Why Child Plans?
Child Insurance plans have become very important because they specifically provide for ones childs future even in ones absence. The inbuilt premium waiver rider ensures that the plan continues even after the parents death and the benefits accrue and when they are payable so that the benefits can be utilized for the purpose for which it was initially planned, i.e. for the childs future. For example, an individual with a child currently aged 5 years buys a 20 year child plan which promises money backs at the 15th, 17th and 20th policy anniversary. The policyholder has planned the money back periods to coincide with the childs educational milestones and would receive the funds when the child reaches 20 years, 22 years and 25 years. The funds will be utilized to take care of the childs higher education. If the insured dies, the plan will not be terminated. Future premiums will be paid by the company and the money-backs will be paid as and when promised. Thus, the money will be utilized only for the childs education which was the actual rationale for buying the plan.
ICICI Pru Smart Kid Assure Plan
A unit linked child plan which offers the following benefits to the customer:
It is a unit linked plan which offers two options of investment portfolio strategies which are Life cycle based Portfolio Strategy and Fixed Portfolio Strategy.
Under the Lifecycle based portfolio strategy, the premium will be initially distributed between two funds namely Multi Cap Growth Fund and Income Fund based on the age of the policyholder. Multi Cap Growth Fund is a high risk and high return fund with the maximum allocation of premium in the initial years while Income Fund is a low risk low return fund. With the passage of the policy term and increasing of the policyholders age, the investment will be redistributed gradually every year with money being transferred form the Multi Cap Growth Fund to the Income Fund to protect it from high volatility. In the later ages, as the policy nears maturity, the bulk of the investment will be in the Income Fund which offers a low risk profile. The distribution and balancing of the allocation is done by the company automatically.
Under the Fixed Portfolio Strategy, the company offers a choice of 6 funds and the policyholder will have to choose the fund according to his risk appetite. The funds available under the options are Opportunities Fund, Multi Cap Growth Fund, Blue Chip Fund, Multi Cap Balanced Fund, Income Fund and Money Market Fund.
There is a feature of Automatic Transfer Strategy under the Fixed Portfolio strategy under which the policyholder may choose to invest all or a part of his premium in the Money Market Fund and from there a chosen amount may be transferred automatically to the Blue Chip Fund or Multi Cap Growth Fund or Opportunities Fund as per the policyholders choice.
On maturity of the plan, the available fund value is payable to the policyholder. The policyholder may choose the receive the fund value on maturity in lump sum or keep the proceeds invested with the company for further 5 years under the Settlement Option. During these 5 years, the policyholder can avail the fund value in installments.
In case of death of the insured during the tenure of the plan, the basic Sum Assured chosen at the time of buying the plan is paid subject to a minimum of 105% of all premiums paid till the date of death. Moreover, future premiums are waived off under the inbuilt Payer Waiver Benefit and are paid for by the company and the plan runs unaffected. On maturity, the available fund value is again paid to the beneficiary who is the child.
There is an option of adding the Income Benefit Rider wherein, in case of death of the insured, 10% of the rider Sum Assured will be paid to the beneficiary every year post death till the maturity of the plan in addition to the death benefit payable as above.
Accidental Death and Disability Benefit Rider is also available under the plan which promises additional payment in case the insured suffers an accidental death or disability
The plan offers Guaranteed Additions which vary in the range of 120% – 170% of the annual premium. The Guaranteed Additions will be added to the fund value at the end of 15 years.
From the 6th year of the policy there will be an additional allocation of premium @ 2%. Thus, from the 6th policy year, 102% of the premiums paid will be allocated to the fund.
The Sum Assured can be increased or decreased subject to certain terms and conditions.
Additional premiums can be paid through top-ups with a minimum value of Rs.2000
Switching between funds is allowed under the Fixed Portfolio Strategy with a minimum value of Rs.2000
One free partial withdrawal is allowed every three policy years subject to a maximum of 20% of the available fund value as on the date of withdrawal.
A change in portfolio strategy is allowed once every year
Applying for a Child Plan from the company:
The company offers specific plans which are available online only. The customer only needs to log into the companys website, choose the required plan, choose the coverage and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card or net banking facilities and the policy will be issued
Plans which are not available online can be purchased from agents, brokers, banks, etc. where the intermediaries help with the application process.
How does a parent benefit from a child plan?
The parent is the policyholder in a child plan. As a result he pays the premiums and keeps the plan active. This proves to be extremely beneficial for him because once the premiums are paid, the fund begins to build up and this helps ease the parents financial burdens. As we all know, education is one of the costliest sectors today and so paying for a childs education can be taxing. But the child plan helps you here, as you can opt to receive lump sum amounts of money when you need them most – at the time of your childs school admission, college admission, etc. You can also set up a fund for your childs marriage. A child plan helps as you can begin saving early and gradually save enough for the big moments in your childs life.
How exactly is a childs future protected with the help of a child plan?
From the points mentioned above, we can clearly see how a childs future is secured with a child plan. Not only does it assist the parents in paying for the childs education, marriage, etc, a child plan also ensures the child continues to get a good education even if the parent suddenly dies.
So a child plan not only provides for the expenses of the childs future educational expenses it also covers for the risk of the parents life so that if the parent dies prematurely, the childs education is not affected.