Ch. 6: Customization Options in Child Plans

Suppose you want to curate a gift hamper for your friend’s birthday. You know they love football, enjoy gourmet food, are a diehard FRIENDS fan, and are a bookworm too. You decide to customise the hamper keeping all these details in mind, so they truly love the gift! You include a FRIENDS-themed tee, some international chocolates, thriller novels, and football merch like a scarf, etc.

Similarly, child plans come with a number of customization options, which can be chosen according to your needs, preferences, and future planning. Each parent has a different level of financial stability and the goals for each child vary too. Some may want to save for their child’s education, some may want to save for their wedding, or some may want to save for both!

Let's dive in!

Different Limited Pay Options

With this feature, you are required to pay the premiums only for a specified period of years. You are covered fully until the end of the policy term, regardless of the period during which premiums are paid.

By taking advantage of this type of plan, you can get complete protection for the entire policy duration, even when they are unable to pay the premiums in their later years.

Depending on the product, the limited payment options available may range from 5 to 12 years or can even be fixed like 5 Pay, 10 Pay, etc. In these terms, the preceding numbers indicate the number of years you wish to pay premiums.

For example:
30-year-old Maneesh purchased a Limited Pay Child plan with a cover amount Rs 30 lakhs for a period of 20 years. By the time Maneesh reaches 40, he intends to cover all his premium liabilities. Therefore, he can pay off the premiums for the child plan over the next 10 years by opting for the 10 Pay Limited premium Child plan. At the same time, he can be assured that his child’s future is financially protected.

Note: The shorter the payment interval, the higher the premium value.

Usually, the sum assured is paid as a maturity benefit to you or as a death benefit to your nominee in one lump sum or as instalments. Along with these two benefits, a percentage of the cover amount may also be paid on an annual or biannual basis - during the policy term. You can customise the payouts depending on the child’s needs. This can be -

Assured Payouts
A predefined percentage of the sum assured which is paid throughout the benefit payout period, on an annual or biannual basis. The benefit payment period and frequency depends on the product you choose. Some plans give you the option to receive the payouts only when a few years have passed after the premium payment term is over. Some plans may not have this condition.

Lump sum
This will be paid along with any accrued bonuses. Bonuses will be paid only if you’ve a participating child plan. This is payable when the policy matures or as a death benefit.

A combination of both
A good option for covering both educational goals and wedding costs.

Important Note: Customization of payout options varies across insurers and products. Make sure you go through the policy wordings carefully.

You have the option of choosing the frequency of paying premiums. Depending on your convenience, premiums can be paid annually, semi-annually, quarterly, and monthly. Premiums will vary based on the frequency chosen.

For instance, Raj purchased a child plan for Rs 30 lakhs for a 20-year policy period. The premium options available include Rs 10,000 annually, Rs 2000 monthly, etc. Raj decides to go with a monthly plan as he believes the yearly plan would put a strain on his finances due to his debt obligations.

When you purchase the policy, you can enhance the sum assured by 50%, 100%, or 200% - by paying an additional premium. If you, unfortunately, pass away during the policy term - the additional sum assured will be paid to your nominee immediately. They can opt to receive the sum assured as a lump sum or as a mixture of both lump sum and annual/monthly income.

Important Note: The enhanced coverage feature varies across insurers and products. Make sure you go through the policy wordings carefully.

Riders are extra benefits that can be added to your policy by paying additional premiums.
The following riders are available with child plans:

• Waiver of Premium Rider
  Waiver of Premium due to Disability Rider
  Waiver of Premium due to Critical Illness Rider
• Surgical Care Rider
• Accidental Disability Rider
• Critical Illness Benefit Rider
• Accidental Death Benefit Rider
• Hospital Care Rider

Whenever choosing a child insurance plan, always look for the versatility it offers you for planning your child's future and meeting their needs efficiently. Make sure you tailor the Child plan according to your child's needs by choosing the right Payment frequency, Payout frequency, Riders, etc. The whole point of a customised child insurance plan is to give your child a financially secure future. Plan today to give your child a better tomorrow!