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Best Child Insurance Plans in India

A review of leading children insurance Plans in 2009 - 2010 which you should consider as investments for your child.

Why take a children’s plan? Children’s plans help you save so that you can fulfil your child’s future dreams and aspirations. These plans go a long way in securing your child’s future by providing the required protection and financing the key milestones in their lives, even if you are not around to oversee them. Children’s plans are specifically designed such that you will be able to provide the required economic support to your child when it is most needed.

  

best child plan in india, best child insurance planWho should take a children’s plan? All parents who have the capacity to afford such a plan should invest. It is imperative that the plan be taken by the earning parent/parents so that the financial security is provided to the child. In case of an eventuality to the insured parent, the proceeds from the claim can be managed by an appointee (spouse) till the child becomes a major.

      

Which plan to choose? You should choose a plan that satisfies your need. Each plan has specific feature/features that make it unique. Although charges are important criteria to choose between unit linked plans, the features and flexibilities offered by the plans are also equally significant while choosing a children’s plan. With careful selection, you can get the product that is customized to your needs.

      

HDFC SLIC Young Star Super

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Death Benefit – You have a choice of Double Benefit & Triple Benefit. Sum assured is paid out immediately. Double Benefit – all future premiums towards the policy are paid by the company and the fund value is paid to the beneficiary on maturity. Triple Benefit – 50% of the premium is paid to the beneficiary and the remaining 50% goes towards the policy and the fund value if paid out on maturity.

 

Maturity Benefit – Fund value which can be taken immediately or in tranches through the 5 year settlement period.

 

Beneficiary – In most children’s plans, it is mandatory for the child to be the beneficiary/nominee. However, the HDFC plan has no age restrictions on whom to nominate so it can be taken for an older child as well.

 

Additional Perks – Bumper additions are available if the policy is in-force and no withdrawals have been made during the policy tenure. If the term is 10 years, 50% of the original annualized premium is paid along with the fund value and if the term is more than 11 years, 100% is added to the fund value and paid out.

 

Flexibilities – Top-ups are allowed when the policy is in-force; 24 switches are free in a policy year; Increase and decrease of premiums are allowed on policy anniversaries; 12 premium redirection requests are free in a policy year.

 

Ideal for – Earning parent/parents with children of any age. With no age restrictions on nominee/ beneficiary and the additional flexibilities mentioned above, it is an ideal plan for any parent wishing to secure his/her child’s future.

 

Avoid - Partial withdrawals affect bumper additions so if you’re looking for a plan that can provide funds in tranches, let’s say to pay tuition fees through college, you might want to shop around for a plan that offers that additional flexibility.

 

ICICI Prudential Smart Kid New Unit Linked RP

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Death Benefit – Sum assured is paid out immediately; future premiums are waived and the fund value is paid out on maturity.

 

Maturity Benefit – Fund value which can be taken immediately or in tranches through the 5 year settlement period.

 

Nominee – The child has to be the nominee. There is an age restriction on the nomination which is between 0 and 15 years.

 

Additional perks – Automatic transfer facility is available from money market fund to any of the equity funds for those who do not have the time to manage the funds themselves.

 

Maximum age at maturity for child – An additional age restriction of between 19 to 25 years is imposed on the nominee of the plan.

 

Flexibilities – 4 free switches in a policy year; Income Benefit Rider which pays 10% of the sum assured every year to the beneficiary on death of the life assured is available at an additional cost; Top-ups are allowed when the policy is in-force; Increase and decrease of sum assured is allowed (at company’s discretion) anytime during the policy tenure.

 

Ideal for – Earning parent/parents who have young children and wish to save for their education/marriage. If you wish to choose a higher sum assured in the initial years and bring it down as you accumulate assets, the option to decrease the risk cover is available. With the Income benefit rider, the child can receive an annual allowance every year till maturity, which provides additional protection for your child’s future.

 

Avoid – With the age restriction for the child on maturity, any parent with a child older than 12 or 13 can avoid. Also, only 5 partial withdrawals are allowed during the entire policy tenure, a negative again for those who are planning on meeting expenses for multiple years.

  

Kotak Headstart Future Protect

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Death Benefit – You can choose between insuring single life and joint life and adding two nominees in the place of one. Sum assured is paid out immediately.

 

Single life - Unlike other plans discussed here, the fund value along with all premiums outstanding will also be paid out immediately or in tranches through the settlement option and the policy terminates.

 

Joint life – On prior death of the primary life assured, all premiums outstanding is invested as bulk into the allocated funds and the fund will continue to be managed and is paid out on maturity. On death of the latter of both lives assured, sum assured is paid immediately and the fund value is paid either immediately or in tranches through the 5 year settlement option.

 

Maturity Benefit – Fund value which can be taken immediately or in tranches through the 5 year settlement period

 

Nominee – The child has to be the nominee. There is an age restriction on the nomination which is a maximum of 17 years.

 

Additional perks – Can nominate 2 children under one plan; Survival units are added at the end of 10, 15 and 20 years; Partial withdrawals are allowed after 3 policy years and without penalty after 6 policy years; 4 free switches in a policy year

 

Ideal for – Joint life is a good option where both parents are earning and supporting the children. Sum assured becomes payable on death of the latter of both lives which provides adequate protection for their future.

 

Avoid - Earning parent/parents with young children. One of the main benefits of a children’s plan is that the money comes to the child at the time he/she needs it the most. In this plan, however, the payout is immediate and therefore, the plan is ideal for those whose children are grown up enough to manage the funds themselves if the need arises.

 

Birla Sunlife Children’s Dream Plan

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In this plan, you choose the maturity value you wish to receive and the sum assured and premium is quoted by the company based on this. This maturity value is guaranteed by the product on maturity.

    

Death Benefit – Sum assured is paid, future premiums are waived and the fund value is paid on maturity.

    

Maturity Benefit – Higher of the fund value or guaranteed fund value is paid. You have the option of receiving the maturity benefits either as a lump sum or in tranches over 5 years by choosing between 100%, 200% or 300% maturity options. While the multiples are on the guaranteed maturity value, the payout happens compulsorily over 5 years for the 200 and 300% options.

  

Guarantee – It is important to note that the guarantee is available on the product only as long as all premiums are paid on or before the due date.

  

Nominee/ Beneficiary – The child has to be the nominee as the age restriction on nomination is between 30 days to 13 years. There is also a restriction on the age of the child at maturity which cannot exceed 18 years.

  

Additional protection – You have the option of adding enhanced risk cover to the basic plan in the beginning or any time during the tenure of the plan. The additional risk cover here comes at a very minimal cost.

  

Flexibilities – 2 fund switches, 2 partial withdrawals and 2 premium redirection requests are free in a policy year; Enhanced sum assured can be opted for anytime during the tenure of the plan; Top-ups are allowed when the policy is in-force

  

Ideal for – Earning parent/ parents with toddlers; the earlier you take the plan, the longer the term you get to choose. With the flexibility of enhancing the risk cover at minimal cost and relatively lower initial charges, the plan is a good option even for those who cannot afford to have high premium commitments. However, premium payment on time is imperative or you lose the guaranteed benefit.

 

Avoid – While taking a long term unit linked children’s plan, it is advisable to park your funds in equity in the initial years to maximize on growth opportunities. This product, however, offers only a maximum of 35% equity exposure which can be crippling for those who are in it for the long term.

 

The author Lovaii Navlakhi is a Certified Financial Planner, Managing Director of International Money Matters Pvt. Ltd.

 

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Published Nov 29 2009




Comments

Comments

 

rprl4 said:

whether any of these plan can beat MF+Term insurance combination for my need?

Why should i pay so many charges for ULIP plan What is IRR of these plans. please give details

December 3, 2009 6:00 AM
 

Manish said:

What kind of customers should go for Child plans ? Is it the best option for someone .. can one beat it by learning some stuff and basics ?

Manish

December 14, 2009 2:17 PM
 

lucky said:

gjgjgjgj

February 21, 2010 12:12 AM
 

keyur shah said:

please compare and tell us your research

March 5, 2010 8:22 AM
 

soumya said:

is the child plan realy helps the child???

March 10, 2010 8:39 AM
 

chandra Shekar, Hyderabad said:

Why you have not mentioned the features of LIC Plans which will give guaranteed Bonus & other unit linked plans?  This seems to be suppression of facts and imbalanced presentation.

March 15, 2010 1:26 AM
 

Vishnu, Hyderabad said:

Ans to Soumyaji 's Post:

yes child plans can help a child. Consider puting your money in an Fixed Deposit and gaining 6-7 % in a time period of 10 years. Deducting the inflation the returns that you get is not much after some period of time. Moreover we have already witnessed that the rate of return for Fixed deposits are going down. So defenitely child care plans are the best way for making an investment for your child,as in a long term you can tackle with the inflation and thereby the 'sky rocketed' fees of educational institutions.

Regards

Vishnu

March 16, 2010 7:11 AM
 

Vishnu Hyderabad said:

Dear Manish Sir.

Any person, who is earning and has a child should consider talking a child plan. yes it is a good option of investement. When you invest in any insurance company, the fund managers of that company allocates the money in equity market( Growth fund) and Debt market (income funds). Relatively debt market is safe but with low returns, where as equity market will have a higher risk higher return charachter. But even in this case also equity market can be considered as an avenue for long term investment as money never sits idle, it keeps on growing. A right balance of allocation is necessary to ensure basic safety and above average returns. ultimately we have to beat inflation also. You cannot simply keep money in your hand also as such money will lose value in some time as the purchasing power of a single unit of currency is declining every year.

Well frankly I didnt understand your last question. If you are asking whether you can be devoid of taking a Child care plan, yes but kindly make sure that other means you opt does fulfil the requirements that comes in future. Say you can do a thorough research in equity market and understand the stock movements and considering P/E ratio invest in stocks and also invest in some debt instruments like debentures to keep a part of your money safe and taking things in your own hand, maybe you can defeat a child care plan threat.

But again the Basic purpose of your child care plan is to ensure that your savings does what it needs to do. Selling your assets ( equities and Bonds) is not an idea of savings.

Regards

Vishnu

9703424637

March 16, 2010 7:34 AM
 

Kanika said:

Can somebody tell me..What is the Child Insurance market in India? revenue earned, plans sold? and wt % does it comprise of the Insurance sector?

Thanks :)

April 17, 2010 12:28 AM
 

Gaurav said:

Can anyone confirm amount of deductions from premiums during entry i.e. starting of any of above 4 plans. So, if we choose any plan from LIC without any deductions and with guarnteed growth of 100% after 18 years is also a good option. Suggestions please as I wanna do some saving for my 2 months baby.

July 26, 2010 10:22 AM

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