maverick_ronnie
Swapnil Made
hey boyz n girlz
children policies r one of the maine insurance policies nw a dayz lets discuss abt it......
children policies r one of the maine insurance policies nw a dayz lets discuss abt it......
children policies
- Thread starter maverick_ronnie
- Start date
maverick_ronnie
Swapnil Made
What is a Children's Policy?
Children's insurance includes policies through which parents or legal guardians can provide for life insurance for their child from birth. The risk cover commences from the child attaining the age of 12 / 17 / 18 / 21 (known as the Date of Risk), and will vest itself on the child upon his or her attaining majority on completion of age 21, if the case demands so.
Until the child attains majority, the parents are the owners of the policy and have to pay the premium periodically. It is important that these policies are considered only after the insurance portfolios of the parents have been completed. The family’s insurance budget should primarily buy as much life insurance as possible on the lives of the breadwinner and should not be frittered away on the children’s lives as their insurance is useless in the event of any premature death of the breadwinner. In fact, those lives should be insured that have maximum economic emphasis. Quite often, these policies lapse if and when the premium paying breadwinner of the family die before the vesting age. After all, the child may not be in a position to continue paying the premiums.
Children's insurance includes policies through which parents or legal guardians can provide for life insurance for their child from birth. The risk cover commences from the child attaining the age of 12 / 17 / 18 / 21 (known as the Date of Risk), and will vest itself on the child upon his or her attaining majority on completion of age 21, if the case demands so.
Until the child attains majority, the parents are the owners of the policy and have to pay the premium periodically. It is important that these policies are considered only after the insurance portfolios of the parents have been completed. The family’s insurance budget should primarily buy as much life insurance as possible on the lives of the breadwinner and should not be frittered away on the children’s lives as their insurance is useless in the event of any premature death of the breadwinner. In fact, those lives should be insured that have maximum economic emphasis. Quite often, these policies lapse if and when the premium paying breadwinner of the family die before the vesting age. After all, the child may not be in a position to continue paying the premiums.
maverick_ronnie
Swapnil Made
How is it beneficial
Children’s policies are designed to enable a parent or a legal guardian of the child to provide insurance cover for the child. With such policies, you as a parent will need to pay the premium for your child’s policy depending on the plan and the term till your child attains majority. The risk cover on your child could start from 7 yrs, 12, 18 or 21 years of age depending on the plan taken.
Children’s policies are designed to enable a parent or a legal guardian of the child to provide insurance cover for the child. With such policies, you as a parent will need to pay the premium for your child’s policy depending on the plan and the term till your child attains majority. The risk cover on your child could start from 7 yrs, 12, 18 or 21 years of age depending on the plan taken.
maverick_ronnie
Swapnil Made
Who should buy this plan?
Those, who plan to provide their child with life insurance cover for a future date when he turns a major, can take children’s policies. The policy envisages two stages, one covering the period from the date of commencement of policy to the deferred date that is the commencement of the risk. No loans are granted against this policy during the deferment period and no risk of death is covered until the child attains the prescribed age as per the policy document.
If the child were to die during the deferment period, the policy will stand cancelled and a sum of money equal to all the premiums paid without any deduction becomes payable to the proposer
Those, who plan to provide their child with life insurance cover for a future date when he turns a major, can take children’s policies. The policy envisages two stages, one covering the period from the date of commencement of policy to the deferred date that is the commencement of the risk. No loans are granted against this policy during the deferment period and no risk of death is covered until the child attains the prescribed age as per the policy document.
If the child were to die during the deferment period, the policy will stand cancelled and a sum of money equal to all the premiums paid without any deduction becomes payable to the proposer
maverick_ronnie
Swapnil Made
Life insurance cover for your children
All life insurance companies have a few policies designated as children plans. Objective of these plans is to provide financial security to children in the form of savings combined with life insurance.
This article is an attempt to understand these policies and their merits/demerits vis – a – vis other form of insurance and investments available.
Broadly there are two types of children policies available. In one type the child is the life assured whereas in the other the earning parent or guardian is the life assured.
In plans like Jeevan Kishore or Komal Jeevan from LIC the child is the life assured. Unless the parent paying the premium avails premium waiver rider benefit by paying additional premium insurance benefit available is not significant. Therefore these policies can be considered as disciplined investment plans to make money available to the child at predetermined future dates. Being a conventional insurance plan returns from this type of plan is not very attractive. In fact it is possible for the investor to select alternative investment route which will provide higher returns for similar risk taken to meet this objective.
In the other type of plan available a few specific benefits are included to make them children specific. In all these plans the parent is the life assured. (Some companies offer plans where any one can be the life assured and any one named as beneficiary.)
Death benefit
In the unfortunate event of death of the life assured the child or the appointee in case the child still remains a minor is paid one full sum assured and further premium are waived. The insurance company pays the premium for the remaining period and at the end of the term the child receives another sum assured with full accrued bonus. In some plans the benefits are paid in installments at pre-notified times in the policy.
Survival benefit
In the event the life assured survives the term the beneficiary i.e. the child is paid the maturity benefit as per policy terms.
This plan is available as a conventional endowment type plan or Unit Linked Plan from most of the companies , the most popular being Jeevan Chaya from LIC in the former category and Smart Kid and Youngstar from Pru ICICI and HDFC SL respectively in the later category.
The design of the plan not only ensures that money is available to the child when required but also provides for funding earlier needs should the bread winning parent die premature.
These plans are available from different companies with some variations – for instance in case of Youngstar the beneficiary need not be a child – any one can be nominated as beneficiary. This will be useful to parents who have more than one child – they can manage with one policy and make the mother nominee who can ensure appropriate distribution of the funds as and when they become available among all her children as per their needs.
While the basic tenets and advantages are explained above an attempt is also made to analyze weather these are the best methods to save for children. Attachment to this note compares the type of plans with buying term insurance and investing the money directly by the parent. From this it can be seen for the same amount of risk taken and benefit derived buying term insurance and investing directly is a better proposition than committing to a children insurance policy of the types available presently.
All life insurance companies have a few policies designated as children plans. Objective of these plans is to provide financial security to children in the form of savings combined with life insurance.
This article is an attempt to understand these policies and their merits/demerits vis – a – vis other form of insurance and investments available.
Broadly there are two types of children policies available. In one type the child is the life assured whereas in the other the earning parent or guardian is the life assured.
In plans like Jeevan Kishore or Komal Jeevan from LIC the child is the life assured. Unless the parent paying the premium avails premium waiver rider benefit by paying additional premium insurance benefit available is not significant. Therefore these policies can be considered as disciplined investment plans to make money available to the child at predetermined future dates. Being a conventional insurance plan returns from this type of plan is not very attractive. In fact it is possible for the investor to select alternative investment route which will provide higher returns for similar risk taken to meet this objective.
In the other type of plan available a few specific benefits are included to make them children specific. In all these plans the parent is the life assured. (Some companies offer plans where any one can be the life assured and any one named as beneficiary.)
Death benefit
In the unfortunate event of death of the life assured the child or the appointee in case the child still remains a minor is paid one full sum assured and further premium are waived. The insurance company pays the premium for the remaining period and at the end of the term the child receives another sum assured with full accrued bonus. In some plans the benefits are paid in installments at pre-notified times in the policy.
Survival benefit
In the event the life assured survives the term the beneficiary i.e. the child is paid the maturity benefit as per policy terms.
This plan is available as a conventional endowment type plan or Unit Linked Plan from most of the companies , the most popular being Jeevan Chaya from LIC in the former category and Smart Kid and Youngstar from Pru ICICI and HDFC SL respectively in the later category.
The design of the plan not only ensures that money is available to the child when required but also provides for funding earlier needs should the bread winning parent die premature.
These plans are available from different companies with some variations – for instance in case of Youngstar the beneficiary need not be a child – any one can be nominated as beneficiary. This will be useful to parents who have more than one child – they can manage with one policy and make the mother nominee who can ensure appropriate distribution of the funds as and when they become available among all her children as per their needs.
While the basic tenets and advantages are explained above an attempt is also made to analyze weather these are the best methods to save for children. Attachment to this note compares the type of plans with buying term insurance and investing the money directly by the parent. From this it can be seen for the same amount of risk taken and benefit derived buying term insurance and investing directly is a better proposition than committing to a children insurance policy of the types available presently.