Child policy takes care of your child’s financial needs, both during your lifetime and after your demise. As a beneficiary, your child receives matured amount either in a lump sum or flexible / regular payouts. The main motive of child insurance plans is to secure your child’s financial future.

Child plan in India not only serves as insurance but proves to be a great investment tool. Investing in child policies as early as possible will offer you higher returns in the long run, and you will have enough finances for your child as and when the need arises.

Almost every child plan in India offers various rider benefits, which are generally not included in base plans. Before you buy a child savings plan, understand what supplementary benefits the plan offers.

1. Regular Income Availability – The plan might be able to offer regular income throughout the policy term or post the insured parent’s death without the liability of paying further premiums.

2. Premium Waiver Availability – Since the parent insured buys the plan for securing the financial future of the child, there should not be a burden on the surviving parent to pay premiums for policy continuation.

3. Option of Increasing Existing Cover : Availability of a rider like the Term rider, allows the parent to get additional Sum Assured equal to the policy Sum Assured with a nominal amount of extra premium.

With growing education cost and inflation rate, about 60% of parents worry about their child’s future. You should opt for a plan that offers financial support at different stages in your child’s education, provides life cover for the parent/s along with tax benefits. When choosing the best child plan, do consider the following major factors:

• Education is a sure way of ensuring a good future - Education beyond its conventional boundaries leads to a bright future. It induces and enhances personal, social, and economic development. All of us agree that education empowers minds and conceives positive thoughts. Your child feels confident and ready to face challenges and make important life decisions.

• Increasing cost of education - Quality education is crucial for your child to shine in today’s competitive environment. However, without proper financial planning parents may have to struggle with the fee constraints. Above all, if your child decides to pursue higher education abroad, it will cost you a fortune.

  Basic monthly savings are not enough to compete with increasing education cost and inflation rate. However, with best child investment plans, you can secure your child’s education and let them chase their dreams without worrying about finances.

• Funds ensured even if, the insured parent is no more - Child policy offers life cover either as a lump sum payment or flexible payouts at important milestones in your child’s life. Life is unpredictable. While none of us wants to think about unfortunate situations such as critical illness or death, child plan shields your child’s future in case of adverse circumstances.

A Child Insurance Plan has various long-term benefits. It’s not only about financial protection in case of unfortunate situations but investing in your child’s ambitions and bright future. Parent has to invest minimal insurance premium as the amount is spread over a long-term. Your minimal annual investment over long-term can build a corpus, which can be utilized by your child for his/her education, career, marriage, and many such important goals in life.

Protection against untoward situations -The major benefit of Child Investment Plan is the life cover. Your child receives a lump sum amount or flexible payouts in case of insured parent’s unfortunate demise. Insurance riders such as accidental death and critical illness riders provide added benefits that slightly higher premium. A proper insurance policy helps your child take care of expenses even in your absence so that they can move ahead in life.

Easy finances for higher education - Although an education loan might help you complete your child’s dream of studying abroad, a Child Savings Plan maturing at the right time can fill the remaining gap. So your child can focus on her or his studies without worrying about finances.

Investing in your child’s future - Better be safe than sorry. Early planning and the right child investment plan can help you help you secure your child’s future and prepare him/her financially to to face any unexpected situations.

Parents who have children between the ages of 0 – 10, who wish to build education corpus for their child are advised to invest in child insurance policies. You can buy child plan the day your child is born or start investing in one on your child’s first day of school. However, the earlier you start investing, the higher will be the returns. Early investing in the best child education plan will also keep the premium amount to a minimum.

While you decide on the amount of insurance cover, do consider your current income and expenses. Pending loans and credit bills also need to be considered.

The growing education cost and the inflation rate will make it difficult to meet your child’s need for quality education. Thus early child investment plan will give you enough time to plan for your child’s secure future.

A child education plan offers dual benefits of investment and insurance. Policies providing financial protection are also known as child insurance plans. Though named as an education plan, these plans provide flexible payouts for important events in your child’s life such as studying in abroad, starting a business, or marriage.

There are two main types of Child Investment Plans: traditional endowment plans and market-linked ULIP plans. The policy terms depend on the type of Child Plan you choose.

Type of Child Insurance Plans provided by Aviva

We believe every child is unique, so are their needs and dreams. Based on what parents like to choose for their children Aviva offers two best child plans meeting parent’s needs and helping your children on every step of their life.

• Aviva Young Scholar Secure – A traditional insurance plan that helps you secure your child’s education.
  The plan offers:
• Multiple payouts to support school and college fees
• Funds to support higher education
• Uninterrupted education, even in case of death of the insured parent.
• Immediate lump sum payout to support the family in case of death of the insured parent
• Aviva Young Scholar Advantage – A unit-linked insurance plan (ULIP) that supports your child during their important educational milestones.
• Higher educational funds in the form of a lump sum payout
• Funds to use for planned/unplanned expenses
• Uninterrupted education, even in your absence
• Immediate lump sum to support the family in case of death of an insured parent

There are many traditional ways you can invest for your child’s future. For decades people have been investing in gold, real estate or in FDs and RDs. Though these are the popular means of investment, returns on FD and RD investments can’t meet the growing education cost and inflation rate.

While investing in gold or real estate can be an option, the prices tend to fluctuate, and returns are uncertain. Also, one has to wait for the payouts after selling these assets. A right Child Savings Plan tackles all the hurdles. A Child Savings Plan helps you with finances on every important step in your child’s education. It also acts as a life cover in case of the insured parent’s untimely death.

Insurance companies offer child policies with various tweaks and added benefits to suit your needs. However, before choosing a child plan, you should understand the basic types that fulfill the general needs of the insured person.

1. Traditional Child Plan - In this plan, your investments are put into the debt market. The plan provides guaranteed / non-guaranteed payouts and there is security due to low-risk investment into various debt instruments.

2. Unit-Linked Investment Plan (ULIP) - Through this plan, your investment is divided into debt and equity instruments as per your risk profile. Thus you get dual benefits - higher-returns from investing into the equity market and rebalancing the risk with debt investments. Though invested in high-risk products, ULIP might provide higher returns to secure your child’s future.

3. Single Premium Insurance Plan - At times, some parents feel pressured having to remember the dates and set aside premium amounts every year. Single premium insurance plan allows a one-time payment, without compromising the benefits.

4. Regular Premium Insurance Plan - These plans allow parents to choose policy benefits they would like for their child. The regular premium insurance plan provides the flexibility to align the premium paying term to their active earning period. There might be a flexibility of paying premiums at a suitable frequency suitable viz. monthly, quarterly, half yearly.

Choosing the best child plan is not easy. You have to consider all possible scenarios before you come to your decision. Here are a few tips that will help you find the right policy for your child:

1. Plan the stages - Make sure the premiums and policy period are spanned out to the specific events of your child’s life. That way, you will have enough finances to support your child’s significant decisions such as studying abroad or starting a business.

2. Premium frequency - Know your investment appetite and how frequently you can pay the premiums. Some insurance plans allow the policyholder to pay monthly, quarterly, or annually. Also, the premium amount depends on the maturity amount of insurance as well as the period. Hence, the earlier you start, lesser the premium will be.

3. Rider benefits - Parents often worry about paying repetitive premiums and if their child will be protected in unexpected situations. A waiver rider eliminates the need to pay remaining premiums after parent’s death. Also, choosing a single premium plan will allow you to pay a one-time premium. Know about different riders and choose the right one for your child.

4. Estimate the inflation - While deciding the insurance cover amount consider the rising inflation along with your daily expenses, pending loans and credit bills. That will help you to invest the right amount and ensure a financially secured life for your child.

Aim of child plans is to ensure adequate money for education and marriage, irrespective of survival of parent.

The key difference is that a child plan has additional features to secure child’s future even if parent is not around.

For e.g. Mr. X is 35 years old and has a 4 year old child. He wishes to ensure that an amount is available to him when his child passes out of class 12. He starts investing Rs. 25,000 per year in a saving instrument. He also invests Rs. 25,000 each year in a child insurance plan. At age 40 Mr. X suffers a severe heart attack and dies.

His family receives the following :