RISING COST OF EDUCATION

	BASICS OF CHILD PLANS
	The worry that tops the list for a parent is, “how to meet the rising cost of education?” You start saving for your children quite early. You plan and save to be able to deal with the costs of higher education or to make their life financially secure till the time they become independent. A child insurance plan is an important step in the direction. Child plans are designed in a manner that you are able to provide financial support to the child at crucial stages in their life.
	Maturity of child plans generally coincides with specific stage in the life of a child like going for a professional course or higher education, stepping into a new career or marriage. These stages are typical at the age of 18 years, 21 years or 24 years. For you, these are occasions when you might need extra funds to manage the situation comfortably. So, planning for child insurance also gives you a peep into your own future financial requirements over the time as the child grows. Buying a child plan is an important decision where you need to consider a lot of factors.
	Consider before you buy:
	• Payer benefit and waiver of premium
	Premium waiver in a child plan implies that if the parent does not survive the policy term, all future premiums will be waived off and the policy will still remain in force. The child will get all the maturity benefits as planned. Many companies have Premium Waiver inbuilt in the child insurance policy, whereas others offer it as riders. It is always better to include payer benefit or premium waiver in the child insurance policy.
	• Allocation Charge
	Allocation charge is the amount deducted by the insurance company from the premium before investing in various funds. It varies as per the type of fund, maximum being for equity funds, and minimum for debt funds. It reduces with the risk involved. Allocation charges may be negligible in traditional plans but more prominent in ULIPS.
	• Riders Available
	To ensure that the child plan does not lapse in case the payer does not survive the policy term, there are certain riders available with it. The most important child plan riders are payer benefit and waiver of premium. Other riders are dreaded diseases or personal accident benefit. Depending upon the insurance company and the insurance policy, these can be inbuilt, optional, or not available. It is important to select the riders carefully.
	• Guaranteed Benefit
	Guaranteed benefit is a percentage of sum assured that is guaranteed by the insurance company in addition to the maturity amount. This assured amount is given to the policyholder for the number of years the premium has been paid. It is payable at the maturity date along with the maturity amount.
	• Loyalty Addition
	Loyalty addition is an additional amount declared from time to time. It is a percentage of the sum assured and is in addition to the guaranteed benefit. It largely depends upon the performance of the insurance company. It is calculated on the number of years that the premium has been paid for. The percentage of additions varies every year.