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Child life insurance products

Just because your child is under 18 doesn't mean he hasn't matured into financial services. Life insurance companies have various offers for children and their parents: special savings policies, policies that include insurance for children and parents against unforeseen situations. The government encourages such savings and provides tax incentives. Let us learn about the advantages of child's insurance products.
Child life insurance products

Endowment life insurance programs for children are like a long-term bank deposit. A parent, relative or guardian draws up an insurance contract in favor of their child; that is, the adult acts as the insured, and the child becomes the beneficiary, i.e. the payee. The insured regularly pays premiums (the amounts and terms can be chosen during the agreement execution), a small percentage is accrued on them, and, as a result, the coverage amount is formed, which the child gets, for example, in 13 years.

The contract is usually concluded for several years, from 5 to 20. It is possible to get timing right for a certain event in the child's life. It could be graduating from high school and going to college, getting married or buying an apartment.

“Investing in children's education is in fact the most profitable investment tool, especially since the cost of education is constantly growing. You can take care of this in advance by concluding an endowment life insurance contract in favor of the child in a life insurance company. You can similarly save a substantial amount for other important events in your children’s lives, such as coming of age, marriage, etc. The sum insured under the contract is accumulated from the premiums paid by the parents and the insurer’s return on investment received. The retention of savings is very important in the face of rising inflation and a difficult economic situation,” explains Gulzhan Dzhaksymbetova, the Board Chairman of LIC Centras Kommesk Life.

Life insurance policies in favor of children are more often opened by women in LIC Nomad Life. “However, the share of male insurers is increasing by an average of 10-15% every year. The average age of clients is 47 years at the moment. Although, just 5 years ago, the average age of a client was 52 years. Our main goal is to expand opportunities for the client within the framework of effective and lucrative accumulation of capital involving young people,” says Aida Kamysova, the company executive.

Financial products

The endowment insurance programs by LIC Nomad Life are intended for individuals over 18 years of age, with the possibility of self-appointment of beneficiaries, which can be both parents and adult or minor children. The conditions for such programs are extremely simple. Every wishful parent can open an endowment insurance program in order to save up for their child’s education, large purchases or a comfortable old age. Let's look at an example: the child’s age is 5 years; 13 years left before entering the university. The average schooling cost at a prestigious university for 4 years is 25,000-30,000 dollars. That is, the client is faced with the task of accumulating an amount equal to the cost of education over 13 years.

With a monthly insurance premium equivalent to 200 c.с.u. (the endowment insurance program provides for regular premiums) the client can independently determine comfortable conditions for paying in installments: once a month, a quarter or a year. Taking into account the guaranteed rate of return, our client will be able to accumulate $35,613 for 13 years.

These savings will help realize the goal of parents to educate their child in a prestigious university.

“It is worth noting that the main mission of life insurance worldwide is the financial security of loved ones. Let's return and review this calculation in the following vein: the client, having paid the first installment of $200, insures his life for $35,613 from the first day of the contract. It means that, regardless of the amount of savings, if the insured event “passing for any reason” of the insured (parent) occurs, the guaranteed coverage amount of $35,613 will be paid to the beneficiary (child) under the insurance contract,” specifies Aida Kamysova.

Nomad Life was the first life insurance company to launch a new innovative endowment insurance product with the possibility of online conclusion, the CAPITAL program in US dollars, in 2021.

Another accumulative product for children is offered by the life insurance company Centras Kommesk Life; the advantages of Bata Omir are that the parent is insured for the selected risks throughout the entire term of the insurance contract, and the insurance company can share its profits with the insured.

The insurance payment under endowment insurance programs cannot be divided in case of property disputes. The funds placed under the program cannot be confiscated or seized by court order. Also, the insurers-parents have the opportunity to obtain a loan secured by the redemption amount. In this case, tax deduction of the insurance premium from taxable income is made. The insurance coverage under insurance contract is valid 24/7 around the world.

The Freedom Finance Life product line for parents includes two endowment life insurance programs, each with its own characteristics and conditions. For instance, Freedom Education is designed for parents who plan to pay for their child's higher education in Kazakhstan or abroad. While the contract is in effect, the insured will be protected from unforeseen events. For example, if for some reason he fails to accumulate the required amount by the appointed date due to an accident, injury, disability or death, the company will fulfill all obligations so that his child can enroll and study for a bachelor's degree.

According to another Freedom Kids program, it is possible to create a financial cushion for your child’s secure future. One can also save up for his child’s education under this program. Throughout the contract term, the parent and his child (insured) are under insurance protection against unforeseen situations. The main risk covered by insurance is the death of the insured. For additional risks, there is coverage of hospitalization, bodily injury, disability, death as a result of an accident or illness, including critical one. When the insured survives until the end of the insurance period, the client receives the basic sum insured and dividends for the period of the contract.

Tax Benefits

Endowment life insurance programs have tax benefits as of 2021. When concluding an endowment agreement with a validity period of three years or more, the policyholder is now able to save up to 10% of the amount of premiums paid by him on taxes annually. “Tax deduction on IIT is applied at the place of work when providing an insurance contract and confirmation of payment of the insurance premium. Thus, income tax is reduced and the net amount received by the client is increased. Income tax is also not withheld from the insured, when insurance payouts or redemption amount upon termination of an agreement with an insurer are made,” explains Azamat Yerdessov, the Chairman of the Board of LIC Freedom Finance Life.

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