Will a child insurance plan really ensure your child’s future?

Written by : Knowledge Centre Team

2024-08-02

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As a parent, one of the most important obligations is to fulfil the educational goals of your child. So, they can go on their way to fulfil their aspirations. Although you can invest in any of the several long-term investment options available, child plans could still be the best investment plan for your child’s future.

Your children are the biggest hope of your life. The ultimate goal of your life is to see your children accomplish their aspirations. With one of the highest inflation in the education sector, higher education expenses have been rising rapidly. You need to start investing early and consistently invest for a long period in the best child insurance plan to ensure a safe future for your child.

Why Invest in Child Insurance Plan?

So, when it comes to sustaining the higher studies of your bright kids, you need your life’s savings to work harder. The best child insurance plans can provide you with the much needed financial assistance for your children’s education and other goals:

a) A child insurance plan serves a dual role of protection and savings plan. It gives a life cover and increases your saving corpus, which you can use for your child's long term needs.
b) You can get a lump-sum amount for your child's educational needs when your policy matures or even if any mishap occurs with you.
c) The protection element of a child insurance plan builds a safeguard to make sure your child’s future isn't hampered if anything happens to you.

reasons-to-invest-in-child-insurance-plan

Types of Child Insurance Plans

Based on your preference towards savings or investment, there are 3 broad categories of a child education plan:

I. Endowment Child Plans

This is a very safe avenue to allocate your funds if your motive is getting guaranteed savings benefits to support your child’s needs. These plans are suitable for you if you are sure about how much amount you need. For example, saving Rs 50 lakhs for the goal of sending your child abroad for higher studies.

This is because the child endowment plans provides you with a safe investment option that offers an assured amount on maturity.

II. Moneyback Child Plans

If you wish to receive certain amounts at various stages of your child’s growth, the money-back child education plan is the best option. It offers fixed instalments of your sum assured at regular intervals as selected by you in form of cash backs.

Such child insurance plans are also suitable if you need a certain amount over multiple years of your child’s education. For example, a 5-year integrated MBA program that involves payment of an annual examination fee.

Apart from that, Money back child plans are participating plans, i.e. they offer bonuses to you that add to your maturity amount.

III. ULIP-based Child Education Plan

If your motive is to get a high growth rate and more flexibility of your portfolio, then you can go with the ULIP-based Child Education Plan. These are investment plans that allow you to invest as per your investment risk appetite. You can choose the type and ratio of the portfolio of your investment between equity, debt, mutual funds and hybrid funds.

Besides, you rearrange your portfolio with an auto rebalancing strategy if you wish to use market fluctuations as per your benefit. The ULIP-based Child Education plans additionally offers extra loyalty bonuses if you continue with your policy till the long term.

Canara HSBC Life Insurance Invest 4G is one such lucrative plan that offers complete freedom to investors to allocate the funds in various portfolios. Additionally, it offers three cover options for different life stages of your child.

Have a look at how your child education plan will assist you in fulfilling your child’s goals.

How does a Child Insurance Plan Ensure your Child’s Future?

The child insurance plans work in a very systematic way to serve the dual goals of giving you a life cover as well as providing you with a certain maturity amount for your child’s goals.

Here are the different key features of a child insurance plan that help you to arrange adequate funds for your child’s future:

I. Life Cover

A child education plan has two important elements – a life cover that your family shall receive in case of untimely demise; along with a certain assured maturity amount that you receive at the end of the policy term if you survive the policy. These 2 elements are common to all 3 types of child insurance plans.

II. Premium Protection Feature

Premium Protection is a feature that ensures continuity of the investment, even in case of your early demise. If you opt for the Premium Protection plan, your insurer will pay all your remaining premiums in case you pass away within the policy term. At the end of the policy, your insurer will pay your family the maturity value. The Premium Protection Plan is offered by all 3 types of child plans.

III. Bonus Additions

All participating child plans shall offer you bonuses for staying invested, called loyalty bonuses. ULIP plans offer bonuses in form of loyalty rewards and wealth boosters. The endowment child education plans accumulate your annual guaranteed bonuses. ON the other hand, the money-back plans also offer bonuses, but they are not guaranteed ones.

All the accrued bonuses shall be payable to you at the policy maturity, along with the maturity. These are tax-exempt u/s 80c and 10(10d) of the Income Tax Act. However, in the case of ULIPs, the tax-exempt limit of bonuses u/s 10(10d) is INR 2.5 lakhs.

IV. Partial Withdrawal

Endowment Child Education plans come with the option of systematic withdrawal from the policy in the last few years before the end of the policy term.

Canara HSBC Money Back Advantage Plan comes with a policy term of 16 years and a premium payment term of 10 years. It offers regular pay-outs of 15% of the total Sum Assured, at the end of the 5th, 9th &13th policy year. Finally, at maturity of the policy, you will receive a guaranteed lump sum amount, which shall be equal to 55% of the total sum assured along with accumulated bonuses at simple rates.

In the case of a ULIP Child plan, you can easily opt for complete withdrawal from the policy with all your accumulated investment corpus, but only upon completion of at least 5 years of the policy term. This withdrawal shall be tax-free, offering you the flexibility to withdraw at any point in time.

Child insurance plans from Canara HSBC Life Insurance offer safety to your child’s goal with multiple investment options. Even in the case of your early demise, your child’s goal will remain unaffected:

i. The insurers will give your family the guaranteed death benefit; and
ii. They will pay the remaining premiums till the maturity of the policy.
iii. At the end of the policy term, your family shall get the maturity value.

This way, the child education plans ensure continuity of the investment even after your untimely demise. Now, you can easily understand how a suitable child education plan can is the best investment plan for child-future.

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We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.