What Is Unique About the Child Plans with Waiver of Premium Benefit?

Written on Thursday, August 24, 2017
By Viswajeet Parashar - Senior V.P and Group Head - Marketing

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When parents say, “We want our kids to have the best of education at all costs”, If cost is not a factor, then parents should invest in the right way and in the right financial product for meeting their kid’s education needs. There are life insurance plans in the market, offered by all life insurance companies that are structured in a way that they help in meeting the education need of the child. If you are one of those parents, who are eyeing for a good child plan, then you have a plethora of options, but the best pick will be a Child Insurance Plan with a Waiver of Premium Benefit. 
What Makes a 'Child Plan with Waiver of Premium Benefit' Unique? 
Unlike any other insurance plan, a child plan with Waiver of Premium Benefit (WOP) is unique because it continues even after the death of the policyholder. This is possible only with child plans that have the feature called ‘waiver of premium’ (WOP). If you are buying a life insurance plan for children need, then make sure it has ‘the waiver of premium’ feature. 
Why Must You Opt For 'Child Plan with WOP Benefit? 
All Child Plans have a simple structure. First, you need to choose a child plan from any of the Life Insurance Company and then start paying a premium as per the plan structure and on the promised maturity day, you will receive an increased sum of money (maturity fund) using which you can meet the financial needs of your kids like education. But to accumulate the desired maturity fund, you require paying a fixed number of premiums as mentioned in the plan. This condition brings forth the risk that what will happen if for any unfortunate reason you are not there to pay the premiums for the child plan dedicated to your child's future. Does that mean the desired fund for your child's future will not get accumulated? Child Plan with Waiver of Premium Benefit is the solution for you. 
How 'Waiver of Premium' (WOP) Works? 
A Child plan with 'Waiver of Premium' (WOP) ensures that in the event of unfortunate dismiss of the policyholder (parent), the insurance company pays the sum assured immediately to the child/nominee of the family. But, the plan doesn’t end here. The insurance company keeps the plan active and continues to fund the policy by paying the remaining premiums. Thus the money keeps growing and is given to the nominee/ child on maturity. This ensures child/nominee gets the required funds at the right age specified in the plan agreement. Thus, there is an assurance that your plan to save for child needs will not get derailed under any circumstances. In most child plans, WOP is an inbuilt feature while in others it can be added as a rider at an additional cost.
Child Plans with WOP Have No Match 
No other investment avenue such as such as Public Provident Fund (PPF), mutual funds, shares, gold and real estate can guarantee that the required sum of money would be available for the child at an age. All such investments are self-funded in nature because one needs to be alive to make the money grow through these instruments. In case of child insurance plans with WOP, even if the parents are not there to pay the premiums because of some unfortunate instance, then also the insurer takes care of the remaining funding. 
The process: There are traditional child plans such as endowment or money back plans and also there are unit-linked child insurance plans (ULCIP) to choose from. Decide when your kid would require funds and how much. Sit with your insurer and find out how much you need to save each month towards it. That’s it. Buying ULCIP over traditional child plans, especially when the need for funds is 7-10 years away. Child plans with WOP are costly compared to normal plans but for a cause. The extra that one pays goes towards ensuring that the child gets the decided amount at all costs.


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