Education Risk

Benefits of Child Plans

We’re sure that your topmost priority is securing your child’s future. Apart from helping you do this, child plans offer a wide variety of other benefits such as:

Securing Their Dreams

These policies allow you to save up a lump sum amount that your child can then use to follow their heart’s desire. If your child would like to go abroad for their education or start their own business, this money could help them do precisely that. Every good child plan will help secure your child’s dream financially.

Financial Stability

One of the major benefits of these plans is that they will provide your child with financial stability in case something were to happen to you. Although nothing will ever replace you or make up for your loss, your child will still have the ability to continue their education or fulfil their dreams thanks to the payout from the plan.

Maturity Benefit

If you purchase a plan when your child is very young, it’s likely they will receive the maturity benefit just when they’re ready to head to college. Given the rise in education costs, this has become all the more important today. By investing in a child plan, you can help secure your child’s college expenses.

Additional Riders

Many child plans come with additional benefits, such as a waiver of premium or personal accident insurance riders. These add-ons provide additional cover, over and above what is already offered in a regular policy. These riders provide peace of mind and additional support and security for your little one.

Partial Withdrawals

Certain plans allow you to make partial withdrawals against the corpus you’ve built up over the years. This allows you to deal with financial emergencies. You can use the withdrawal from the plan to help pay for any special course that your child wants to take up.

Income Tax Benefits

The premium that you pay towards the upkeep of a child plan is exempt from taxes under Section 80C of the Income Tax Act 1961. You can claim deductions up to INR 1,50,000 per year against the premium amount. Additionally, the payout from this plan is also tax-free under Section 10(10D) of the Income Tax Act.

How Child Plans Work

Child plans were created for the sole purpose of helping your child fulfil all their dreams. To start the process, you must decide whether you’d like to purchase a Unit-Linked Insurance Plan (ULIP) or an Endowment Plan. A ULIP will provide you with the opportunity to choose where you’d like your money to be invested. On the other hand, if you opt for an endowment plan, the insurance provider will simply invest the amount in debt instruments.

While purchasing the policy, you also need to clearly state whether you’d like a lump sum payment or regular, monthly or annual payments. Once you sort out the details and pay the premium, the child plan will come into effect.