival as planned.
Policy loan available.
In this policy, the investment risks in the investment portfolio is borne by the policyholder
This plan is suitable for efficient wealth creation options and wants to ensure higher financial protection for their family as their responsibilities grow.
UIN: 101L162V01
Child Education Plan allows you to stay financially ready for your child's educational requirements. These plans assist in saving for your child's future needs and offer returns to help you achieve your child's desired goals:
Quick assistance during financial emergencies
Safeguarding the child’s future
Addressing increasing education costs
Assured investment returns
Providing security for obtaining education loans
Investing in child policies can allow to enjoy triple benefits in case of untimely demise of a policyholder, which are as follows:
A life cover is provided to the nominees of the policyholder i.e. the family members.
All the remaining premiums are borne by the insurance company. On maturity, the sum assured is paid out to the child.
Also, during the present scenario, the child beneficiary gets his or her monthly expense cover. It includes education-related costs such as books, copies, tuition fees, etc.
Here are some of the features of child plans:
It means in case of any mishaps the policy will provide a life cover lump sum amount to the nominees of the policy.
In case of untimely demise of the policyholder during the policy term, all the remaining premiums would be borne by the insurer.
The policy also allows partial withdrawals from 6th year onwards (i.e. after 5 years). It can be beneficial to fund certain milestones in a student's career such as admission fees, educational trips etc.
Apart from life cover after deducting partial withdrawals, you will receive the remaining balance of the sum assured upon maturity.
You can also be eligible for tax benefits under section 10(D)# and deductions under 80C# of the Income Tax Act. The amount of premium paid toward the policy will be eligible for a tax deduction, hence reducing your overall tax liability.
Investing in a child education plan ensures that your child's educational requirements are covered, providing a piece of mind that their future is secure even in your absence.
In the unfortunate event of your dismissal, the insurer provides the life cover to the nominees and your family receives an immediate payout. And future premiums are waived off, ensuring the policy remains in force without imposing a financial burden on the child.
Child education plans offer flexible payout options, allowing you to receive funds at key educational milestones, such as college admission.
Investments in child education plans can help you to avail tax deductions, providing a means to save money while securing your child's educational future.
With educational costs rising due to inflation, a child education plan helps you stay ready, ensuring that your child can pursue top-tier courses without any financial hindrance.
Primarily child plans are of two types, which are as follows:
A Child ULIP serves as both an insurance policy and an investment. Similar to a typical child education plan, a portion of your funds are allocated to safeguarding your child, while the remaining portion is invested in a combination of equity and debt.
A child savings plan allows you to invest without taking market risks. This comprehensive plan offers maturity perks, life coverage, along tax benefits all within a single policy.
Let us take an example to understand how a child plan works:
Mr Mukherjee, a parent of a 5-year-old, plans to start investing in his son's higher education abroad. He is paying a monthly premium of Rs. 8,000 for 15 years.
Note: ROI is 21%
Let’s consider two different scenarios to understand how the payout would work.
Situation 1: Mr Mukherjee out-lives the policy term
In such a scenario, Mr Mukherjee will receive a sum assured of Rs. 1.1 crore (approx.) at the end of the policy tenure and now it can be used for higher education of his son.
Situation 2: Mr Mukherjee dies on the 8th year of the policy term
In this situation, Mr Mukherjee's child and other nominees will receive a lump sum amount as life cover and the remaining premiums will be waived off. The nominees can also make partial withdrawals for the child's educational purpose based on the type of policy chosen.
The cost of education is increasing at a rapid pace. According to a recent study, it was identified that the average cost of education from primary classes to post-graduation was Rs. 8,331 per year for a student. However, this study was conducted considering all the types of schools and colleges available across the country. We know that the cost of private schools and colleges is way more than government-owned institutions.
Moreover, the cost of professional courses such as engineering can be more expensive and the cost of some business school courses can become even more expensive, hence based on the desires and interests of the child you will have to plan for a sufficient sum assured.
Listed below is the step-by-step guide to claim for a child insurance policy.
Step 1: First, you will have to inform your insurer that you are willing to file a claim. You can convey this by phone, email or by physically visiting your nearest branch office.
Step 2: Fill out the claim form by entering details such as name, insured child details, policy number etc. You can either download the form from the insurer’s website or obtain it from their branch office.
Step 3: Next, you will have to submit some of the essential documents such as a death certificate, medical reports, identity proofs etc., with the claim form.
Step 4: The insurer will then conduct a verification and investigation of the incident and might appoint a surveyor for claim processing.
Step 5: Post investigation and approval, the beneficiaries of the policy will receive the claim amount in their bank account.
Listed below is the list of documents required to avail a children's insurance plan:
Proposal form
Identity proof (passport, voter ID card, Aadhaar, driving licence)
Address proof (voter ID card, Aadhaar, passport, utility bills, driving licence)
Age proof
Income proof
Here are the following things to consider while buying the perfect child education plan:
Investing early in a child education plan helps you grow your money over the long term leveraging the compounding effect. This results in a larger sum that can be beneficial to fulfill your child's aspirations.
There are some investment plans available in the market which allow you to choose various asset mixes such as either equity, debt or a mix of both.
While finalizing a child plan, always check whether the premium waiver benefit is included or not. As in case of the policyholder's demise, all future premiums for the policy will be borne by the insurer.
Listed below are some of the benefits of early planning for your child’s future:
Starting early gives you more time for your invested funds to grow and compounding requires time to demonstrate exponential growth in return.
Investing early in a child education plan can help you with more time researching various educational options and choosing the one which best suits your child.
The overall cost of education is increasing at a rapid pace. Considering the effects of inflation these days, your children's education may require a lot more money than you initially planned for. Here opting for a child education plan as early as possible can be the wisest move to make
By starting early you start saving for your child's education, it can teach them the importance of saving money from a very early age in life.
Purchasing a child insurance plan online is quite easy and simple. Simply visit the HDFC Life home page. From the navigation bar, go to "Investment Plan" and click on 'Child Plan’. Then from the interface choose the plan as per your requirement and click on ‘Buy Now’ to initiate your purchase.
The eligibility criteria to buy a child plan are- the child must be an Indian citizen, the parents or the legal guardian must be an Indian citizen and there are age criteria which vary from plan to plan and insurer to insurer.
There are two types of tax benefits you can enjoy- firstly you will be eligible for tax deductions on the amount of premium paid of up to Rs. 1.5 lakh under Section 80C. Moreover, up to Rs. 2.5 lakh per year is exempted from tax on the life cover or sum assured amount received from the insurer u/s 10(10D).
Some of the top government policies for child education in India are the Sukanya Samriddhi Yojana, CBSE Udaan Scheme, Dhanlaxmi Yojana, Balika Samriddhi Yojana etc.
Yes, you can customise a child plan based on your own requirements which can be factors like pay-out structure, policy term, premium amount and other perks aligning with your child’s requirements.
There are several important reasons for investing in a child plan which are- funding higher education, using this policy as collateral during financial constraints, partial withdrawal for medical treatment of the child and tax benefits.
An important feature of a child insurance plan is that it allows the parents to withdraw the money from their funds in multiple fragments without waiting for the policy to mature. Parents opt for this route to fulfill the financial needs of their children at different stages of their life. Lump sum partial withdrawal from the fund is allowed after completion of five policy years, provided the life assured is at least 18 years of age. Partial withdrawal isn’t allowed as it would result in termination of the policy.
Child plans are subject to tax benefits on death or maturity claim profits under Sec 10(10D) of Income Tax Act, 1961. The premiums paid towards insurance plan are also eligible for tax deduction under Section 80C. Benefits are applicable as per prevailing tax laws.
There is no right time to buy a child plan. You should buy it when you are ready and the earlier the better. According to experts, it is ideal to begin a child plan within 90 days of the child's birth as you don’t want to miss out on the compounding effect. The sooner parents start a plan for their child, lower is the risk and they stand to make better returns.
Child plans are investment cum insurance plans that help to plan your child's future financial requirements by accumulating money over a period of time. On maturity, a lump sum amount is paid to the child to cover their education or marriage expenses.
Child plans come with Waiver of Premium (WoP) feature which is applicable if the parent dies in a stipulated period. In case of an unfortunate demise, the sum assured is paid to the nominated beneficiary, while the insurance company continues to pay the due premium for the remaining policy term. Upon maturity of the policy, the child stands to receive the maturity amount as mentioned.
You can withdraw money from the child plan during the tenure of the investment. This money can be used for any medical emergency that might arise for the child and reduce the finanaical burden on the family.
Parents can take the right step in fulfilling their responsibility in securing their child’s future by investing in a child plan.
Child life coverage refers to the decided upon amount that the nominee receives in case anything happens to the policyholder during the policy term.
Yes, you can purchase a child plan for your 15-year-old child. However, when it comes to investments, the earlier you start the better.
In a child plan, the nominee refers to the person who will help look after the child and the policyholder’s financials if anything happens to them during the policy term. The nominee is responsible for ensuring that the money goes to the intended individual. The beneficiary is the child or the individual who should receive the payout from the policy. In certain situations, the nominee and beneficiary can be the same.
The beneficiary is the individual who receives the payout from the policyholder or parent. Parents must ensure that their beneficiary is somebody who can handle the responsibility of receiving the child plan benefits. If not, they should appoint a responsible nominee.
#The above tax benefits are subject to conditions specified u/s 80C and u/s 10(10D) of the Income tax Act, 1961.
The afore stated views are based on the current Income-tax law. Tax Laws are also subject to change from time to time. The customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.
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