It might not be. That is why a child plan proves essential.
What is a child plan?
A child plan is a life insurance policy that is designed to secure a child’s financial future. Under the plan, the parent is, usually, the life insured while the child is the beneficiary. The parent buys the plan with the objective to create a corpus for the child.
Let’s understand, in detail, how the child plan helps in securing your daughter’s financial future –
How child plans help in securing your daughter’s financial future?
1. Different types of plans
There are different types of plans that are offered as a child insurance plan. You can take your pick from the following –
- Endowment plans that create a corpus over the life insurance policy duration
- Money back insurance plans that pay regular incomes at specified milestones of your child’s life
- Unit Linked Insurance Plans (ULIPs) that help you accumulate market-linked savings corpus
Depending on your risk appetite, financial goals and investment strategy, you can choose from one or more of these plans to create a suitable corpus for your daughter.
2. The premium waiver benefit
The premium waiver benefit is what takes the cake. Child plans usually have this inbuilt benefit wherein the premium is waived off if the parent dies. However, the plan does not stop. It continues till the chosen tenure and the insurance company pays the premium on the parent’s behalf subject to plan’s terms & conditions. On maturity, the maturity benefit is paid.
This premium waiver benefit ensures corpus creation even when you are not around. The insurer pays the remaining premium and builds up the corpus on your behalf so that your daughter’s financial future is secured.
3. Insurance coverage
A child insurance plan is an investment-cum-insurance policy. While they save up for your child’s financial future, they also pay a death benefit in the case of your premature demise. Since the parent is insured, the child plan pays the death benefit on the parent’s death. This benefit comes to the immediate assistance of the family who battle both emotional and a financial loss.
4. Additional returns
Child plans help you build up an optimal corpus for your daughter through the returns that they offer. Participating Endowment and money back plans usually offer additional bonus (if any declared by the insurer), and other benefits like guaranteed additions, loyalty additions, etc. depending upon the product features, that help build up a corpus. When it comes to ULIPs, you may get to enjoy market-linked returns (which are associated with risk depending on the asset in which investment is made) that, with time, may create a considerable corpus for your daughter’s goals, whether it is pursuing higher education at a prestigious college, starting a business or having a fairy-tale wedding.
5. Tax benefits
Lastly, you cannot ignore the tax benefits that child plans give. When you buy a child insurance policy, the premium that you pay qualifies as a deduction under Section 80C of Income Tax Act 1961 (the Act). You can claim a deduction up to Rs.1.5 lakhs saving up to Rs.46,800 in taxes (assuming you fall in the 30% tax bracket+ Health and education cess 4%). Moreover, the maturity benefit paid under a child plan is also tax exempt under Section 10(10D) of the Act, subject to satisfaction of terms and conditions mentioned therein. So, with a child insurance plan, you can create a tax-efficient corpus for your daughter.
The International Girl Child Day
The 11th of October is celebrated every year as International Girl Child Day. This day celebrates girls across the world. Marked by the United Nations, the day endeavours to recognize girls’ rights and the unique challenges girls face around the world. The day focuses attention on the need to address the challenges girls face and to promote girls’ empowerment and the fulfilment of their human rights.1
This International Girl Child Day, it’s time to express your love for your daughter. While she might know how much you love her, make an effort and celebrate her this year. Secure her financial future with a child insurance plan and gift her and her dreams the promise of financial security.
Source:
https://www.un.org/en/observances/girl-child-day
BJAZ-WEB-EC-01367/22
An ISO 9001:2015 
