For any average person, life is all about fulfilling one’s financial goals. One of the major elements of these long-term goals is to fortify a child’s needs with education and financial security.
One of the key ways of ensuring financial security is to find an instrument that will guarantee a steady cash flow for an extended period of time. Child insurance plans are increasingly becoming popular for this reason. They combine insurance as well as the provision of getting a stream of cash – that too guaranteed – for a pre-designated term.
All insurers offer child plans
Almost all major private insurers offer child plans since they are getting popular quickly. Let’s see a calculation with a particular plan of a major private insurance company TATA AIA.
Let a couple buy a child insurance plan for their kid in the very first year. The premium without the GST is Rs 1 lakh per annum. Inclusive of GST the premium for the first year works out to Rs 1,04,638. According to the policy, one has to pay premium for 12 years, during which one would pay premiums of Rs 12 lakh.
The payback numbers
The payback will begin from the 18th year. Each year the company would pay back the policyholder Rs 1,57,260. In this way, the payment will be made for 30 years. In addition, the insurer will also return Rs 12 lakh paid as the premium.
“The payment is guaranteed and not linked to anything. Therefore, in this particular case, the entire payback will amount to Rs 59,17,800 or Rs 59.17 lakh,” said Tapas Biswas, Executive Life Planner, TATA AIA.
Death benefits
In case of the death of the policyholder, the company will fulfill its payment obligations. “If the death occurs within the initial 12 years of premium payment, one does not need to pay the premiums. The company will pay back the contracted amount to the nominee. In case death occurs after the premium payment ends, the company will fulfil its obligations to the nominee,” added Biswas.
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