Child Investment Plans in UAE

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Parenthood is an immensely joyful experience. However, being a parent also involves numerous responsibilities, with securing your child’s future being one of the most important duties. As one can face several uncertainties in life, being ready for unforeseen circumstances is important especially when your child's future is involved. 

Several insurance providers in the UAE offer child investment plans to secure your kid’s future and also cover their education expenses. Whether it's schooling or higher education, you can manage your child’s education expenses without any hassles with a child investment plan. This aspect of security will apply even if the cost of education soars high in the future. Read the article below to find the best child investment plans in the UAE along with their features and benefits. 

What is Child Investment Plan UAE?

Child Investment Plans are specially designed investment plans that focus on generating financial capital to meet your child’s higher education expenses. However, it should be noted that these investment plans also secure your child against any unforeseen event. Child Investment plans often come with life covers and opportunities to maximise your wealth over the period. Depending on the type of plan, you may be required to pay a lump sum amount or a monthly, quarterly, half-yearly, or annual premium to keep your plan active and accrue interest. 

Once your child starts their higher studies, the funds are used to pay their education fee. A few funds can also be converted into a term insurance plan after your child completes his/her studies. However, you will need to verify the same before investing in a children's investment plan in the UAE. 

Why Do You Need a Child Investment Plan?

As a parent, it's your prime responsibility to secure the future of your child so that their education is not hampered during unforeseen situations. Given the several uncertainties of life, one should not overlook the significance of child investment plans. Children depend on their parents or guardians for basic needs and education until their employment. In case of the untimely demise of the parents, the child should not struggle or compromise their studies. 

Additionally, with the increasing cost of education, it can also be difficult in the future to manage other expenses along with the child’s college fees. In such cases, a child investment plan is a perfect blend of insurance and education plans which secures your child and their education should the worst happen. Consequently, a child investment plan can be considered highly necessary and should be purchased as early as possible. 

Immediate Financial Protection

Child investment plans pay a lump sum amount in case the earning parent dies untimely. Additionally, during the active investment tenure, the premium is also waived off to ease any financial burden on the child. 

Counter Education Inflation

The cost of education is increasing drastically every passing year along with general inflation. On top of that, if you plan to send your child to study abroad, it can deplete your life savings without proper planning. However, with the right child education plan in the UAE, you can manage your child’s education as well as your expenses without any hassles. 

Premium Waiver During Adverse Situation

Inability to pay the premium even amidst unforeseen circumstances can derail the investment and impact the higher education of the child. However, with such plans, the insurers continue to pay the premium from their side to keep the investment going and provide a premium waiver to the dependent child. 

Better Returns on Investments than Normal Saving Plans

Child Investment Plan are goal-based investments yielding better returns. The investment component generates wealth and the power of compounding adds to the financial growth. You must start a child investment plan as early as possible to get a high return on investment. 

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Features and Benefits of Child Investment Plans in UAE

Apart from providing funds to cover the educational expenses of your kid, a child investment plan comes with a host of features to safeguard their future. Following are the key features of child investment plans in the UAE. 

  • Corpus for Child’s Education
  • Inflation Beating Returns
  • Comprehensive Life Coverage
  • Premium Waiver
  • Income Protection for the Child 
  • Collateral for Acquiring Higher Loan
  • The Flexibility of Premium Payment
  • The Flexibility of Receiving Plan Benefits

Corpus for Child’s Education

A child plan helps you grow enough funds to support your child’s higher education, steering clear of the effect of inflation. However, the funds available depend on the terms and conditions of the plan and the amount of premium invested. You may receive bonuses in case the funds perform better. 

Inflation Beating Returns

Most child investment plans are market-linked, with their performance depending on the market performance. With the expertise and market experience of the banks and insurers, child investment plans yield higher returns that easily beat inflation. So even if your child's education fee increases with inflation, you can have enough funds to pay for their higher studies.  

Comprehensive Life Coverage

While an education expense cover is among its salient features, the plan also provides comprehensive coverage against life threats and critical illnesses. You can partially withdraw funds from your plan to meet the hospitalisation and medical treatment cost. It includes coverage for accidental deaths and permanent disabilities. 

Premium Waiver

In case of the untimely demise of the earning parent (the policy owner), the plan also offers a premium waiver feature. It means that all the future premiums are waived off and the child still continues to get the plan benefits. The insurer pays the insurance premium in these cases. At the end of maturity, the lump sum amount is paid to the nominee or the child (whoever is entitled) as promised during the plan purchase. 

Income Protection for the Child 

In unfortunate events where the parents are not around to pay the kid’s expenses, the child's investment/education plan pays a regular income, which is usually a percentage of the total assured sum. 

Collateral for Acquiring Higher Loan

If you have an investment in a child education plan, you can use it as security or collateral to acquire higher loans in case of emergencies. 

The Flexibility of Premium Payment

The plans offer flexibility to pay your premiums on a monthly, quarterly, half-yearly, and annual basis. Based on your financial planning, you can opt for suitable premium payment frequencies. However, the payments may also be decided based on your maturity amount and tenure. 

The Flexibility of Receiving Plan Benefits

After maturity, you can opt to receive the child investment plan benefits in lump sum amounts or at regular intervals depending on your requirements. 

Types of Child Investment Plans

Most insurance providers in the UAE offer child education plans as insurance products, with the plans varying as per the type of investment, premium payment, etc. Following are the major types of child investment Plans in the UAE. 

  • Single-Premium Child Investment Plan 
  • Regular Premium Child Investment Plan 
  • Child ULIP Plans 
  • Child Endowment Plans 

Single-Premium Child Investment Plan 

In a single premium child plan, the policyholder needs to pay a lump sum amount as an investment. The plan then generates wealth over the specified period to cover the education expenses of the child. In a single premium plan, you won’t be required to go through the hassles of arranging premiums regularly once you have paid the premium, letting you stay worry-free. 

Regular Premium Child Investment Plan 

A regular premium child investment plan allows you to pay a regular premium against your investment at your convenience. You can choose to pay your premiums on a monthly, quarterly, half-yearly, or annually basis. 

Child ULIP Plans 

Unit linked insurance plans provide considerable growth as the premiums paid by the policyholder are divided into various units and invested into the market. Besides such growth potential, these plans also offer numerous benefits like an assured sum in case of demise of the insured guardian, where the future premiums are waived off and the maturity amount is paid at the end of the maturity period. 

Child Endowment Plans 

A child endowment plan can be simply thought of as life insurance that also generates wealth over the given tenure. Since the endowment plans have a saving component, you will receive the insurance benefits after maturity. The amount helps in meeting the child’s higher education and also provides the life protection umbrella. 

Best Children Investment Plans in UAE

Considering the increasing cost of education in the UAE and across the globe, several insurance companies and financial institutions offer child investment and insurance plans to secure their life and higher education. However, with numerous options to choose from, it may be difficult to select the most suitable plan as per your and your child’s requirements. 

To ease your research process, we have compiled a list of the best children's investment plans in the UAE. 

Met-Life Educare Insurance Plan

Met-Life Gulf is one of the major insurance providers in the MENA region. From life, health, and travel to personal accident cover, the company offers a range of benefits and securities. And while it has satisfactory conventional protection plans, it also offers innovative and customisable plans to suit your security requirements. 

To safeguard your child’s future, it offers the Met-Life Educare Plan that not only secures their higher education fees but also covers them against a range of difficult situations. The plan includes various add-on riders to help you customise the plan as per your requirements. Here are a few benefits of the Met-Life Educare Insurance Plan. 

  • Guaranteed tuition fee twice every year 
  • Additional bonuses if the plan performs well 
  • Guaranteed post-graduation payout for a decent start to your kid’s career
  • Coverage against accidental death and death due to illnesses
  • Waiver of premium in case of death or disability of the policy owner

Mashreq Bank Child Education Plan

Established in 1967, Mashreq Bank is one of the oldest banks in the UAE and provides a range of innovative and customisable banking solutions. While it is renowned for its banking products, the bank also offers numerous investment opportunities, with the child education plan being one of its popular goal-based investment plans to secure your child’s future. 

Mashreq Bank Child Education saving plans provide numerous benefits as mentioned below. 

  • Guaranteed education fee for your child’s higher studies
  • Life insurance and critical illness cover 
  • Regular income for the dependent child in case of the untimely demise of the policyholder
  • Premium waiver for the child if the policy owner dies during the investment tenure
  • The bank collaborates with renowned national and international insurance companies, ensuring multiple opportunities and security of investment 

Zurich Child Education Plan

Zurich is one of the largest and oldest insurance providers in the world. Besides a range of life and health insurance products, the company also offers child insurance and saving plans to meet their higher education expenses and provide stability during unforeseen events. 

Zurich Child Education plan provides numerous benefits from covering your child’s education fee to securing their life from unforeseen events. Following are the important features and benefits of the Zurich Child Education plan. 

  • Get an assured sum to meet your child’s higher education expenses 
  • The plans offer premium waivers in case of the untimely demise of the earning parent
  • To meet your kid’s daily expenses, the plan provides regular income in case of death or disability of the earning parent.  
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Other Options for a Child Education Plan

Since most child education plans are goal-based investments, you have the option of setting your own financial goals and investing in some of the high returning investment options. However, as you will need to create a strong financial backup for your child’s education, it is crucial to choose the right investment plan in UAE. Here are a few other investment options for child education plans in the UAE. 

Investment in Equities:

Equities offer steep financial growth that can easily beat the education inflation and help you secure your child’s future. Compared to deposit and saving schemes, these investments offer better returns. At the same time, it should be remembered that equities are risky. An excellent option to navigate around such risk is to create a diversified portfolio and tackle the uncertainty. Once you have generated enough wealth, you can liquidate funds and move to safer investment options like National Bonds UAE, Debt Funds, or Deposit schemes. 

Mutual Funds:

Mutual funds are comparatively safer ways to invest in stocks as your funds are managed by asset management companies. With their research and experience, your investments are at a lesser risk than direct equities and generate considerable income over the period. After you have generated enough wealth, you can liquidate it and deposit it in the saver option.  

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Unit Linked Investment Plans (ULIPs):

An alternative to mutual funds, unit-linked investment plans come with both investment and insurance components. The investment component generates income over the tenure while the insurance component assures a fixed sum for any uncertainty. Whichever type of stocks you select for investing in, you will receive returns after maturity based on their performance in the market. 

Endowment Plans:

Similar to the ULIPs, endowment plans also have insurance and a saving component. While the saving component generates income and grows your wealth over time, the insurance component helps your child tackle unforeseen situations. Endowment plans guarantee an assured sum provided in case of untimely events. 

Term Insurance Plans:

Term insurance plans are the most affordable of all insurance policies. They guarantee a large assured sum in case of the demise of the policyholder during the insurance tenure. It is widely considered among the best options for securing a child from untimely events and removing any financial liabilities from their shoulders if their parents are not around.
However, while common term insurance plans don’t have maturity benefits, there are a few that offer maturity benefits when you opt for an additional rider.  

Documents Required to Purchase a Child Investment Plan in the UAE

Following are the documents to be submitted while purchasing a child insurance plan. 

  • A duly filled proposal form 
  • Applicant’s age proof
  • Applicant’s proof of identity
  • Proof of Income
  • Address Proof like lease or rent agreement 

Child Insurance Plan Claim Process

Choosing a child insurance plan from a company with a high claim settlement ratio ensures a hassle-free claim process. Similarly, it is recommended to buy a child's education plan from a reliable insurer. These two are among the several other factors involved in the selection process for such plans. For more related information, here are the steps for the child insurance claim process. 

  • In case of eventualities where you need a claim settlement, intimate your insurance provider and report the event. You can also file a claim online by sending an e-mail or contacting the insurer’s support team. Alternatively, you can visit your insurer’s office in person and file a child insurance claim.  
  • Subsequently, you will be required to fill out a claim form entering the details of events. Enter all the necessary information like the date of the incident, policyholders’ detail, nominee’s name, contact details, etc. 
  • Attach all the supporting documents and official reports like medical records and police reports (if applicable) while submitting your claim form. 
  • The surveyor appointed by your insurance provider will go through your case and verify all the details and documents.
  • After approval, the insurer transfers the claim benefits to the policyholder’s or the nominee’s account within 30 days of filing the claim. 

In case your claim request is rejected, you will have to find the reason for disapproval and follow the steps again after making the necessary rectifications. 

Documents Required for Child Insurance Claim Process

Given below is the list of documents you will require while filing for a child insurance claim settlement. 

  • Duly filled claim form
  • Policy certificate or details 
  • Medical certificates in case of settlement for a medical complication 
  • Death certificate in case of policyholder’s demise
  • Diagnostics, medical reports, and prescriptions 
  • Post-mortem report and FIR copy in case of unnatural death 
  • KYC of the nominee and the policyholder

Child Insurance Plan Exclusion

Although child insurance plans provide comprehensive coverage against life and illnesses threats, there are a few instances where the plans do not offer coverage. These include injuries or loss of life under certain situations as mentioned below. 

Alcohol and Drug Abuse 

In case the policy owner dies due to intoxication of banned and illegal substances such as drugs or consumption of alcohol, the nominee does not receive insurance benefits.

Self-Inflicted Injuries or Suicide 

If the policyholder commits or attempts suicide, the nominee does not get any insurance benefit. 

Involvement in Risky and Adventurous Sports 

If the policyholder gets injured or dies due to involvement in risky and life-threatening sports like sky diving, rock climbing, scuba diving, paragliding, etc., the insurer won’t pay any insurance benefit.

Involvement in Criminal Activities 

The policyholder’s demise due to involvement in criminal activities leads to the rejection of a child insurance policy claim. 

Eventualities due to War or Related Situations 

The child insurance plan does not cover injuries and loss of life due to war or war-like situations including nuclear attacks and accidents. 

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How Much Should You Invest in Child Investment Plan?

‘How much should I invest in a child plan’ is one of the most common questions appearing in the minds of the majority of parents. However, by outlining your financial requirements and forecasting the funds required to cover the education expenses of your child, you can determine the amount to be invested for fulfilling your child’s higher education fees. 

For instance, let’s assume that the current cost of higher education in the UAE is around AED 75,000, and would be AED 225,000 after 20 years. In this case, you can invest a minimum of AED 500 per month for the next 5 years, which can fulfil the requirement to a great extent after compounding due to the interest. Based on its performance, you can increase or decrease the investment amount.  

Things to Consider When Investing in a Child Investment Plan?

You should consider a few factors to accurately plan your investment in a child education plan. With the right plan and goal in mind, you can conveniently maximise your profits in a child investment plan. Here are the factors you need to consider when investing in a child plan. 

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Begin Investing Early 

Whichever plan you invest in, it is always advisable to start your investment as early as possible. The same applies to a child investment plan, as investing early helps you generate a bigger corpus for your child’s higher studies. Most child insurance plans start paying off once your child attains the age of 18 years. Moreover, early investment provides higher benefits while also allowing you to enjoy the growth of wealth through the power of compounding.

Factor in Economic Variables

It's critical to recognise that your child's savings and investments will only be utilised in the coming years. When settling on a suitable sum assured, a number of economic considerations must be considered. Inflation, rising education costs, and rising healthcare costs are among the economic issues one should take into account, as this will lead to sufficient funds for the child’s higher education. 

Special Attention to Terms and Conditions

It is always crucial to go through the child investment plan terms and conditions. You must properly scrutinise the policy documents to prevent any confusion at the later stages or at the time of payout. Additionally, the terms and conditions also help you in selecting the best child insurance plan suiting your child’s needs. You can compare various investment options as well as life insurance plans on our website to find the right policy for your child’s higher education. 

Choose the Premium Waiver Benefit

As already mentioned, in case of the policy owner's demise during the policy tenure, the insurer offers a premium waiver to reduce financial liabilities from the dependent child. Choosing a plan that offers a premium waiver provides you higher security and peace of mind regarding your loved ones’ safety even if you are not around to support them.

Opt for Policies Allowing Partial Withdrawals

Policies allowing partial withdrawals help you tackle emergencies during urgent financial needs, which ensures that your child’s future education is not compromised. 

Choice of Fund

It is important to understand your requirements, financial capabilities, and education inflation before choosing a child investment plan. If you want a better return on your investment, you can choose ULIPs or endowment plans or even invest in equities until you generate enough income. You can later transfer your funds to safer investment options. Ultimately, the choice of funds is crucial to avoid any losses and generate considerable returns. 

Child Plans Frequently Asked Questions 

Should I invest in child education plans?

Considering the education inflation, it is crucial to plan your investment to gather a significant amount of sum for your child’s higher education. As increasing education inflation can create trouble in arranging funds to meet your kid's higher education, it is always advisable to go for a child education plan in the UAE.

How much should I invest in the child education plan?

Your investment amount depends on several factors like inflation rates, the forecasted education fees for your kid, and your risk appetite. Additionally, you need to prepare a blueprint of financial planning. Once you have done these, you can easily decide how much investment you need in a child education plan. You can contact our support team to get professional advice on child education and insurance plans.

 

Until what age does the child investment plan cover?

The child investment plan covers a kid until the age of 18 or the beginning of their higher studies. Once they start going to college, the funds start paying off their fee on a semester or annual basis. 

 

Do child education plans also provide life insurance cover?

Yes, child insurance plans provide life coverage including protection from critical illnesses. In case of adverse situations, you can use the insurance benefits for medical treatment and meeting daily expenses. 

 

What are the exclusions of child education plans?

With a child education plan, you can be assured of comprehensive life coverage regarding education expenses and more. However, you should take note that in certain situations, the insurance does not protect the policyholder. Here are some of those instances. 

  • Injury or death due to consumption of banned or illegal drugs, including alcohol 
  • Bodily injury or death due to involvement in an adventure sport or risky activity
  • Death or injury due to involvement in criminal activities
  • Loss of life due to war or war-like situations
  • Nuclear attacks or accidents are not covered under the insurance plan
What is a premium waiver in a child education plan?

In case of death or disability of the earning member, the plan may go off track due to the inability of the policyholder to pay the premium. In these situations, insurers waive off the premiums to avoid the financial burden on the dependent and the child so that they don’t have to compromise their lifestyle.

 

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