Why parents look at child plans

Every parent in India worries about rising education costs, uncertain incomes and “what if something happens to me?” while planning a secure future for their child. A good child plan is expected to do three things together: protect the child if the parent is not around, build a disciplined savings corpus over time, and offer some flexibility in how and when the money is received. SBI Life’s Smart Future Star is designed exactly around these needs as a child-focused insurance-cum-savings plan.​

It is an Individual, Non-Linked, Participating Life Insurance Savings Product where the life assured is the minor child and the parent, grandparent or legal guardian becomes the proposer (policyholder). The plan combines life cover on the child, built-in Waiver of Premium on the proposer, and the potential for bonuses to help create a long-term corpus for education, marriage, or other milestones.​

Basic structure and eligibility

Under SBI Life Smart Future Star, the child (life assured) can be as young as 30 days and up to 15 years at entry, while the proposer (parent, grandparent or legal guardian) must be between 18 and 65 years at entry. This makes it suitable for young parents as well as slightly older guardians planning ahead for school, college or professional education. Premiums remain constant throughout the chosen premium payment term, making cash flow planning easier for the family.​

The plan is non-linked, which means it is not directly invested in market-linked unit funds, and it is participating, meaning it is eligible for bonuses if declared by the insurer. On survival of the child till the end of the policy term, the policy pays a maturity benefit that includes the Sum Assured on Maturity plus vested reversionary bonuses, if declared, plus a terminal bonus, if any.​

Key benefits and payouts

The maturity benefit is the central feature for long-term goals such as higher education or marriage. At the end of the policy term, a lump sum is payable comprising the guaranteed Sum Assured on Maturity along with any bonuses added over the years. This structure encourages disciplined long-term saving, while allowing the potential for higher overall benefit through participation in profits.​

On the risk side, the plan also provides a Sum Assured on Death benefit, which is defined as the higher of the Sum Assured chosen at inception or 11 times the annualized premium, subject to product terms and regulatory guidelines. This ensures that even during the policy term, the child’s future has a layer of financial protection in case of unfortunate events.​

Powerful Waiver of Premium feature

One of the biggest fears for parents is: “If something happens to me, who will continue paying the premium?” SBI Life Smart Future Star addresses this through an in-built Waiver of Premium (WoP) benefit on the proposer’s life. If the proposer dies or suffers Accidental Total Permanent Disability (ATPD) during the premium payment term, all future premiums are waived, but the policy continues as if the premiums were being paid regularly.​

This means the child’s coverage and benefits under the plan continue without interruption, and the maturity benefit can still be expected at the end of the term. For a parent, this feature is a key reason to consider such a plan, because it de-links the child’s future from the parent’s ability to keep earning in extreme situations.​

Flexible maturity options

Not every parent wants to take the entire corpus as a one-time lump sum. SBI Life Smart Future Star offers flexibility at maturity: the policyholder can defer receiving the lump sum maturity benefit by 1 to 7 years or opt to receive the benefit in instalments. These instalments can be monthly, quarterly, half-yearly or yearly, payable in arrears, for a period ranging from 2 to 7 years.​

There is also an option to take part of the maturity benefit as a lump sum and the remaining amount in instalments, with the freedom to choose the proportion of lump sum and the instalment period. This can be especially useful if parents anticipate staggered expenses like annual college fees, hostel charges, or stepwise funding of professional courses.​

Tax aspects and important definitions

Premiums paid under eligible life insurance policies may qualify for tax benefits under the Income Tax Act, 1961, subject to the prevailing laws and conditions. Similarly, benefits received may also enjoy tax advantages as per applicable sections, but these rules can change, so it is always advisable for parents to consult a qualified tax advisor for updated, personalised guidance.​

The plan document also clearly defines terms such as “Annualized Premium” (premium payable in a year excluding taxes, rider premiums, extra premiums and modal loading) and “Total Premiums Paid” (sum of base product premiums excluding extra premium and taxes). For the in-built ATPD benefit, disability must either involve specified severe impairments or persist for at least 180 days and be certified as permanent by a medical practitioner, with a shorter requirement in case of loss by physical severance.​

Who should consider this plan?

SBI Life Smart Future Star is suitable for parents, grandparents or legal guardians who:

  • Want a combination of protection and long-term savings specifically earmarked for a child’s goals.​
  • Prefer a non-linked, participating plan with potential bonus additions rather than a purely market-linked ULIP.​

It is particularly attractive for those who value the built-in Waiver of Premium feature on the proposer’s life, ensuring continuity of the plan even after death or accidental total permanent disability. At the same time, investors should compare returns, costs and flexibility with other child insurance plans and pure investment options before deciding, keeping in mind their risk profile, time horizon and financial goals.​

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