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You have a child endowment plan which is unique in India especially if taken with a waiver of premium rider. Let us first understand how an endowment life plan works in order to know more about child endowment plan. An endowment plan is a two in one policy. Insurance +Investment You have to pay a premium in order to take up a life endowment plan .If you die before the maturity of the policy you get a sum assured. The idea in this plan is if you survive till maturity of the plan (10, 15 or 20 years) you get sum assured + bonus. You get a different amount if you die before maturity (sum assured) and at maturity (you get sum assured + bonus).
You can take a child endowment plan for your child when he is as young as 3 months (91 days old). The child endowment policy matures when the child attains a maturity of (18-24 years).The premiums of the child endowment policy have to be paid for a period of 10-15 years. In India you must take a child endowment policy with a waiver of premium rider. If you the parent die before the maturity of the policy your child gets the sum assured amount. All future premium payments are waived off (The Insurer pays up the premium) after your death till the maturity of the policy .At maturity (either when the child is 18-24 years) your child gets a maturity amount. If you die before this policy matures this policy becomes a twin payout policy
Sum assured paid on your death
Maturity amount paid at the maturity of the policy.
The Child Ulip has charges just like any other Ulip which may be higher in the beginning but gradually decrease with time. These charges are deducted from the premiums you pay and invested in equity or debt or a mix of both of them. If you want to take a higher risk for a higher return you invest a huge proportion in equity and if you are risk averse you invest a higher proportion in debt. If the stock markets do well you get a huge corpus (amount) for your Children’s education. If you die before the policy matures you get the higher of the sum assured or the fund value. Certain child Ulips pay you both the fund value and the sum assured but charge a higher premium.
You can take these plans for the marriage of your children or for your children’s education needs. You get a sum of money on the maturity of the policy (maturity amount) and you can use this money at the time the child needs it the most. You need to beware of the high charges in a Ulip before taking up a child Ulip plan.