Pick the child life insurance plan carefully

Using Insurance to plan your child's future:

Planning for the child’s future is an important decision in any parent’s life. There are a variety of child insurance plans available in the market today, which can act as a savings tool to secure your child’s future. Child plans help address your child’s future education and/or marriage needs. They also provide the capital that your child may need at a later stage to venture into a business.

Some life insurance companies have a lower premium on their child plans if the proposer is the mother. For example, SBI Life and ICICI Prudential to name just two, charge a lower premium on child plans, provided that it’s the mother who pays the premiums.

Money back child insurance plans
Money back plans are ideal for parents planning for life stage events like child's education, marriage or seed capital for a business opportunity. A father wants to set aside some money for his 5-year old daughter's higher education. He also wants to have enough money for her marriage a few years after that. This is the ideal scenario for a money back plan.

The father can select a money back endowment plan with a 20-Yr tenure for a sum assured of Rs 10 lakhs (Rs 1 million). The annual premium that he will have to pay is Rs 67,175 (refer Table 1). The premium amount will vary across life insurers.

Age (Yrs)	Sum Assured (Rs)	Tenure (Yrs)	Premium (Rs)
30	1,000,000	20	67,175

(The figures used in the illustration are based on that of an existing life insurance company. The returns could vary across life insurance companies.)

One word of caution " Please make sure that you know the expenses and other deductible’s very clearly before hand " because the early years charges are quite high in some plans and in some policies the exit years can be expensive. Most of the insurance companies in India are offering Child Insurance Plans. If you are planning to buy a secure future of your child then at least compare plans of 4 or 5 insurance companies and then decide, because each company will have something different to offer. Most of these child insurance plans aim to meet your financial needs. For example, ICICI Prudential Life has three variants under the SmartKid plan.

Life Insurance for Disabled Children: Sadly, there is no government or private insurance policy that is particularly created to care for the future needs of disabled children. On the other hand, a common life insurance can offer the security that you will need for the financial future of your disabled child or children. You can either get a term or a permanent (cash-value) life insurance to finance a special needs trust. The special needs trust is a legal agreement that will allow you to provide for the needs of your child in his entire life including after your death. The funds that will come from the trust will be given on top of the benefits he will get from the government.