FAQ - Child Plans

Different companies offer different Child plans which can be categorized based on the premium payment terms, benefits received and modes of investments.

Premium Payment Term:

Depending on the duration of the premium payment term, most of the child insurance policies are categorized into two types:

Regular Premium Plan: The policyholder pays a regular premium for a number of years. The payment term can be monthly/ quarterly/ half yearly or yearly.

Single Premium Plan: The policyholder can pay a lump sum premium and doesn’t have any more commitments towards paying the premium.

Benefits received:

Death Benefit and Maturity benefit are the two main benefits offered in a child policy. There are some policies which offer both Death and Maturity benefits while there are some policies which offer only a lump sum amount either as the death or maturity benefit, whichever occurs first.

Premium waiver benefit is another key benefit offered by most child insurance policy but there are some policies which provide a death benefit and the policy is terminated.

Type of Investment:

Child plans can either be ULIP or Traditional plans based on the investments done by the insurance company. The returns on investment would vary based on the investment type. So select a plan that best suits your requirements.

Unit Linked Child Insurance Plans: Here, the fraction of premium paid flows under the debt instruments and the rest comes under the equity instruments. However, the decision of switching the funds remains in the hands of the Insured. Since the plan is market-linked, the returns are decided on the basis of net value of the assets at the maturity period.

Traditional Endowment Child Insurance Plans: The Premium paid flows only into debt instruments, the decision of which is at the discretion of the insurance company. The investment is generally made under a safe and low yielding products. However, the returns are not so great but will be stable and predictable. 

If you would like to know more about the different child plans available please click here.