Child insurance plans: Waiver of premium option offers double protection

The importance of financial avenues that can grow money faster than inflation cannot be overstressed. Particularly when education remains one of the key concerns for most Indian parents. The high education inflation, low savings and the uncertainties relating to life make parents worried about ensuring a good education for their children. Therefore, it is advisable to invest in products that can give regular payouts at important milestones of your child’s academic life and make sure that the funds are available for the child whether or not you are around.

The feature that makes children plans unique among all options in the market is ‘waiver of premium’. It offers double protection with two payouts if the policyholder dies—one when the life assured dies and the second when the policy matures. The waiver of premium option ensures continuity of the insurance plan even in the case of the parent’s demise so that your child’s education needs do not get hindered.

Here’s what sets it apart

A regular insurance policy gets terminated either after the demise of the life insured during the policy term or after paying out the maturity value if the life insured survives the term. Children’s plans are structured differently. Here the insurer pays the nominee the sum assured upon the death of the life assured. But unlike regular policies, it does not terminate. Here future premiums are waived, and the policy continues till its maturity date as if premiums were being paid. At the time of maturity, the insurer pays the maturity value again so that the child can take up the higher education as earlier planned at the age of 18 or 21 years.

Apart from the waiver of premium, other riders are also available to address different milestones in your child’s life cycle. For example, there are riders to ensure that your child gets payouts for landmarks like tuition or coaching charges, extra-curricular activities, among others, if you are not around.