Is the waiver of premium rider needed while buying Child Insurance Plans?
For all parents, one of the major concerns is to provide their child with the best financial security. Financial safety in the form of a good insurance child plan is the initial step towards building a strong financial future for your child. Such plans assist to attain the goals of your child like higher education etc. However, for those parents who are unaware about what is life insurance and its importance, here is a small brief on it.
Life insurance refers to a contract between the insurer and policy holder, where the policy insurer assures to pay a predetermined amount upon maturity or death of the insured. For all parents, it is crucial to buy an adequate child insurance plan. Doing so helps you to build adequate corpus for your child’s higher education, maintain a kitty for your child’s medical treatment, support your child in the case of your absence, etc.
An insurance child plan assists to form a corpus for a child’s future financial needs over time. A lump sum amount is received on insurance maturity or on nearing life’s important milestones such as higher education/wedding. Many insurance plans also come with numerous add-ons also called rider options to enhance the basic coverage. Such rider options may be in the form of premium waiver, income benefit etc.
Note that such rider options are frequently bought insurance add-ons wherein waiver of premium rider usually comes as an in-built option in most plans.
Waiver of premium rider on child plan – Importance
Waiver of premium on a child plan is an additional choice or option provided under the child policy to cover the premium cost in the situation of any unexpected event. For child policy, primary holders are the parents who must pay the premium regularly.
Consider this instance where the primary policyholder witnesses an unfortunate event leaving them disabled, deceased, or injured. Opting for this rider option would ensure all future premiums are waived off while the policy continues in such cases. Waiver of premium rider also makes sure that the insurance does not lapse, and the ward continues to receive full cover to attain crucial goals. The child upon maturity of the insurance is provided a lump sum amount.
Advantages of waiver of premium rider
This rider offers multiple benefits, some of them are:
- Protection against serious illnesses
In situations if the parents are diagnosed with any critical health issue and unfortunately expires during the insurance term, waiver of premium rider can assist cover the rest of the term’s premium expense. Few of the serious illnesses the rider provides protection to are heart attack, cancer, vascular disease, and kidney failure.
- Protection against disability
If a parent suffers from any disability owing to an accident or any ailment, this rider can waive off all future premiums. However, for availing this rider, the disability should be for six months or more.
- Available at low costs
Usually, many child plans provide insurance with an in-built premium rider offer. However, in the case of its unavailability, you can add it to your basic insurance cover by paying a meagre additional premium.
- Flexibility in choosing the rider
While most child policies come with in-built rider options, most insurances also allow the facility of its removal or addition based upon convenience. However, opting for the rider option is just useful during any crisis.
- Tax benefit
Premium paid against term policy including waiver premium rider receives tax benefit as per Section 80 C. The holder of the policy can claim tax exemption of up to Rs 1.50 lakh.
Crucial exclusions under the waiver of premium rider option
All parents as are the primary holders of the policy should be aware about the crucial exclusions under waiver of premium rider option.
Listed below are crucial exclusions, most insurers have for this rider option to adequately work:
- Congenital infections
- Any ailment diagnosed during the policy’s waiting period
- Death or injury because of riots, war, strikes or invasion
- Death or injury because of participation in any criminal act
- Death or injury by participating in dangerous sports like skydiving, martial arts, hunting, etc.
- Death or illness caused due to nuclear contamination