ULIP Plans for Your Child
Unit Linked Insurance Plan (ULIP) offers duality in investment and life cover plans for long-term goals. For ULIP child plans, the minimum entry age in the majority of the plans is 18 years of age. Until then, the plan is maintained by the guardian, which in turn helps to protect the child’s future in case of emergencies. Most of the time, this plan is generally utilized by the holder for their child’s education.
There are several child ULIP plans offered by different companies which tend to provide different incentives such as:
- Diverse portfolio to choose from in case of investments
- Option of joint life cover
- Company’s centered bonuses
- Possibility of tax exemption in case of premium payments
Let us look at various plans and pick the ULIP plan for your child.
ULIP Investment Options for Child
- Max Life Suraksha Plus Plan
It is one of the best ULIP plans for a child out there. This plan provides all the benefits similar to insurance cover. The most remarkable factor about the Max Life Suraksha Plus Plan is that it not only gives coverage for the education of the child but also provides all the benefits for whatever career path the child decides to pursue. The policy has a term limit of 10 years after which you can extend the term limit.
- Policyholders get to decide between the six categories of funds for the investment. This includes government securities, corporate bonds, equity funds, other equity-related securities, and other instruments.
- If policyholders decide to extend the term limit of the plan in the 11the year, extra units are added by the insurer.
- Tax benefits are granted as per the Income Tax Act.
The policyholder’s age should be between 21 and 50 years to avail of this policy. The age of the beneficiary child can be from 0 – 18 years. Child can be the legal or adoptive child of the policyholder.
How to apply
The plan can be purchased directly from the official website of Max Life Insurance. Customers can also visit the local branch or get in touch with the agent to initiate the procedure.
- Aviva Young Scholar Advantage Plan
This ULIP for a child provides financial protection to the children in case of an unfortunate event. In such a situation, the child gets all the monetary benefits. If the policyholder survives till the term limit, a maturity benefit equal to the fund value is paid to them. Loyalty benefits are also provided to the policyholders if all the premiums are paid on time. Policyholders can also claim tax benefits on the premiums paid.
- Policyholders get the autonomy to choose from the seven funds for asset allocation. Policyholders can also transfer or switch funds within the term limit.
- For the death benefits, beneficiaries get the sum assured and the 105% amount equal to the total premiums paid.
- Policyholders can also liquidate their funds if they wish to. However, this is only allowed after 5 years from the policy purchase date.
The policyholder’s age at the time of the policy purchase should be between 31 and 60 years. Whereas the beneficiary’s age should be between 0 to 17 years.
How to apply
For the convenience of the investors, the policy can be purchased online as well as offline.
- Kotak HeadStart Child Assure Plan
This plan provides dual benefits to the policyholders in the form of insurance cover as well as a viable option for wealth generation. After the death of the insured parent, this plan provides all the necessary financial help to the child.
- Insurer offers the choice to choose from the 7 different funds as an investment portfolio.
- After the death of the insured parent, the insurer offers triple benefits. That is, immediate payment of the sum assured, the policy remains in motion, and after the maturity, the fund amount is paid to the child, and the remaining premiums are waived off.
- Policyholders get flexibility in both premium payments and the number of withdrawals.
The policy has a maturity period lasting over two decades, and any individual above the age of 18 years to 60 years is eligible to purchase this insurance plan.
How to apply
Kotak has made the policy purchase procedure simple for the customers by offering an online application process. Offline or third-party purchase of the policy is also allowed.
- ICICI Prudential Smart Kid Premier Plan
It is a ULIP child plan which protects the children in case of any unfortunate event to guardians. It is not a one-time payment plan. Instead, you have to pay your premiums over a specified interval during the payment period.
- Joint coverage option for the insurance holder and their life partner
- Choose a personalized and diversified portfolio for investments
- Payout options during critical situations or moments for your child
The minimum entry age of the holder should be 20 years and a maximum of 60 years in case of single life and 55 in case of joint life. In the case of children, the age range is 0-13 years.
How to apply
You can buy the policy by visiting the provider’s official website or any other third-party platform.
- HDFC SL Youngstar Super Premium Plan
This child ULIP plan mainly focuses on accelerated growth through market investments. It also provides life coverage in two options called life option and life health option. This is the best ULIP plan for a child for people who are looking for long-term earnings over investments.
- Investment in a single or combination of funds as per the holder’s needs.
- In case of the insurer’s demise, 100% of the future premium payments will be paid by the insurer.
- Tax exemption on premiums under Section 80C of the Income Tax Act, up to the limit of INR 1.5 lakhs
The minimum entry age of the holder should be 20 years and a maximum of 55 years for life health options and 65 years for life options, the minimum policy term is 10 years, and the maximum policy term is 20 years.
How to apply
Visit the vendor’s official website or any other online third-party platform to buy the policy.
Benefits of Schemes for Children in India
There are many benefits of ULIP child plans in India, and the following are some of the major benefits to look for:
- Flexibility to choose both investment plans and life insurance plans, which in turn will provide you with a better return compared to other life insurance plans.
- Tax benefits are also provided under the Income Tax Act up to a limit of INR 1.5 lakhs and under Section 10D.
- The most important benefit is that it secures the child’s education and ensures basic amenities and facilities in case of the absence of guardians.
- Some of the child ULIP plans cover joint life insurance along with maturity and death benefits that are paid annually until the plan is active.
- Child ULIP plans provide the benefit of a personalized and diverse investment portfolio and free-fund switching with minimal costs.
Why do we need ULIP Plans for Children?
ULIP child plan is one of the best ways to secure a child’s future and meet the parent’s financial goals through investment as it offers two options, life coverage and investment goals. Following are some of the reasons mentioned for choosing the ULIP plan for children:
- It performs progressive and accelerates growth in your investment with a minimum lock-in period of 5 years.
- It is now affordable, and there aren’t any extra policy charges or hidden charges, and the company explains all the complexities and rules related to the policy.
- Option of Tax deduction under Section 80C and 10D of the Income Tax Act.
- It ensures that the child doesn’t feel displaced in their education due to financial issues.
- It has several benefits such as payment of future premiums in case of demise of the insurer, monthly payment for child’s education, etc.
Child ULIP plans need to be chosen correctly with proper research. There are separate benefits attached to several child ULIP plans, and you need to choose as per the situation, your income and lifestyle. Child ULIP plans are bundled with a lot of benefits to secure your child’s future and progressively increase your wealth through diverse and personalized investment portfolios. The best ULIP child plan in India would be the one that fulfills your child’s future education and financial needs.
What is a ULIP child plan?
It is a policy cover for your child in case of any unfortunate events with the guardians. It covers a general life insurance plan with a monthly payment as well as covers investment plans for the accelerated growth of your wealth through personalized and diverse portfolios.
Can the ULIP policy be revoked or surrendered before the lock-in period?
Yes, you can surrender your ULIP policy in case of non-maintenance, but the catch is that the money will be paid after the expiry of the lock-in period, which is, 5 years in the majority of the plans.
Which is the best child ULIP plan for child education?
There are a lot of good child ULIP plans available in the market, with a minimum entry age of 18 years and a minimum annual premium of INR 12,000. Following are the best plans to choose from:
HDFC Youngstar Super Premium Plan
ICICI Prudential Smart Kid Premier Plan
Max Life Surakshtak HeadStart Child Assure Plan
Aviva Young Scholar Advantage Plan
What are the penalties or consequences if I don’t pay the ULIP premium after 5 years?
You will not be penalized if you cannot pay the premium amount after 5 years. At the same time, you won’t be able to claim your amount before the expiry of the lock-in period, which is 5 years in the majority of the plans.
Is TDS deducted on ULIP withdrawal?
When your ULIP matures, the total amount received by you or your nominee will be completely tax-free under section 10(10D). Premiums paid for insurance must meet the conditions stated in the Income Tax Act, 1961 in order to qualify for tax benefits.