What is a Children's Policy?
Children's insurance includes policies through which parents or legal guardians can provide for life insurance for their child from birth. The risk cover commences from the child attaining the age of 12 / 17 / 18 / 21 (known as the Date of Risk), and will vest itself on the child upon his or her attaining majority on completion of age 21, if the case demands so.
Until the child attains majority, the parents are the owners of the policy and have to pay the premium periodically. It is important that these policies are considered only after the insurance portfolios of the parents have been completed. The family’s insurance budget should primarily buy as much life insurance as possible on the lives of the breadwinner and should not be frittered away on the children’s lives as their insurance is useless in the event of any premature death of the breadwinner. In fact, those lives should be insured that have maximum economic emphasis. Quite often, these policies lapse if and when the premium paying breadwinner of the family die before the vesting age. After all, the child may not be in a position to continue paying the premiums.
How is it beneficial to me?
Children’s policies are designed to enable a parent or a legal guardian of the child to provide insurance cover for the child. With such policies, you as a parent will need to pay the premium for your child’s policy depending on the plan and the term till your child attains majority. The risk cover on your child could start from 7 yrs, 12, 18 or 21 years of age depending on the plan taken.
Who should buy this plan?
Those, who plan to provide their child with life insurance cover for a future date when he turns a major, can take children’s policies. The policy envisages two stages, one covering the period from the date of commencement of policy to the deferred date that is the commencement of the risk. No loans are granted against this policy during the deferment period and no risk of death is covered until the child attains the prescribed age as per the policy document.
If the child were to die during the deferment period, the policy will stand cancelled and a sum of money equal to all the premiums paid without any deduction becomes payable to the proposer.