One of the preferred ways to secure your child’s future is by purchasing a child life insurance plan. Apart from being able to financially secure their future, a child plan also allows you to customise it according to your requirements through add-ons. One of the important add-ons that you may opt for a child plan is the waiver of premium rider. Want to know more about it? Continue reading to find out.
Child Insurance Plan
A child plan is basically a life insurance plan aimed at parents of children. By providing both insurance and investment benefits, these plans are designed to financially secure the future of your children. Upon maturity, the policyholder receives a lump sum amount, which they can then use towards fulfilling their children’s dreams.
And in the event of their unfortunate death during the policy term, the nominees of the deceased policyholder get a lump sum death benefit, which they can use to manage the expenses of the deceased policyholder’s children.
Why Do We Need It?
If you’re a parent of a child, then a child life insurance policy is something that you may invest in . It is a highly useful financial tool that can protect your children from life’s uncertainties. Still not convinced of its usefulness? Here’s an example that can provide you with some clarity.
Imagine that you’re the sole earning member of your family of three, which includes your spouse and your child. Now, as long as you’re alive and earning, your child’s needs would be well taken care of. However, if something unfortunate were to happen to you, your family’s financial situation could become worse, and your child may not be able to realise his/her dreams.
However, with a child life insurance plan, you can prevent all of that since it would provide your family with a lump sum death benefit if something were to happen to you. This amount can be used by them to take care of their needs as well as your child’s.
And if you were to survive till the end of the policy tenure, the maturity benefits that you receive from the plan may be used by you to take care of your child’s higher education or pay for their marriage.
What is the Waiver of Premium Rider?
Now that you’ve seen what a child insurance plan is and why you need one, let’s take a look at this rider and see what it entails.
The waiver of premium rider is basically an add-on that you can opt for when purchasing a child insurance plan on payment of nominal extra premium. The add-on essentially waives off all the future premium payments in the event of the policyholder’s death as per the terms & conditions of the rider.
In case of occurrence of the underlying event like death which is specified under the rider all future premium payments that the policyholder is required to make will be waived off and the benefits under the insurance plan will continue to be provided.
Benefits of the Waiver of Premium Rider
There are plenty of benefits that you stand to enjoy by opting for the waiver of premium rider. Here’s a quick look at a few of them.
- The family can continue to enjoy the benefits under the policy without having to pay the premiums
- Reduces the financial burden on the family
- The rider premium is affordable
- The rider premium is eligible for tax deduction under section 80C of the Income Tax Act, 1961 subject to provisions stated therein
How Does It Work?
Assume that you’ve purchased a child insurance plan along with the waiver of premium rider for a tenure of 20 years. After about 5 years, you receive information that you’ve been diagnosed with cancer, which is one of the specified critical illnesses and is one of the underlying conditions under which the rider will trigger. In such a situation, you would have to dedicate a major portion of your finances towards the treatment of the illness. On top of this, you may not have enough money left to also pay the premiums for the child life insurance plan that you’ve taken.
Here’s where the waiver of premium riders comes into the picture. Since you’ve opted for this add-on, all the future premium payments for the remaining 15 years of tenure of the child plan will be waived off. However, you would continue to enjoy all the benefits, both death and maturity, listed under the plan.
Exclusions under the Waiver of Premium Rider
The Waiver of Premium Rider comes with several exclusions. Exclusions are basically scenarios where the coverage under the rider wouldn’t be applicable. Refer to product brochure available on respective Insurance Companies website for more details on exclusions under Waiver of Premium Rider.
Conclusion
As you can clearly see, opting for the waiver of premium rider along with a child insurance plan may help you secure your child’s future in a more comprehensive manner. Also, it may help in reducing the financial burden for a nominal additional premium as well.
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