I want to take a child care plan for my one year old daughter. Please tell me what are the kinds of children policies available along with the premium payment plans?
Suparna Tyagi, Bhopal
There is a large variety of child insurance plans available in the market. Most plans however, fall in two broad categories based on premium payments – regular or one time single-premium.
Normally in case of the regular premium policies: premium payments are generally made till the child turns 18 and thereafter the insurance company pays back in instalments in the next four years; till the age 21. This way, it provides for money at time of need of higher education or marriage. These policies insure the parent, with the benefits earmarked for the child. The added benefit is waiver of premium payment in case something happens to the parent.
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In case of single premium plans, a lump sum amount is paid at the time of taking the policy. The term of the policy can be chosen by the insured but it should be such that the age of child, at policy maturity is greater than or equal to 16 years and less than or equal to 25 years. The sum assured is generally 5 to 10 times the single premium amount paid. Only the life of parent is insured under these plans. The amount paid by the insured remains invested with the company and the fund value is paid on maturity. However, if you do not want the proceeds on maturity (i.e. in case you want to stay invested in market for longer time), you may choose to defer payment of proceeds by opting for the Settlement option.
