Once you become a parent, you have a big responsibility on your shoulders to raise your child and provide him or her with a secure future. But you may not be there all the time with your child as life is uncertain. Besides, rising inflation and education makes it difficult to successfully provide for your child financially when he needs it most to pursue higher studies. Hence, you should go for a child plan
that will not only provide a secure amount to your child if something happens to you, but also a maturity benefit on the completion of the term.
However, you have to pay a cost to avail this child plan to secure your kid’s future. You need to pay premium on the child plan so that he can receive funds when he needs it the most for pursuing higher education.
There are some factors affecting child insurance premium. Let us have a look.
You can choose an amount that you think you will need to fund your child’s education or dream to pursue a particular profession. You also need to take into account the inflation rate to arrive at that particular amount. This sum assured selected will determine the premium you need to pay every year.
Tenure of the policy:
Once you have selected the sum assured to fund your child’s education, you need to then figure out the age at which your child will require those money. For example, if your child is 12 years of age now and studying in class 6, he will require the money 10 years later when he has completed his graduation and ready to pursue higher studies. And if he is 15 years now, he will require the sum assured 7 years later. Hence, the lesser the tenure of the policy, higher the premium, considering sum assured is the same in both the options.
Type of policy chosen:
The type of policy chosen will determine the cost of the premium. The premium of a child plan that offers lump sum amount at maturity will be different as compared to a plan that offers money back benefit or instalment payout to meet the needs of your child at regular intervals. Besides, there are plans that offer premium waiver on death of the policyholder. Hence, the premium on this plan might be higher when compared to a plan that does not offer add-ons.
Frequency of paying premium:
There are certain benefits of paying premium on a yearly compared to half-yearly or monthly basis. When you pay premium yearly, you pay less than on a half-yearly or monthly mode of payment.
You may choose to take accidental death benefit
or permanent disability benefit riders with your child plan to cover all the risks involved. Hence, in such a situation, the costs of the premium will be higher than just a normal child plan offering a death and maturity benefit.
Hence, study various insurance websites to identify an affordable premium without compromising on the sum assured you need to finance your child’s future.
What is not included in child plan( exclusions in a child plan)
A child plan is the best way to secure your kid’s future. With a child plan, you can provide a financial security to your child in the event of your untimely death. Post the death of policyholder in a child plan, the premium is waived off and a maturity benefit is paid to the child so that he or she can take care of higher studies.
These child plans also come with few riders – such as accidental or disability benefit. You can also buy a child health plan to take care of the medical needs of your child.
All this sounds good, but you may not be aware of about the insurance plan are exclusions
—features that are not included in the policy.
These are called terms and conditions,
which are published in fine print. But often insurance seekers tend to read them only in passing.
It’s important to read the exclusions carefully so that your child receives the plan benefits timely and efficiently.
What are the exclusions in a child plan?
Suicide of the parent:
No benefit is given if the life assured commits suicide within one year of the child plan.
Even if accidental death benefit or permanent disability benefit riders are taken with the insurance plan, there are certain instances when compensation is denied if accident is caused due to the following reasons:
- Participation in riots, strikes military service
- Influence of illegal drugs or alcohol
- Racing or betting or illegal flying
- Criminal or illegal act
In cases critical illness rider is not taken with the insurance plan, certain diseases may be excluded from the plan. This may vary for different insurers and will be mentioned in the policy document.
Exclusions in child health plan
You can buy a separate medical plan to secure your child’s health. But even in such plans, there are certain exclusions that you must note down before buying the plan.
- An older child will be excluded from receiving compensation for treatment of a particular disease if he or she has that pre-existing disease.
- High-risk activities such as mountaineering, life-threatening hobbies that can lead to accidents or major injuries, or hunting.
- If there has been a deliberate failure to take medical help at the right time.
- Diseases due to sexual misconduct.
- Radioactive-related diseases.
- If the facts and figures in the policy are misrepresented, compensation might be denied to the policyholder.
Hence, it is extremely important that you compare various child plans and read what is being offered—especially what are excluded from the plan—to choose the best policy for your child in order to secure his or her future.