As parents, we always strive to secure the future of our children. One way to protect their financial well-being is by investing in a child insurance policy. However, with numerous options available in the market, choosing the right policy can be overwhelming. To make an informed decision, it is crucial to consider several factors that align with your child's future needs and financial goals. In this article, we will discuss the key factors to consider when buying a child insurance policy in India. And at the end of the article, we’ll share some of the best Insurance Policies you can choose from so read till the end!
Factors to consider while buying a Child Insurance Policy:
Coverage and Benefits:
The first factor to evaluate is the coverage and benefits provided by the policy. Look for policies that offer comprehensive coverage, including life insurance and various riders for critical illnesses, accidental death, or disability. Assess the policy's maturity benefits, such as guaranteed returns or bonuses, which can help fund your child's education, marriage, or future endeavors.
Premium Payment and Flexibility:
Consider the premium payment options and flexibility offered by the insurance provider. Evaluate whether the premium payment terms suit your financial capabilities. Some policies allow flexible payment modes, such as monthly, quarterly, or annually, ensuring convenience and ease of managing premiums.
Policy Tenure and Flexibility:
The policy tenure plays a vital role in meeting your child's future financial needs. Consider policies with flexible tenure options that align with specific milestones in your child's life, such as education or marriage. Longer policy tenures provide more time for your investment to grow and accumulate returns.
Bonus and Guaranteed Returns:
Review the policy's bonus structure and guaranteed returns. Policies with participating features provide annual bonuses based on the insurer's performance. Additionally, guaranteed returns ensure a certain minimum payout at maturity. Consider policies that offer competitive bonus rates and attractive guaranteed returns.
Premium Waiver Benefit:
Look for child insurance policies that include a premium waiver benefit. This feature waives off future premiums in case of the policyholder's unfortunate demise, ensuring that the policy remains in force and the financial goals for the child are not compromised.
Flexibility to Customize:
Consider policies that allow customization to suit your specific requirements. This may include the option to increase or decrease the sum assured, change premium payment frequency, or add riders to enhance the coverage. The ability to tailor the policy ensures that it aligns with your evolving financial needs.
Claim Settlement Ratio and Reputation of the Insurer:
Evaluate the claim settlement ratio and reputation of the insurance provider. A high claim settlement ratio indicates the insurer's efficiency in processing and settling claims. Research the insurer's reputation, customer reviews, and financial stability to ensure reliability and trustworthiness.
Tax Benefits:
Child insurance policies offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act. Consider policies that provide tax advantages, allowing you to save on taxes while securing your child's future.
Inflation Protection:
Factor in the impact of inflation on your child's future expenses. Look for policies that offer inflation protection through features like increasing the sum assured or providing an option to increase the coverage periodically. This ensures that the policy keeps pace with the rising cost of education, healthcare, and other expenses.
Transparency and Disclosure:
Choose an insurance provider that maintains transparency and provides clear policy terms and conditions. Carefully review the policy documents, including exclusions and limitations, to fully understand the coverage and potential limitations of the policy.
Let’s deep dive into the top child insurance policies!
| Plan | Entry Age | Maximum Maturity Age | Minimum Annual Premium | Minimum Sum Assured |
| Aviva Young Scholar Advantage Plan | 21-45 years | 60 years | 50,000 | 10x annual premium |
| Exide Life Mera Aashirvad Plan | 21-50 years | 65 years | Not applicable | 3.5 lakhs |
| Aegon Life Rising Star Insurance Plan | 18-48 years | 65 years | 20,000 | 10x regular annual premium |
| HDFC SL Youngstar Super Premium | 18-65 years | 75 years | 15,000 | 10x annual premium |
| SBI Life Smart Champ Insurance | 21-50 years | 70 years | 6,000 | 1,00,000 |
Buying a child insurance policy is a crucial step in securing your child's financial future. By considering factors such as coverage and benefits, premium payment flexibility, policy tenure, bonus and guaranteed returns, premium waiver benefit, customization options, claim settlement ratio, tax benefits, inflation protection, and transparency, you can select a policy that aligns with your child's needs and provides financial security.
Happy Investing,
Team Upstox
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.