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A plan that offers long term savings and insurance in one premium.
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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/492
Like a typical endowment plan, a child endowment plan is a life insurance policy that offers dual benefits of life insurance and savings in one policy but comes with additional benefits.
Every parent is concerned about their children’s future. Financial security is one of the most critical aspects of children’s future. So, parents do everything possible to ensure their children don’t face economic issues. Investing their earnings in a child savings plan or other best investment plan for the child is one of the best solutions.
In this article, we will discuss the best investment plan for a child and highlight the features and benefits of child investment plans like endowment plans to give you a better perspective on the ideal features a parent should look for in a child savings plan.
Just like ULIP policy, an endowment plan is a modern life insurance option available in the market with a dual benefit. An endowment plan offers the policyholder a blend of life insurance and investment. In this life insurance option, the policyholder gets the best of both; investment returns as maturity and death benefits in case of the policyholder’s unfortunate demise.
In an endowment plan, the policyholder or the nominee receives a lump sum amount either after a specific policy term or post the unfortunate demise of the policyholder, depending upon the situation.
Thus, it is one of the best investment options that a person looking to invest hard-earned money can opt for. Moreover, as you get a living benefit through periodic payouts and simultaneously enjoy life insurance cover. Endowment plans are the best pick for your children. There are dedicated endowment plans for children that a parent must look through and opt for, depending on how one of these child endowment plans is fulfilling their child’s financial requirements.
Like a typical endowment plan, a child endowment plan is a life insurance policy that offers dual benefits of life insurance and savings plan in one policy but comes with additional benefits. In this plan, a policyholder, in addition to having the flexibility of choosing a sum assured amount as per their financial requirements, also guarantees a payout in the event of the parent’s death or when the child attains an age of adulthood. In addition, you also get regular bonuses on an endowment plan.
These features make a child endowment plan the best investment plan for a child that a parent must choose for investing in their child’s future, while ensuring an excellent financial growth of the invested funds.
*Note: Different policies define adulthood or child maturity age differently. Thus, it is suggested to read policy documents carefully.
Other than the primary benefits of an endowment like life insurance benefits, maturity benefits, and loan benefits, there are additional benefits of a child endowment plan.
Let’s have a look at some of them:
Under Section 80C and Section 10 (10D) of the Income Tax Act, the premiums you pay for a child endowment plan (of up to ₹1 Lacs) and the maturity benefits are exempted from tax.
Individuals can pay the premium at once or in regular, timely premiums, whatever fits their preference. However, it must be noted that an endowment policy’s premium(s) payment depends on the sum assured.
When you look for a child endowment plan, a guaranteed maturity benefit is assured. It means you can be assured about your child’s financial security while having a life insurance cover.
In addition, the policyholder will receive a lump sum payout. These payouts are a huge collective amount that a policyholder receives when the policy attains maturity. This type of payout can help you take care of significant financial liabilities like higher education for your child or their marriage expenses, amongst other important things. In addition, this amount serves as a substantial corpus for their requirements.
Here is a list of the essential features of a child endowment plan:
- The minimum age criteria to own a policy is 91 days. This means the child must think of 91 days old to hold a policy.
- The maximum age criteria to own a policy is 13 to 15 years based on the policy guideline of different insurance providers.
- The minimum sum assured can be ₹1 lakhs.
- The maximum sum assured can be up to ₹1 crore. However, other child endowment plans have no upper limit.
Experts believe that the best time to buy a policy is today. And when it is about the financial stability and security of your children and their future, you must opt for the best investment plan for child. Endowments assure your children will be financially stable. Additionally, your children will have a monetary corpus at their disposal.
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/521
