Good financial planning is the secret of a successful family when it comes to wealth management for taking care of every major financial need of each of the family members. Life insurance plays a major role as a financial instrument that protects the family of insured party in case of untimely demise of the policy holder. With time the term insurance has evolved a lot and many variant products are available to customize different needs of the people.
Conventional Child Plan
This gives the policy holder the opportunity to include the child in the term plan taken by him/her. Insurers offer child plans to the policy holders for the welfare of their children in case of their untimely death. For Example, Mr. Ravi has taken a child include from the insurance company where his minor daughter Kiran was included, Kiran is currently 5 years old. The child plan does not insure the life of Kiran but in case of the untimely death of Ravi, The insurance company will provide the necessary future support for Kiran based on the Child plan purchased by Mr. Ravi. The plan is for Ravi where the detail of Kiran is mentioned as the future beneficiary.
Certain features of Child Plan include:
Term plus SIP
This is the financial instrument where the customers get the benefits of both life insurance coverage as well as the investment benefits. Let us consider the case of Mr.Rishi who is working at a MNC and want to have investment that will give return in future as well as serves a life coverage. There are similar instruments offered by different insurers, and Mr. Rishi is considering the following after some market research based on his requirement, affordability and eligibility:
The policy could be customised using different Riders as required like Critical Care, Accidental death Benefits, Permanent Disability Benefit etc.
Rishi’s selected Policy Product Resembles the following:
Policy Term | Minimum Age of Entry | Maximum Age of Entry |
7 years | 11 | 58 |
12 years | 8 | 53 |
15 years | 8 | 50 |
Age At Maturity | Minimum: 18 years | Maximum: 65 years |
Sum Assured | Minimum: ?100,000 | Maximum: No limit |
Premium Frequency | Monthly/Quarterly/Half Yearly/Yearly | |
Pay out Period | 15 years | |
Pay out frequency | Yearly |
In case of Premature Death during the term of Policy, the nominee receives the higher of:
Comparison of Conventional Child Plan and Term plus SIP
While both the plans have the life coverage as common feature, the other benefits are specific to the individual requirement. If Kid’s education and future is priority then Child Plan is preferred and could be done lump sum or partial withdrawal of maturity amount as needed. Whereas, for a preference of pay-out for prolonged period, Term plus SIP is the right option.
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