What are Child Education Insurance Plans?
Child Education Insurance Plans are insurance plans that take care of your protection and savings needs for securing the future of your children. As a parent, one of your most important goals would be to make sure that your children have a bright future and lead their lives comfortably. These plans can help you achieve this by saving for your children’s higher education at a prestigious university.
In our Child Education Insurance Plan, you pay premiums for a specified period (monthly, half-yearly, yearly or single pay). Once the policy term ends, you receive a lump-sum amount called the Maturity Benefit. In case of an unfortunate event during the policy term, the company offers your nominee the life cover amount. The company also waives the future premium payments* for the remaining policy term to ensure that your children’s future is always secure. This benefit is available, provided all due premiums are paid.
Why do you need a Child Education Plan?
You want to provide quality education to your child. A child education plan enables you to stay financially prepared for your child’s education needs. These plans help you save for your child’s future needs and provides you with returns that help you fulfil your child’s goals.
These plans can offer the following benefits:
Immediate Assistance for Financial Emergencies
Child education plans offer the benefit of immediate financial assistance in case of any financial emergency. Some child plans offer you the flexibility to withdraw money from the plan partially in times of your need. This feature of the plan is called Partial Withdrawal and is available after 5 years from purchasing the plan.
Tackling Rising Education Expenses
Inflation increases the cost of goods and services over time. This could apply to education expenses as well. This is why planning and saving for your child’s education is important. The returns from your child education plan can help you beat inflation and stay prepared for your child’s education expenses. These returns can be used to cover the cost of tuition fees, books, travel, and other educational expenses.
Offering Collateral for Securing Education Loans
Child education plans can be used as a collateral when applying for education loans. The collateral can help you get a lower interest rate for the loan. You may also get a high-value loan if you have collateral in place.
Protecting Your Child’s Future
Child education plans ensure that your child receives the education he/she desires with a lump sum payout at maturity or in case of an unfortunate event. It acts as a safety net to make sure that your child’s education does not get affected, no matter what!
Returns on investment
Child education plans offer the potential for high returns on investment. These plans may offer you the choice to invest your money in equity, debt or a mix of both funds. With a long-term investment horizon, these funds offer the opportunity for higher growth. This can help you meet your child’s future needs.
Key Features and Benefits of a Child Education Plan
Lump-sum benefit
The plan provides your children with a lump-sum benefit in the case of your death within the policy term
Waiver of premium
Your child won’t be burdened with premium payments as the company pays it on your behalf. Thus, the policy continues to exist
Partial withdrawals
You can access your funds during the term in the form of partial withdrawals, subject to conditions. This takes care of your child’s different educational milestones
Tax benefits
Such a policy offers tax benefits to the policyholder under section 80C of the Income Tax Act^
Loyalty Addition and Wealth Booster
These plans may also offer benefits such as Loyalty Addition and Wealth Booster, to help you grow your money without you needing to invest extra money
Riders
Depending on your plan, you may add riders that can enhance your coverage from the plan. These riders offer added security and financial support for you and your child in difficult situations
Flexibility
These plans offer you the flexibility to choose your policy term, premium payment options and frequency of payouts to suit your requirements. You can choose a policy term that aligns with your child’s educational needs. You can also customise the premium payment terms to suit your budget. Additionally, the plan provides flexibility to choose the frequency and mode of receiving the payouts.
Are Child Plans Tax-Free^?
Child plans offer tax^ benefits under The Income Tax Act, 1961. The premiums paid under the policy qualify for tax deductions up to ₹ 1.5 lakh in a financial year subject to conditions under Section 80C of the Income Tax Act 1961. Further, the benefits received during the plan’s tenure and on completion of the policy period are also exempt subject to conditions under Section 10(10D) of the Income Tax Act 1961.
How much should you invest in a child plan?
Education is the key to a bright future. Regardless of what stream or career your child chooses, ensuring that they go to a good school and college is your prime responsibility as a parent. Considering the fact that India is a developing country, the children of today have a massive role to play in the growth of the nation tomorrow. All of this can be achieved with a proper education. Not only does education open the realms of a financially secure life but can also help children develop an open mind and live a more mentally and physically balanced life.
However, the cost of education can be overbearing in some cases. As per a study conducted in 2019, it was found that the cost of education from primary classes up to post-graduation was ₹ 8,331 for a year for each student. This is only a general estimate that includes all types of schools and colleges across the country. The fee for private schools and colleges is a lot more than a public or government one. Professional courses such as engineering, medicine, and others can be even more expensive. If you combine these costs with inflation, the final figure will drastically increase further. It is hard to cover these costs with a limited source of income.
That is why, with a life insurance plan, you can ensure that your child’s future and dreams are financially secured, even in your absence.
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Types of Child Plans
1. Child ULIPS
A Unit Linked Life Insurance Plan is an insurance policy that doubles up as an investment. A part of your money goes towards protecting your child just like the standard child education plan. The remaining part is invested in a mix of equity and debt.
2. Child Savings Plans
Child Saving Plan allows the policyholder to invest in the plan without any market risk. It is a multi-faceted plan that provides life cover, maturity benefits and tax benefits, all in one single policy.
How do Child Plans work?
Let’s consider the example of Mr. Kapoor, who has taken SmartKid with ICICI Pru Smart Life, a 10-year insurance policy for his child. Now he will have to pay a premium monthly, half-yearly, yearly or in a single-pay depending on his selection of premium mode. In the case of Mr. Kapoor’s death in the 7th year of the policy, his nominee will still receive the entire life cover amount. In case Mr. Kapoor survives the policy tenure, he may choose to use the amount in parts for important milestones of his child’s educational journey, or he may choose to get a lump-sum payout at the end of the term.
Tips to consider while buying a child plan:
Here are a few tips you can consider while purchasing a plan for your child:
1. Start Early
Starting early provides you the benefit of growing your money over a long term. The interest earned over time gets re-invested to generate more returns. This is the advantage of the power of compounding.This provides you a larger amount that can be used to fulfil your child’s dreams.
2. Look for the Premium Waiver Benefit
Under this benefit, in case of an unfortunate event with the policyholder, all future premiums for the policy will be paid by the insurance company. This ensures that the policy continues and the dreams of the child are fulfilled, no matter what.
3. Look for the Partial Withdrawal+ Feature
Some plans offer the flexibility to withdraw upto a certain amount from the plan during the tenure of the policy. This feature helps you stay financially prepared for various milestones of your child, such as college admissions, wedding, and more. This also helps you stay prepared for any financial emergency.
4. Choose an Investment Fund as per your Needs
Some child plans provide you the option to choose from various funds$ – equity, debt, or a mix of both as per your risk appetite. Equity funds are high-risk funds that offer higher returns. Debt funds, on the other hand, offer stable returns. It is important that the child plan you choose provides you with options that suit your needs.
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List of Documents Required for buying Children Insurance plans
Proof of Age
Proof of Identity
Proof of Income
Proof of Address
Proposal Form
What is the claim process for Children Insurance Plans?
Below are the steps for claim process of a child insurance plan:
- Notify the insurance company about the claim. For ICICI Prudential Life, you can email claimsupport@iciciprulife.com, make a phone call to the 24 x 7 ClaimCare number at 1860 266 7766, or submit an online claim form on the website. You can also send an SMS ‘ICLAIMPolicy No’ to 56767 or visit your nearest ICICI Prudential Life Insurance branch
- Fill out the claim form accurately and completely. This includes information such as the policyholder’s name, policy number, details of the insured child, nature of the claim, and more
- Submit the required documents, such as medical reports, death certificate, and more, along with the claim form
- The insurance company may appoint a surveyor to assess the claim. The surveyor will investigate the incident and verify the details provided
- The insurance company will review the claim. Once the claim is approved, the money will be processed within 30 days of receiving all the required documents
What documents are required for Child Insurance Claim process?
Below is a list of documents required for child insurance claim. This may vary basis your plan and other factors:
For death claim:
- Claimant’s statement form
- Original policy document
- Copy of death certificate issued by a local municipal authority
- Copy of claimant’s photo identification proof and current address proof
- Cancelled cheque / copy of bank passbook
- Copy of medico-legal cause of death certificate
- Medical records (admission notes, discharge / death summary, indoor case papers, test reports, etc.)
- Prior medical records of insured / Life assured
- Medical attendant’s / hospital certificate issued by a doctor
- Certificate from employer (for salaried individuals)
For accidental / suicidal death claim:
- Postmortem report and chemical viscera report
- FIR / Panchnama / inquest report and final investigation report
- Copy of driving license if the life assured was driving a vehicle at the time of the accident (applicable if the Accident and Disability Benefit Rider has been opted)