The child money back plan is a traditional plan that is designed to meet the needs of your growing child. These requirements could be anything from educational needs to paying for their marriage. This new money back plan also provides you the risk cover to offer survival benefits upon surviving the policy duration.
This policy can be bought by the child’s grandparents or their parents between the ages of 0 and 12. Simply put, it is an insurance cum investment plan that will help you secure the child’s future and ensure that they are able to achieve their goals, even if something happens to you. Depending upon the performance of the investment, your child money back plan is also eligible to earn a bonus.
The main reason why this policy remains a preferred option for many parents is that it provides the financial security to their child up to the age of 25 years. By that time, they are old enough to take their own responsibilities and would have most likely achieved the basic milestones in life. The child will also receive a maturity amount after they have attained the age of 25, allowing them to pay for a higher education or fund other ambitions.
But to avoid common investment mistakes while buying a child money back policy, you need to understand what is investment and how does a money back policy work in order to make the right decision. Read on to know more.
Features of Child Money Back Policy
Here are some of the most common features of child money back plan.
- This plan can only support one child at a time that offers survival, maturity, and death benefit to secure their future in all circumstances.
- The maturity period is 25 years minus the age at which you buy the policy. For example, if the entry age is 11 years, then the policy period will 25-11 = 14 years. After the completion of this period, the child receives maturity benefit of the complete sum assured.
- There is a free-look period of 15 years when you buy the child money back plan. If you do not like the policy terms, you can return the policy for a full refund.
- There are multiple payment options, such as premium on yearly, half-yearly, quarterly, or monthly basis, as per your requirements. Moreover, you can also fund your short-term goals by taking loans on this plan.
- You can supplement your child money back plan with a premium waiver rider option that exempts your family members to pay premiums, in case something happens to you during the policy term.
Benefits of Children’s Money Back Plan
Here are the key benefits of this plan:
- Death benefit
If something happens to the policyholder within the policy period or before its maturity, then the child will receive the death benefit. Thus, the payable amount will include the full sum assured along with vested simple reversionary bonus and additional bonus, if applicable.
- Survival Benefit
If the child survives the policy term and attains the age of 18, 20, and 22 years, then 20% sum assured is paid at each milestone.
- Maturity Benefit
If the life assured person survives the policy period, then they become eligible for 40% of the basic sum assured plus bested simple reversionary bonus and additional bonus, if applicable. However, the policy must be active to avail these benefits.
- Profit Sharing
Since this is a participating plan, life assured will be entitled to receive profits from the corporation as per the plan’s performance. The bonus will be automatically added to the amount when the claim is raised, either upon death or maturity.
- Optional Benefit
The policyholder can defer the survival benefit anytime during the policy period. As a result of deferment, the corporation will be liable to pay an increased survival benefit as per the policy document’s terms and conditions. However, you would have to give a written request at least 6 months before the maturity date to be able to avail this benefit.
- Option to Avail Loan
You can also take a loan against your policy if you need emergency funds. Loans will be allowed only after the plan has acquired the surrender value as the value of loan depends on the policy’s surrender value.
If you want to give your child a secure financial future, then consider investing in a child money back plan as it is designed to help you achieve that objective. It not only protects them against all eventualities but also creates a handsome corpus for them to be able to pay for their dream education when they reach the maturity age. Read this article to educate yourself about the policy in detail to avoid making common investment mistakes.
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