Child plans

Child plans 

• Child insurance plans help parents to save for their children’s future financial needs such as education, marriage etc. 
• Child insurance plans offer the dual benefit of savings along with insurance. 
• It is important to note that the child does not have any income of their own. Instead, they are entirely financially dependent on their parents. The parent pays the premium to the insurance company towards accumulating money for the child’s future financial needs. 
• The child is the beneficiary who is entitled to receive the benefit on the maturity of the policy. 
• In these plans, risk on the life of the insured child will begin only when the child reaches a specified age as stated in the policy. The time gap between the policy start date and the date of commencement of risk is called the deferment period. 
• The date on which the risk will commence at the end of the deferment period is known as the deferred date. The deferred date will be a policy anniversary. 
• There is no insurance cover during the deferment period. 
• When the child reaches the age of majority (18 years old) the title of the policy will be automatically passed on to the insured child. This process is known as vesting. The date on which the policy title passes to the child is known as the vesting date. 
• After vesting the policy becomes a contract between the insurer and the insured person (the child in this case).
• Some child insurance plans come with a built-in ‘waiver of premium’ rider, whereas in the case of other child insurance plans the parent can opt for the waiver of premium rider for a small additional premium. In this case if the parent dies during the policy term the insurance company will continue to pay the premiums on behalf of the parent (until the child reaches the age of majority) and the policy is left intact. The child receives the benefit at the end of the policy term according to the policy terms and conditions. More details on riders will be discussed in chapter 7. 
• Child insurance plans can be taken out in the form of endowment plans, money-back plans or ULIPs. 

Anand Khemka
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+91-8287041341