Best Life Insurance Policies for Kids in 2024

Life is full of unforeseen events that can leave families financially vulnerable. Life insurance plans for kids offer the necessary financial security and peace of mind for parents. These plans provide financial security for your child’s education, marriage and other needs, ensuring a better future for them. 

The best child life insurance plan offers extensive benefits for the child, including insurance coverage for unforeseen events and financial support for future needs and education. Given the increasing inflation and soaring education costs, it has become essential for parents to have a child insurance plan. As a result, the question often arises - which is the best child insurance plan to invest in?

Choosing the right insurance plan for kids can be overwhelming due to the wide variety available. This article covers everything you need to know about Child Life Insurance plans, including their benefits and how they work. Keep reading this detailed article to learn more. 

5 Types of Life Insurance Policies for Children in 2024

Life insurance policies for children in India are carefully crafted to meet the financial needs of children, including education and marriage expenses. These policies offer a blend of insurance coverage and investment opportunities. The available types of child insurance policies, along with their specific features and advantages, are outlined below for a comprehensive understanding. 

1. Child Education Plans

Tailored specifically to save for a child’s education, these plans provide a lump sum payout upon maturity for higher education expenses. They offer customized options to accumulate funds, ensuring a secure future for your child’s education. Key features of these plans include flexible contributions and attractive returns, making them an ideal choice for parents planning for their child’s educational needs. 

• Life Cover: It offers financial protection for your child in the unfortunate event of your early death, ensuring their continued financial security. 
• Maturity Benefits: The lump sum payment received after the policy term can provide financial support for educational expenses, offering peace of mind and security for future educational endeavours. 
• Tax Benefits: Premiums paid for life insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act. This makes it a beneficial option for individuals looking to reduce their tax liabilities while securing their future. Make sure to check the specific terms and conditions to understand the eligibility criteria and maximum deduction limits. 

2. Unit Linked Child Insurance Plans (ULIPs)

Insurance plans that include investment in market-linked funds provide the flexibility to choose from various investment options, thereby potentially offering higher returns based on market performance. Some key features include - 

• Investment Component: A part of the premium is invested in funds, which can be either equity or debt-based. This investment aims to generate potential capital growth over time. 
• Insurance Cover: It provides additional investment benefits for your financial security. 
• Flexibility: Policyholders have the flexibility to change their investments by switching between different funds. This can be done based on the performance of the funds as well as the individual’s risk appetite. 

3. Whole Life Insurance Plans

These plans offer comprehensive coverage for the entire lifetime, with the added benefit of building cash value over time. They are an ideal choice for parents seeking to ensure their child’s financial security well into the future. Key features include - 

• Death Benefit: It provides a crucial financial safety net for the loved ones of the policyholder, offering them a designated sum of money upon the policyholder’s passing. This can help cover funeral expenses, outstanding debts and ongoing living costs. It brings peace of mind to know that loved ones will be supported during difficult times.
• Cash Value Accumulation: The policy accrues cash value which can be used for borrowing or withdrawal purposes. 
• Maturity Benefits: The policyholder can access the accumulated cash value once they reach a specific age. 

4. Term Plans with Child Benefits

Pure life insurance plans provide a death benefit without cash value accumulation. They are cost-effective and can be enhanced through various riders. Key features include - 

• Affordability: Premiums for term life insurance are typically lower than those for whole life or ULIP plans. 
• Rider Options: You have the option to include additional coverage for critical illnesses or accidental death to enhance your insurance policy. 
• Financial Security: It provides a safety net for a child’s future, ensuring that they are cared for even if their parents are not present. This can be achieved through investments, insurance and estate planning to guarantee that the child’s needs are met regardless of the circumstances. 

5. Endowment Plans

These plans offer both insurance coverage and a savings component, providing a lump sum payout upon maturity or in the event of the policyholder’s passing. Some key features include - 

• Guaranteed Returns: It provides a promised sum of money upon the completion of the policy duration, offering a secure financial term. 
• Death Benefit: Life insurance provides financial assistance to the policyholder’s family in the event of their death. 
• Bonus Additions: Certain plans include additional bonuses that can increase the total maturity amount payable. These bonuses are designed to provide extra value and benefits to the policyholder upon maturity. 

Which is the Best Life Insurance Policy for My Kid?

The following table comprises the list of some top best life insurance policies for kids offered by reputed companies. 

Policy Name	Provider	Key Features	Premium Waiver	Investment Options	Age Limit
Bajaj Allianz Young Assurance	Bajaj Allianz	Provides life cover and savings for child's future	Yes	Market-linked funds	0-17 years
		Flexible premium payment options
		Additional benefits for online purchase
Bharti AXA Life Child Advantage Plan	Bharti AXA	Offers life cover and maturity benefits	Yes	Combination of debt and equity funds	0-17 years
		Premium waiver in case of parent's demise
		Tax benefits under Section 80C
HDFC SL YoungStar Super Premium	HDFC Life	Unit-linked plan for child’s education	Yes	Various fund options	0-17 years
		Option to withdraw funds after 5 years
		Critical illness cover available
ICICI Prudential Smart Child's Regular Premium	ICICI Prudential	Life cover till age 99	Yes	Market-linked investments	0-17 years
		Partial withdrawals allowed
		Tax-free maturity benefits
LIC New Children's Money Back Plan	LIC	Provides regular payouts during the policy term	Yes	Traditional plan	0-12 years
		Life cover and maturity benefit
		Premium waiver feature included
AEGON Life Rising Star Insurance Plan	AEGON Life	Offers life cover and investment growth	Yes	Market-linked options	0-17 years
		Flexibility in premium payment terms
		Tax benefits available
Exide Life Mera Aashirvad Plan	Exide Life	Child education plan with life cover	Yes	Combination of funds	0-17 years
		Option for partial withdrawals
		Flexible premium payment options
Aditya Birla Sun Life Insurance Vision Star Plus	Aditya Birla	Life cover with investment benefits	Yes	Market-linked investments	0-17 years
		Flexibility in premium and payout options
		Tax benefits under Section 80C
Kotak HeadStart Child Assure Plan	Kotak Life	Provides life cover and savings for education	Yes	Various fund options	0-17 years
		A premium waiver on the death of a parent
		Flexible investment options
Aviva Young Scholar Advantage Plan	Aviva	Life cover with education savings	Yes	Market-linked funds	0-17 years
		Partial withdrawals allowed
		Tax benefits available
Tata AIA Life Insurance Child Plan	Tata AIA	Combines insurance and savings	Yes	Customizable investment options	0-17 years
		Flexible premium payment options
		Guaranteed income after the accumulation phase
Max Life Smart Wealth Plan	Max Life	Offers life cover and wealth creation	Yes	Market-linked and traditional options	0-17 years
		Flexibility in premium payment terms
		Partial withdrawals allowed after 5 years
SBI Life Smart Scholar Plan	SBI Life	Provides life cover and education benefits	Yes	Combination of funds	0-17 years
		Premium waiver in case of parent's demise
		Option for regular payouts or lump sum at maturity
Reliance Nippon Life Child Plan	Reliance Nippon	Offers life cover and savings for child's future	Yes	Market-linked investments	0-17 years
		Flexible premium payment options
		Additional benefits for critical illness
HDFC Life Click 2 Protect 3D Plus	HDFC Life	Term insurance with child benefit rider	Yes	N/A	0-17 years
		Provides a lump sum to the child in case of the parent's death
		Option to enhance coverage with additional riders
Birla Sun Life Child Education Plan	Aditya Birla	Focused on funding children's education	Yes	Market-linked investments	0-17 years
		Provides a lump sum on maturity
		Flexible premium payment terms
Kotak Life Child Education Plan	Kotak Life	Offers life cover and education benefits	Yes	Traditional and market-linked options	0-17 years
		Premium waiver in case of parent's demise
		Option for regular payouts or lump sum at maturity
Future Generali Big Dreams Plan	Future Generali	Provides life cover and savings for child's future	Yes	Market-linked investments	0-17 years
		Flexible premium payment options
		Additional benefits for critical illness
IDBI Federal Life Insurance Child Plan	IDBI Federal	Offers life cover and savings for child's future	Yes	Market-linked investments	0-17 years
		Flexible premium payment options
		Additional benefits for critical illness
Canara HSBC OBC Life Insurance Child Plan	Canara HSBC	Provides life cover and savings for child's future	Yes	Market-linked investments	0-17 years
		Flexible premium payment options
		Additional benefits for critical illness

 

What are the Benefits of Investing in a Child Life Insurance Policy?

Child life insurance policies offer several key benefits such as - 

1. Protect Your Child’s Financial Future

Child life insurance plans offer a sense of financial security for your child’s future, safeguarding their educational and life aspirations in case something happens to you. In the event of your untimely death, the insurance company waives future premiums and provides a death benefit to support your child’s immediate needs and long-term financial stability. 

2. Saving Systematically for Education

Systematic savings for educational goals is an effective way to plan for future educational expenses. By consistently setting aside a portion of your income, you can build up a fund that will help cover tuition, books and other related costs. It provides a sense of financial security and reduces the need for taking out costly student loans. Starting early and staying committed to regular contributions can make a significant difference in achieving educational goals. 

3. Availability of Tax Benefits

Child insurance plans offer tax benefits under Section 80 of the Income Tax Act, allowing you to save money while securing your child’s future. The premiums paid towards the policy are eligible for tax deductions and the maturity and partial withdrawal benefits are usually tax-exempt under Section 10(10D). 

4. Flexibility and Customization

Child life insurance plans have various payment options (regular or single premium), policy terms and payout structures. This flexibility allows you to select a plan that suits your financial situation and meets your child’s future requirements. Additionally, some plans allow for partial withdrawals in case of emergencies and many insurers offer loyalty additions, wealth boosters and other bonuses to reward long-term investors. 

5. Protection Against Inflation

Child insurance plans can be a smart choice to prepare for the increasing costs of education due to inflation. These plans offer the opportunity to invest in market-linked funds, which can provide higher returns than traditional savings options. By opting for these plans, you can ensure that your child can pursue their desired courses without being restricted by financial limitations. 

6. Income Guarantee

These plans are designed to provide a guaranteed income after a certain period, which can be used for educational expenses or other needs. This structured approach can help plan for a child’s financial future. 

7. Calmness and Clarity in Mind

Child life insurance offers parents the peace of mind they need, ensuring their child’s financial security. This allows parents to confidently navigate the various challenges of parenting and focus on their child’s development and education. With the reassurance of child life insurance, parents can plan for their child’s future without constant concern about unexpected events. 

What is the Right Time to Start Investing in a Child Life Insurance Plan?

Experts recommend investing in a Child Life Insurance Plan as early as possible to make the most of the investment horizon and align with your financial goals. The child’s age also plays a crucial role in determining the right time to start investing in a life insurance policy for kids, as an early start can help in accumulating a substantial corpus over the long term. 

Debt mutual funds are suitable for short-term goals, while a mix of debt, equities and gold is recommended for long-term goals. Parents can opt for either single-premium or regular-premium child plans, based on their investment objectives and risk tolerance. 

Considering the cost and timeline of investing in a child’s education is crucial for planning their future. These factors will determine how much financial preparation is needed and for how long. By carefully evaluating the costs and time required for their education, parents can better allocate resources and set realistic financial goals. This will ensure a smoother and more secure path towards their child’s educational success. 

Which Pointers Should I Consider Before Investing in a Life Insurance Policy for My Kid?

When deciding on a life insurance policy for your child, it is important to carefully consider a few key factors. These factors will help you assess if the policy fits well with your financial objectives and your family’s requirements. 

• Education Funding: Calculate the total expenses for your child’s higher education, including tuition fees, accommodation costs and living expenses. 
• Marriage Expenses: Estimate the costs for your child’s wedding if you plan on covering them. 
• Emergency Fund: Consider using the policy as an emergency fund for unexpected situations. 
• Premium Payment Term: Select a payment term that suits your finances. 
• Maturity Benefit: Calculate the lump sum for the child at maturity. 
• Riders: Consider adding extra coverage such as critical illness or accidental death. 
• Loan Facility: Some policies offer loans based on their value.
• Tax Benefits: Verify policy eligibility for tax deductions. 
• Solvency and Reputation: Check the insurer’s financial stability and reputation. 
• Claim Settlement Ratio: Check the insurer’s claim settlement ratio.
• Customer Reviews: Read customer reviews and testimonials to understand their experiences. 
• Compare Premiums and Benefits: Compare plans to find the best value.
• Child's Health: Accurate health information is needed to avoid the exclusion of medical conditions by insurers.
• Investment Options: Understand the risks and returns of investment options in the policy.
• Policy Term: Pick a term that suits your child’s financial goals.
• Flexibility: Consider flexible premiums and policy change options.

Conclusion

Investing in a life insurance policy for kids is crucial for the parents to secure their child’s financial financial future. These plans provide coverage for unforeseen events and offer financial benefits for their education and milestones. 

Parents have multiple options to choose from when it comes to securing their child’s future. From Child Education Plans to Unit Linked Child Insurance Plans (ULcIPS) and Whole Life Insurance, there are policies available to cater to different financial goals and the child’s needs. Investing early is crucial as it leads to higher savings growth and better preparedness for future expenses. 

Child life insurance offers attractive investment options with tax benefits under Section 80C and the potential for market-linked returns. Parents can make informed decisions by considering factors such as the insurer's reputation, claim settlement ratio, and policy flexibility. This ensures a secure future and peace of mind for their child.

Frequently Asked Questions (FAQs)

 

Q1: What is Child Life Insurance?

A: Child life insurance is a type of life insurance policy designed specifically for children. It offers two key benefits:

1. Death Benefit: If a parent, who is usually the policyholder, passes away during the policy's term, a death benefit is paid to the designated beneficiary, commonly the child. The received funds can assist in meeting the child's future financial needs like education and living expenses.
2. Savings Component (depending on the policy): Certain child life insurance policies offer the added benefit of including a savings component. By allowing the money to accumulate over time, there is potential for significant growth by the time the child becomes an adult.

Q2: Can I add riders to my child's life insurance policy?

A: Yes, it's important to explore the optional riders offered by insurers to enhance your child's life insurance coverage. Adding riders can provide additional benefits and customization to the policy, so it's worth considering the options available to ensure comprehensive coverage for your child.

Q3: What happens to the policy if my child reaches adulthood?

A: It's crucial to be aware of the policy terms as they will determine what happens when your child becomes an adult. Some policies automatically convert to adult life insurance, whereas others may terminate. Understanding these terms is important to be informed about the available options.

Q4: Can I withdraw money from the savings component of a child's life insurance policy?

A: If you have a policy with a savings component, you may be able to withdraw the money under certain conditions. However, early withdrawals could result in penalties or reduce the policy's value. Please refer to the policy details for specific terms.

Q5: What happens if my child develops a serious health condition?

A: If your child has a serious health condition, it could impact your policy in various ways based on the type of policy and the insurer's guidelines. Certain policies may exclude specific pre-existing conditions, while others may offer limited coverage or require extra premiums.

Q6: Is it possible to get a loan against a child's life insurance policy?

A: Child life insurance policies often come with a savings feature that allows you to borrow against the cash value. However, keep in mind that borrowing may incur interest charges and can have an impact on the policy's overall value.

Q7: Can I convert my child's life insurance policy to an adult policy when they reach a certain age?

A: Child life insurance policies often include a conversion option. This allows the policy to be converted to an adult life insurance policy when the child reaches a certain age. By doing so, you can maintain coverage for your child without having to undergo another medical examination.

Q8: Can I gift a child life insurance policy to my child?

A: Consider consulting with a financial advisor to ensure that you carefully consider the ownership and beneficiary designation of a life insurance policy gifted to a child. It's important to understand the implications before making any decisions.

Q9: How often should I review my child's life insurance policy?

A: Regularly reviewing your child's life insurance policy is important to make sure it still meets your financial needs. Updating coverage amounts, beneficiaries, and other policy details as your financial situation changes can help ensure your child is adequately protected.

Q10: What is the role of a financial advisor in choosing child life insurance?

A: It's important to work with a financial advisor to evaluate your family's financial status, identify your objectives, and receive advice on appropriate child life insurance choices. They have the expertise to offer insights on policy attributes, expenses, and potential tax consequences.