The Premium Waiver Benefit Feature: How it Secures Your Child’s Corpus After Demise

A child insurance plan is structured to build a corpus for a child’s future needs over a fixed term. The plan assumes that premiums will be paid regularly until maturity. The premium waiver benefit exists to ensure this structure holds even if the parent paying the premiums passes away or becomes permanently disabled, as defined under the policy. This feature is designed to protect the continuation of the child plan, not to change its benefits or returns.

What the premium waiver benefit is in a child insurance plan

The premium waiver benefit is a feature available in many child insurance plans, either as a built-in benefit or as an optional rider. When a defined triggering event occurs, the insurer waives all future premiums that were payable under the policy.

The most common trigger is the death of the parent or policyholder. Some plans also include total and permanent disability as an eligible trigger. The exact scope depends on the policy wording and the benefits selected at the time of purchase.

Once activated, the policy continues without requiring any further premium payments from the family.

What continues after the premium waiver benefit is activated

After the benefit is triggered and approved, the policy continues without structural changes. In practical terms, this means:

• The policy remains active for the full policy term
• The maturity date and benefit structure remain unchanged
• The child continues as the beneficiary
• Future premiums are treated as paid by the insurer

In market-linked child insurance plans:

• Invested funds remain allocated and continue to be invested till maturity
• Fund performance remains market-linked
• Investment risk continues to be borne by the policyholder, as stated in policy terms

In traditional child insurance plans:

• Assured benefits continue as defined
• Declared bonuses, if any, continue to accrue as per policy rules

The premium waiver benefit ensures uninterrupted progression of the plan till maturity.

Why this feature is integral to child insurance plans

Child insurance plans are designed to deliver a maturity benefit at a specific stage in the child’s life. If premium payments stop and the policy lapses or becomes paid-up, the final corpus may reduce or fall short of the intended objective.

The premium waiver benefit removes the dependency on the parent’s ongoing income. It ensures that the plan remains active even when the parent is no longer in a position to continue premium payments.

This is why the feature is closely associated with child insurance plans rather than general life insurance products.

Built-in benefit versus rider structure

Depending on the insurer and product design, the premium waiver benefit may be included automatically or offered as a rider.

• Many ULIP-based child insurance plans include this benefit as part of the base policy
• Traditional endowment-based child insurance plans often offer it as an add-on rider
• The rider usually comes at an additional cost
• In most cases, the benefit must be selected at the time of policy purchase

What matters is whether the policy clearly states that future premiums will be waived and the policy will continue till maturity after a covered event.

Conditions, definitions and exclusions to check

The premium waiver benefit operates strictly according to policy terms. Before selecting it, it is important to check:

• What events trigger the benefit
• Whether total and permanent disability is included
• If critical illness or accidental disability is linked to premium waiver
• Any waiting periods or exclusions mentioned
• Documentation and claim requirements

The benefit applies only when the triggering event meets the policy’s defined conditions.

Tax treatment and policy continuity

Premiums paid for eligible child insurance plans may qualify for deduction under Section 80C, subject to the applicable limit. Maturity proceeds and death benefits may qualify for exemption under Section 10(10D), subject to prevailing tax rules and policy conditions.

The premium waiver benefit does not provide an additional tax benefit. Its role is to ensure the policy does not lapse, helping preserve the tax treatment that applies when the plan runs till maturity.

What this feature changes for the family

Once the premium waiver benefit is activated:

• Premium payment obligations stop
• The family does not need to track payment schedules
• The risk of unintentional lapse reduces significantly
• The policy continues automatically on its original timeline

This allows the child’s plan to remain stable without requiring ongoing intervention.

Why this feature should be treated as essential

Parents choosing long-term child insurance plans should view premium waiver as a structural feature, not an optional enhancement.

• Longer policy terms increase the importance of premium continuity
• Single-income households face higher disruption risk
• Parents with variable income benefit from built-in continuity

Final Takeaway

A child insurance plan is built to reach a defined goal at a defined time. The premium waiver benefit supports this objective by ensuring that the plan continues on its original path even if the parent paying the premiums is no longer able to do so. It does not change returns or remove market-linked movement. It preserves continuity. By keeping the policy active through to maturity under clearly defined conditions, the premium waiver benefit helps ensure that the outcome planned for the child remains achievable.