Child plans are designed to ensure that the goals of one’s child do not have to wait as a result of lack of finance. Read this article to find out which are the top child investment plans in India.
Many parents are looking into various child plans offered by insurance companies to secure the future of their children. These plans are developed to provide timely financial assistance for higher education, marriage, etc. Nearly all life insurance providers have child plans in their portfolio of offerings. Some of them are market-linked policies, while others are traditional plans. By opting for child plans, the parents (or legal guardians) are essentially ensuring that the needs of their children are taken care of, even if they are not around.
Some of the top child plans available in the market are as follows:
SBI Life - Smart Champ Insurance
This is a traditional participating child insurance plan that helps to secure the educational needs of a child. The benefits payable under the plan are as under:
Benefit payable on survival: Smart Benefits will be paid at the end of the policy year when the child completes 18, 19, 20 and 21 years of age. Terminal bonus (if any) shall be paid with the last instalment of Smart Benefits.
| Age of Child | Smart Benefits |
|---|---|
| 18 years | 25% of Sum Assured + 25% of Vested Simple Reversionary Bonus |
| 19 years | 25% of Sum Assured + 25% of Vested Simple Reversionary Bonus |
| 20 years | 25% of Sum Assured + 25% of Vested Simple Reversionary Bonus |
| 21 years | 25% of Sum Assured + 25% of Vested Simple Reversionary Bonus + Terminal Bonus (if any) |
In the event of death or Accidental Total Permanent Disability, whichever is earlier, during the policy period, the following benefits are payable:
A lump sum amount immediately:
• For Single Policy: The sum assured is higher of Basic Sum Assured or a multiple of Single Premium; where multiple is:
| Policy Period | Age at entry of Life Assured is below 45 years | Age at entry of Life Assured is 45 years or more |
|---|---|---|
| All terms | 1.25 | 1.10 |
• For Limited Premium Payment Term: The sum assured is higher of basic sum assured or multiple of annualized premium or 105% of all the premiums paid till the date of occurrence of the insured event. Where multiple is:
| Policy Period | Age at entry of Life Assured is below 45 years | Age at entry of Life Assured is 45 years or more |
|---|---|---|
| 8 and 9 years | 5 | 5 |
| 10 years or more | 10 | 7 |
No future premium instalment(s), due, if any, are required to be paid. The policy continues to accrue bonuses (if applicable).
Source: SBI Life - Smart Champ Insurance brochure
ABSLI Vision Star Plan
This policy provides regular pay-outs for financing the education of one’s child. It secures the child’s future, even in the absence of a parent or legal guardian with comprehensive financial protection.
• Assured Pay-out Option
ABSLI Vision Star Plan offers the flexibility to choose between two Assured Pay-out
Options:
Option A – Four biannual pay-outs of 20% | 20% | 30% | 30% Starting five years after the premium paying term is over; there shall be an Assured Pay-out every two years. Option B – Five annual pay-outs of 15% | 15% | 20% | 20% | 30% Starting 5 years after the premium paying term is over, there shall be an Assured Pay-out every year.
- Death Benefit In the event of the life assured's death during the policy term, the insurer will pay the nominee
- Sum assured plus
- No premiums are required to be paid in future
- Assured Pay-outs on the scheduled dates (as covered in the Assured Pay-out section) plus
- Bonuses accrued till maturity date and terminal bonus (if any) shall be paid on the policy’s maturity date.
- Maturity Benefit
If the life assured outlives the policy period, the insurer shall pay
- Accrued bonuses till date plus
- Terminal bonus (if any)
Source: ABSLI Vision Star Plan brochure
Bharti AXA Life Child Advantage
This is a traditional participating savings plan with an in-built premium waiver benefit. It offers the flexibility to select between two maturity benefits – Money back and Endowment – depending on the child’s needs and career goals.
- Money Back option
This option provides guaranteed pay-outs in the last five years before maturity to meet the child’s education needs. On maturity, this plan offers guaranteed maturity pay-out of 40% of sum assured, to support the child’s higher education needs and launch his or her career.
| Time of Guaranteed Pay-outs | % of Sum Assured Payable |
|---|---|
| End of 5th Year before the Maturity Date | 10% |
| End of 4th Year before the Maturity Date | 10% |
| End of 3rd Year before the Maturity Date | 15% |
| End of 2nd Year before the Maturity Date | 15% |
| End of 1st Year before the Maturity Date | 20% |
- Endowment option
This provides a guaranteed lump sum amount of 125% of sum assured at the policy’s maturity to help the child pursue his or her goals.
Life Insurance Benefit:
In the event of the life assured’s death during the policy period, the nominee will receive higher of (110% of sum assured - money back option and 125% of sum assured - endowment option) or 11 times the base annualized premium. The death benefit payable at any point in time shall not be below 105% of all premiums paid. The guaranteed benefits shall continue, and all future premiums will get waived off.
Bonus:
The policy participates in the distribution of surplus or profits that may be declared by the insurer. Non-guaranteed annual simple reversionary bonus gets accrued to the policy at the end of every year and is payable at maturity. The company may also declare non- guaranteed terminal bonus, which is payable with maturity benefit.
Source: Bharti AXA Life Child Advantage brochure
Conclusion
As seen above, child plans provide the combined benefit of life insurance along with savings & investment. They enable the parents or legal guardians to secure the future of their children, while simultaneously building a corpus to meet the major milestones in their children’s lives. Before availing a plan, individuals are advised to compare the benefits, features and costs, and accordingly select a product that best-fits the needs of their children.
