Child Plans – How They Work & Should You Buy Them?

Child – parent relation is of natural love & affection and planning for there education/marriage is of prime importance for them.Thats were Child plans comes into focus.Such plans are being offered by insurance as well from few mutual funds.Today we will have some thoughts on Child plans offered by life insurance companies.

Most of the insurance companies offer endowment[bonus plans] as well unit linked children plans.Today we will discuss in relation with the endowment plans only.

Common Futures Of Child Plans –

1. Under child plans parents are insured and child is beneficiary,till child attains age of 18 yrs benefits are paid to appointee.
2. Guaranteed Payouts – These payouts are based on fixed percentage of the sum assured.Most of the plans offers the payouts in the structured way in the last four years of policy, probable years of childs graduation.There are few policies which make payouts in the intermediate periods approximately when child is in 10th, 12th and graduation period.
3. Payouts – Payout periods differ from policy to policy.Few policies offer payouts after completion of selected years. General payouts are 20% of SA,25% of SA, 25% Of SA & 30% + Bonus accumulated as last payout.
4. General Death benefits – under event of unfortunate death of insured parent,following benefits are generally paid :

• Sum assured : paid immediately.
• Waiver of future premiums – Most of the plans have this in built future. All future premiums are paid by company and policy continues.
• Guaranteed payouts – Child will receive structured payouts as  per terms of the policy.