Grow up to child cover

Insurance offers a simple assurance in terms of money support to a child in case of death or disability of a parent. This takes care of his education and provides necessary financial support till he is able to shoulder the family responsibility and stand on his own feet.

Insurance plans for children can help if things go wrong at key stages in a child’s life and his growth years.

Pregnancy and Child Birth: Complication during child birth and congenital defects are a major risk. Insurance help give parents the much-needed financial help for hospitalisation expenses due to complications in birth, post-pregnancy ailments and congenital defects and disability.

Insurers have started covering specific complications during pregnancy as well as support medical care and other needs for congenital disability for a new-born child.

Child’s Health: In case a child needs hospitalisation, an individual leaves no stone unturned to get the best medical attention. Insurance can pay for all the hospital bills. Insurance companies today are working on products which cover child specific illnesses like tonsillitis and appendicitis.

Specific child health products have been available in developed markets such as Europe and the US and it is a matter of a time before these are launched in India as well.

Higher Education Cost: Children’s education insurance plans help parents save regularly to generate a corpus, which pays for their child’s higher education at key stages like joining college, post-graduate course and also after passing out to start a new business on their own.

In case of any unfortunate incidence where the main bread earner passes away, insurance plans guarantee that all the money (and often much more) that you had planned for your child is still given at all the stages at which you would have wanted for your child’s education if you were around.

Marriage: This stage of a parent’s responsibility is in a way also taken care by today’s insurance plans. Child insurance plans can have a bonus component or a lump sum at maturity option in case of death of a parent, apart from regular payouts. This can be used as a ‘start of life benefit’ to settle the child or can be used for the child’s marriage.

What is typically available?
Education insurance plans are a much talked about products. These basically offer guaranteed payouts at specific intervals, which take care of graduation, post graduation fees or both. Health insurance is usually bought as a ‘family floater’ whereby all members are covered in case of hospitalisation.

Parents purchasing education insurance products for their children must account for inflation cost and payouts benefit. They should not buy a plan keeping in mind today’s costs. The likely cost at the time the child will be requiring the money needs to be considered.
Another issue likely to be overlooked is the premium paying capability of the parent throughout the term of the policy. It is better if the policy builds in waiver of future premiums in case of death or disability of the parent.

Parents can also build in a monthly pension of, say 1% of sum assured, for a minimum of 10 years or the remaining period of policy, whichever is higher. Building in these features will ensure that the policy continues even in the unfortunate event of the death of the parent or when the parent is unable to pay on account of disability.

Finally, parent must question their insurance advisor thoroughly before purchasing the policy about all the guaranteed benefits available and the frequency at which the benefits under the policy will be available.

Sanjay Jain
The author is head, marketing, Bajaj Allianz Life Insurance