What are the most important features of a child plan?

A child plan is one of the most useful financial tool towards securing your child’s future. This is because a child plan continues even after your (the parent’s) death and it pays the maturity benefit as promised.

When a parent buys a child plan, he or she is assured that the insurance company will pay an amount promised at the time of maturity, even if the parent is dead. This maturity amount can then be used to fund the child’s education or marriage. Thus, a child plan secures the child’s financial future. Additionally, if the parent dies, there’s no burden on other family member to keep paying the premiums.

- Waiver benefit in case of parent’s death

Child plans also have the unique feature of an in-built premium waiver benefit. This benefit waives the future premiums if the parent dies during the plan term. So, the parent is not only assured of a maturity benefit, he or she also knows that the family would not face the burden of paying any premiums to continue the plan. The plan would then continue automatically and pay benefits as and when promised.

- Rider customisation is allowed

Child plans, whether traditional or unit linked, understand the importance of securing funds for your child. This is why these plans also allow various add-on riders. Rider are provisions which help increase the scope of coverage. The policyholder can choose any rider as per his requirement and enhance the coverage provided by a child plan.

- Tax saving

The premium a parent pays for a child plan are tax-free under Section 80C, up to a maximum of Rs.1.5 lakh. Moreover, any death benefit or maturity benefit received under the plan is also completely tax-free and that too without any limits! So, a child plan not only builds a corpus for your child it also saves your tax liability.