What is Child Life Insurance?

Child Life Insurance is a plan that is offered by various insurance companies. This insurance offers financial safety to your child’s dreams and goals. Children usually do not understand or have any idea about financial values (there is no insurable interest) and there are no liabilities.

So, investing in a child insurance plan may not seem a good idea. But, there is a misconception that a child’s life should be insured. The truth is that in a child insurance plan, the parent or the guardian is the life assured while the child is the nominee! A child insurance plan is a very popular financial vehicle to build a corpus for your child.

Benefits of Child Life Insurance

The advantages of Child Life Insurance are stated below:

1. Child life insurance policies are a blend of both investment and life insurance. Child life insurance, among various other life insurance policies, help the life assured to build a corpus to fund their child’s future financial requirements such as education plan, higher education, marriage expenses, help children to kick start their career, or help their child fund their dream and start their venture.

2. Child life insurance plans provide a facility for partial withdrawal. You can fulfill your child’s immediate requirements such as a sudden medical emergency or fund your child’s extracurricular activities with the help of this facility.

3. This type of life insurance plan provides financial security and support to your child in the case of your sudden unforeseen demise during the policy tenure. This will allow your child to maintain a healthy lifestyle and pursue their dreams even if you are unfortunately not around them.

4. Child life insurance policies also act as collateral.

Dual Benefit: Investment+ Insurance

What does a Child’s life insurance provide you? Life insurance of your child can give you the dual benefit of both investment and insurance. Various milestones in your child’s life can be safeguarded through child life insurance. You can use the money on its maturity whenever it’s a financial need.

1. Aiding your child’s education

The best gift that parents can give to their children is the best educational life. However, quality education comes at a price and in addition to the basic tuition, there come extra expenses towards trips, extracurricular activities, etc which add up to a significant amount. By making your portfolio inflation-proof, a market-linked investment plan can help you to achieve higher returns.

2. Collateral for loans

Usually, a child insurance policy has a Surrender Value so it can be offered as collateral to avail a loan. The loan amount can vary based on the value of the underlying fund.

3. Waiver on premium

Child insurance plans always come with a Waiver of Premium Rider. This premium ensures that in case of your (parent’s) death, all the future premiums will be waived by the insurance company and the remaining dues will also be paid by the insurance company. So no matter what happens, your child will be entitled to a lump sum amount for his/her future. You may consider any insurance plan which will offer you a comprehensive solution for securing your child’s future in case you are a young parent with a desire of building a corpus for your child and if you are ready to invest in the long-term.

Two types of Child Insurance Plan

There are two types of Child Insurance Plans. These include:

Traditional Child Plan: This plan is safer and is more secure. And it guarantees you maturity returns. You can invest in low-risk funds, such as government securities and corporate.

Unit-Linked Plans or ULIPs:
This plan is for those who don’t have any problem investing more. These plans yield high returns but are long-term. Therefore, Unit-linked plans are high-risk as well as high-returns financial instruments.

Read More: How A Child Education Plan Can Help You Secure Your Child’s Higher Education


As a Guardian, you must consider child life insurance plans for your child while planning for the financially secured future of your child. These types of insurance policies easily come in handy when you need funds to fulfill your child’s financial requirements in the future.

Child life insurance policies assist you to create a financially secure future for your child.

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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