Child Plans are the Next Big Objective of Insurance Agencies !

Insurance Companies in India offer different types of need-based Insurance products these days.  Life insurance products include mainly term plans and endowment plans. But there are other insurance policies that also come under the umbrella of life insurance solutions.

Life Insurance solutions are basically insurance plans that offer life coverage to the customer. Term plans and endowment plans are traditional Life Insurance plans as they offer a guaranteed sum on the death of the policyholder. But the difference between endowment and term plan is that the former offers maturity benefit while the latter does not. So, in order to be qualified as a life insurance product, the policy must include death benefit as one of the benefits offered.

A child plan and a pension plan are not traditional life insurance plans. The main focus of a child plan is to cater to the various financial needs of your child while a pension plan ensures a financially independent post-retirement life. So, the main focus of these plans is not the life but the needs of the policyholder, be it his or her own future financial needs or the financial needs of their child. But both child and pension plans offer life coverage. These plans are generally more expensive than traditional life insurance plans. So, in case the policyholder dies within a few years after the commencement of the policy, the insurer guarantees that his or her family will receive all the premiums that the policyholder has paid till the unfortunate event. This guaranteed lump sum payout on the death of the policyholder is called the death benefit. Hence, the death benefit is the most important aspect by which you can identify a life insurance plan.

Even a few years back, the major portion of the sale of a life insurance company consisted only of term and endowment plans. But now, as people are getting more aware of the importance of other plans like pension plan and child plan, the sale of these plans have also increased in India. After the dramatic increase in the sale of pension plans in past two years, insurance agencies are now diverting all the focus to the child plans.

Child plans, being the next big objective of life insurance companies, have come to the limelight these days. The increasing cost of education in India has also helped to increase the popularity of child plans.  Companies these days are promoting their child insurance plans through television, newspapers and online as well. New features and benefits are getting added with newly launched child plans in order to attract more customers. Even a child plan has been split into two types- Child insurance plan and child education plan.

A child education plan is an out-and-out education oriented plan. It may or may not provide life coverage but it invariably offers the inbuilt waiver of premium rider. As per the rider, all future premiums are waived off in case the policyholder (mainly a parent of the child) dies during policy tenure. The policy continues until it reaches maturity so that the child receives the sum assured to fund his or her higher education.

A child insurance plan is only slightly different from a child education plan. A child insurance plan is more like a life insurance plan as it provides guaranteed life coverage. On the death of the policyholder, the child, who is the beneficiary, receives a lump sum assured as the death benefit. All future premiums are waived off. But the policy continues as the insurer keeps paying the premiums on the behalf of the policyholder. On maturity, the child receives the maturity benefits in annual installments for 4 to 5 years so that the child can fulfill all his dreams in life. There are some child plans that provide risk coverage on the life of the child itself. Unlike a child education plan that only takes care of the education of the child, a child insurance plan, on the other hand, takes care of the various aspects of the child’s life- higher education, marriage, fulfilling any dream in his or her life etc.

There are numerous advantages of a child plan. Most importantly, it ensures a financially secure life for your child’s future. So, a child insurance plan is what your child needs the most. Insurance companies, therefore, have taken a great step towards popularizing child insurance plans by promoting it more and more to the modern parents in India.