If the age of the child is between 8 to 12 years, then the life cover starts as soon as the policy is received. If the age of the child is less than 8 years, then the life cover starts after 2 years of taking the policy.
Today we will talk about a very special LIC policy for children. This policy has been specially designed for children. The name of this policy is New Children Money Back Plan. This is a non linked policy which is not linked to the stock market. This plan comes with two types of benefits which include Simple Revisionary Bonus and Final Additional Bonus. In this plan, LIC gives bonus in between and additional bonus is given at the end as well. This is a regular premium plan in which the premium has to be paid for as many years as the plan is.
A policy has a unique structure in which there is a proposer who can be the father or guardian of the child. The proposer himself takes the policy for his child. The father or proposer will have to pay the premium for the sum assured policy taken for the child. This policy is given in the name of the child but the premium has to be paid by the father (proposer). This policy can also be taken in the name of the child in the year in which he was born. The maximum age limit has been kept at 12 years. Children above 12 years of age cannot take this plan.
How many years plan
To know the policy term in this plan, the age of the child has to be deducted from 25 years. Suppose the age of the child is 5 years, then subtract it from 25 which will come to 20 years. That is, the policy of that child will be 20 years. This policy will get maturity when the child attains the age of 25 years. In this plan, it does not matter at what age of the child is taking this policy. When the child reaches 25 years of age, then it will be maturity. The money back of the policy is available before that. The minimum sum assured in the policy is Rs 1 lakh.
Premium is waived
This policy is for the child, so it is important to understand from what age the child starts getting life cover. If the age of the child is between 8 to 12 years, then the life cover starts as soon as the policy is received. If the age of the child is less than 8 years, then the life cover starts after 2 years of taking the policy. Premium waiver rider can be taken as a rider in this plan.
The advantage of this will be that if the proposer or the father of the child who has started the policy, leaves this world, then all future premiums are waived off. Apart from the surrender value in the policy, the benefit of revival is also available. If the policy is discontinued, it can be revived within 5 years from the premium due date. All remaining premiums have to be paid along with interest.
Loan facility is also available in this policy. You can take a loan against the policy after paying the premium for 2 years. The premiums of the policy can be paid at monthly, quarterly, half yearly and yearly levels. The premium amount is fully exempted under section 80C and on maturity under section 10(10D) of income tax.
Understand with this example
Understand this policy with an example. 30 year old Raman takes this policy for his 2 year old child Shyam. He has taken the sum assured of the policy of Rs 2 lakh. The age of the child is 2 years, so the policy term will be 25-2 i.e. 23 years. Raman will have to pay premium for 23 years in this plan. Raman has also taken premium waiver rider in this plan.
In case of his untimely death, all premiums for the child will be waived off. Raman has opted for the monthly premium plan, so Rs 816 will have to be paid every month. The annual premium will be Rs 9,577.
Get Rs 3,37,000 on maturity
Raman will pay Rs 2,20,481 as premium during the entire policy term. When Shyam is 18 years old, he will get 20 percent of the sum assured i.e. 40 thousand rupees as the first money back. When Shyam is 20 years old, then 20% of the sum assured i.e. 40 thousand rupees will be available as second money back. When the child is 22 years old, then 40 thousand rupees will be available as the third money back.
When Shyam attains 25 years of age, this policy will mature and he will get the remaining 40% of Sum Assured first as maturity i.e. Rs.80,000, Rs.2,07,000 as Vested Revisionary Bonus and as Final Additional Bonus. 50,000 will be available. Adding the total amount, Shyam will get Rs 3,37,000.
The money back that Shyam has got in between, if he does not want to take it at that time, then he can get it together later. LIC pays this money along with interest. This plan is mainly designed keeping in mind the higher education of children. If Raman dies during the policy then all premiums of this policy run in the name of his child Shyam get waived. After the death of the father, Shyam will get the benefit of all benefits in the same way as Raman would get at the time of maturity while he was alive.
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