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Insurance for Children

“Better late than never” suits perfectly for policies on children. Child policies have an entry age limit of 13 – 14 yrs based on company or policy. Child policies are targeted at providing funds for the higher education or marriage needs of the child. Life Insurance Corporation of India was the only insurance company till the year 2000, before the Indian government had opened insurance market for private players. This move has revolutionized the insurance industry, leading to the creation of customized child insurance products based on customer specific needs. FDI has opened the gates for innovation in insurance products which were successful in western countries. Most of the western world’s players had entered the local Indian market in collaboration with local players. These players introduced new products in the Indian insurance market.

                LIC had a standard format of paying premium for their products in tranches for 15+ years and the policy holder used to receive the lump sum maturity amount only at the time of policy maturity. These products have only life cover as their default feature. This structure has changed with the entry of private players.

                LIC has 2 products in its portfolio customized for child’s future needs. Jeevan Tarun and New Children Money Back plan are children specific plans with different premium payment periods and maturity periods. Jeevan Tarun has four different sub-options with in it and has a 5 year reduced premium payment term. In New Children Money Back policy, premium needs to be paid till the maturity period. Purchasing child policies at an earlier stage would help in accumulating a larger chunk of money with minimal spend from your budget every month.

                Child insurance has a value added, unique feature called the Premium waiver Benefit rider. This rider would be optional and can be opted by paying some additional premium in some of the products and it would be available by default in some of the policies. This rider would waive off the future premiums to be paid for the policy, in case the proposer (parent) expires before the policy gets matured. This would not be applicable to the other parent if the other parent is not the proposer.

                LIC’s Jeevan Tarun and New Children money back policy will provide financial security to children in case of parent’s death. The financial benefits will be provided when the children complete their 18th age. These benefits will be provided at regular intervals till they complete 25 years, so that their higher education and marriage needs are fulfilled. Considering the merits of child policies, these have an edge over the bank deposits, as these child insurance products provide almost equal returns compared to other investments and also provide secured career to the child even if the parent expires.