Premium waiver feature is a must have in any unit linked insurance policy (Ullip) bought for the child's future needs. Here's why.
Welcome to FundooMoney, your 24X7 buddy for all your money matters! Life insurance companies offer child plans to save for the future expenses of children, especially higher education.
A variant of the child plans is children’s unit linked insurance plans (Ulips).They use your premiums to provide life insurance coverage and help you buy units in a fund of your choice, as you invest for the child’s future. A major attraction of Ulips is that they help you invest in equities and benefit from its growth during the long Ulip term.
Now, for your child’s future needs, if you opt for a child plan, especially an Ulip, you need to ensure that it has a premium waiver option. More about this Ulip feature in just a moment.
Here’s how a premium waiver option in a child plan works:
Beneficiary gets the sum assured In case of demise of the person insured during the Ulip term, the beneficiary child gets the sum assured of the policy. This helps to meet immediate financial needs. Ulips typically offer up to 40 times annual premium as sum assured a fairly high life protection.
The policy continues Despite the untimely demise, the child Ulip continues without any insurance cover. The funds remain invested till the end of the term for the child plan. This helps the money to remain invested and gets to grow well thanks to the equity investments.
Helps meet future needs Thanks to the growth of invested money, the child gets a substantial amount for a major need, typically higher education, even in the absence of regular premium payment.
This makes premium waiver a must have feature in a plan which you would zero down as the best child plan and could be considered if you want a financial product that combines life insurance and investment.
We hope you found this useful. Are there other features that one needs to consider in child plans? Do share with us your thoughts in the comments section. For more such actionable personal finance information, subscribe to our channel. Also, visit our website, download our mobile app and stay connected with us on Instagram, Pinterest and Slideshare.
