A LIC policy for children is an insurance policy that provides financial security for the child’s future. There are numerous reasons for establishing a child plan, including meeting future needs, providing tax benefits, addressing inflation, and serving as an asset that can be borrowed from. The LIC policy for children ensures they achieve their major life milestones. A policy scheme aids the fulfilment of the growing years, for instance, getting a higher education or marriage. It also assists in healthcare services. In this article, we will walk you through different LIC policies for children, their benefits, and why you should invest in child insurance.
Table of contents
LIC SIIP Plan
The LIC SIIP Plan is a unit-linked insurance plan. In elaboration, the insurance holder gets the opportunity to make financial investments in the equity market to grow their wealth. An individual can choose the policy term accordingly so that the policy must align with the child’s educational goal. Once the policy has matured, an individual becomes eligible to receive accumulated returns with the fund value in a lump sum or in instalment mode, which solely depends on the circumstances.
LIC SIIP Plan Benefits
The benefits of the SIIP plan are mentioned below:
- If the policyholder dies within the policy term, then their loved ones receive the benefit.
- Part of the premium amount goes directly to the investment in market-linked funds. Moreover, the remaining portion goes directly towards the life cover.
- There are four options available for the policyholder to choose from, depending on their risk appetite.
- The policyholder can use the facility to switch to a different policy if they are unsatisfied with it without any additional charges.
LIC Bima Jyoti Plan
LIC Bima Jyoti is a unique insurance plan that provides a guaranteed payout upon maturity and death benefits in the event of the policyholder’s unfortunate demise. The policyholder can use the policy and bonus amount to finance their child’s education.
Bima Jyoti Plan Benefits
Bima Jyoti plan has several benefits, making it one of the most popular LIC plans. The benefits of Bima Jyoti are as follows:
- The Bima Jyoti plan can offer the policyholder a combined benefit of insurance and savings.
- Till the policy matures, there are guaranteed additions to the sum assured annually.
- Bima Jyoti’s plan facilitates the policyholder to choose from the option of monthly, quarterly, half-yearly, or yearly to receive the maturity benefits.
- One of the benefits is that Bima Jyoti allows the policy to align the maturity date according to their preferences. Due to this facility, the Bima Jyoti plan offers a fixed sum regularly, which funds the child’s ad-hoc needs.
LIC Children’s Money Back Plan
The latest LIC children’s money-back plan caters to the child’s education, marriage, and other basic needs via the Survival Benefits. Furthermore, it offers a risk cover for the child during the policy’s term, including the survival benefits up to the end of the stipulated duration.
LIC Children’s Money Back Plan’s Benefit
Check out the below-mentioned vital points to get a better understanding of the benefits of the LIC Children’s Money Back Plan:
- In case the policyholder demises after the commencement date of risk, then the sum assured on death along with the simple reversionary bonus and the vested final additional bonus (if any) shall be payable.
- If the life assured survives the age of 18, 20, or 22, then 20% of the Basic Sum Assured shall be payable on each occasion.
- In case the life assured survives till the completion of the policy term, then 40% of the basic sum assured along with the simple reversionary bonus and the vested final additional bonus (if any) shall be payable.
LIC Jeevan Tarun
LIC Jeevan Tarun is a limited premium payment plan, offering the policyholder the combined benefit of insurance and savings. This is a specially designed LIC scheme to cater to the financial and education need of the child in the growing years.
LIC Jeevan Tarun Plan’s Benefits
Check out the below-mentioned key points to get a better understanding of the benefits of the LIC Jeevan Tarun plan:
- If the unfortunate demise of the policyholder occurs after the commencement of risk, then the death benefit will be equal to the sum assured capital of death with an additional reversionary bonus and the final bonus in case there’s any.
- Once the child completes 20 years of age, a specified percentage of the assured sum is payable after 4 years.
- If the policyholder survives the total policy tenure, then the sum assured upon maturity along with the bonuses, including the vested reversionary bonus (if any) will be payable to the insured individual.
Why One Should Make Financial Investment in Child Insurance?
Making a financial investment in child insurance has major benefits, such as tax benefits, works as an asset to avail a loan against, and also addresses the child’s future needs. Some of the benefits are mentioned below:
Build Large Aggregations
A child plan is extremely beneficial for saving capital and fueling your child’s bright future. One of the benefits is that a child insurance plan has the potential to provide up to 10 times the investment funds. The amount can be used for various purposes, such as education, healthcare, marriage, and future projections. Investing capital in child insurance ensures that there is no lack of capital for your child’s future projections and major milestones.
Tax Benefits
A child insurance plan provides several tax benefits under section 80C of the IT Act. According to this act, the policyholder is eligible to claim tax deductions. If the premium paid by the individual in a specific year exceeds the 10% mark of the basic insured amount, then the individual can claim tax exemptions up to 10% of the assured amount.
Furthermore, under section 10D, the policyholder can avail of the tax deduction on the interest earned upon investment if the annual premium paid doesn’t exceed 1/10th of the sum assured. However, in the event of an unfortunate demise, the disbursed funds have full tax exemptions.
Serves as an Asset
The child insurance policy works as an asset that can be used to obtain a loan. Moreover, a child insurance policy is also used as collateral for several child-related borrowings for purposes like education, marriage, and so on.
Tackle Inflation
The capital you save for your child’s education, marriage, and future projects does not grow periodically, which can tackle the inflation rate. Investing your money in child insurance grows faster than saving and also assists in a crisis.
Child’s Protection
Any insurance policy, including the LIC policy for children, serves the same purpose: protecting the policyholder. It addresses the child’s future needs, including funds for their higher education. Several child plans have a facility that allows the policyholder to.
Addressing Future Needs
Addressing future needs A child’s future strategy also includes funds for higher education. Many child plans have a premium waiver feature that continues in effect for the remainder of the insurance period in the event of the policyholder’s untimely demise. In this situation, the company is liable to pay the policy premium. Moreover, the invested capital is held till the end of the policy term, after which the capital is paid to the policyholder to cover the education funds.
Premium Waiver Shielding
Most life insurance schemes, including the child insurance plan, have one purpose in common: protecting the dependent. Here, in the LIC policy for children, if the insured parent’s untimely demise, and the life insurance premiums from the policyholder’s plan will be used immediately for the child’s day-to-day needs and future requirements.
To Sum Up
The LIC policies for children are specifically designed to provide financial security for the child’s future and also cater to education, marriage, and other basic needs via the Survival Benefits. It also offers multiple benefits, such as tax deduction, addressing future needs, premium waiver shielding, tackling inflation, etc. An insurance policy also provides a death benefit in the policyholder’s unfortunate demise. The insurance serves as an asset, which makes it possible to get a loan against it.
Frequently Asked Questions (FAQs)
Can I pay the LIC premium for my daughter?
Yes, a life insurance policy can be bought for many children, whether they are minor or major, married or unmarried.
What is the Children’s Money Back plan?
The Children’s Money Back Plan is a LIC policy for children that offers survival and death benefits.
What is the Children’s Money Back plan?
The Children’s Money Back Plan is a LIC policy for children that offers survival and death benefits.
What is the LIC Jeevan Tarun plan?
LIC Jeevan Tarun is a limited premium payment plan, offering the policyholder the combined benefit of insurance and savings. This specially designed LIC scheme caters to the child’s financial and educational needs.
Which one’s better LIC or Mutual funds?
Both of them have their pros and cons. A LIC policy is less risky than a mutual fund, but a LIC policy provides a guaranteed death benefit in the event of the policyholder’s unfortunate demise. On the other hand, mutual funds are highly volatile.
Benefits of LIC Policy for children?
The government-owned LIC comes with a guarantee from the Indian government, which makes its offering a safer and more reliable investment avenue. Moreover, it also provides tax benefits under Section 80C of the IT Act, 1961, addresses children’s future needs, and caters to their higher education.
