Talk about safeguarding the future of the child and a lot of things cometo the minds of parents in order to reach that objective. Upbringing a child is the utmost priority for every parent. The key to securing the future of the children is to indulge in systematic planning and keeping the options open when it comes to child policy.
In order to help the parents provide the best facilities to their children, a large number of insurance companies have flooded the market with a lot of options regarding best investment plan for child. But, before investing in these child insurance policies, it is important to know how beneficial these plans are. Are these plans really worth investing money and time? What are the best investments options that can help parents secure the future of their child?
Let’s find the answers to these queries and understand how beneficial insurance for children actually are.
Child life insurance plansare insurance cum investment plans that are offered by the insurance companies to help parents secure the future of the children. These insurance plans are similar to that of ULIP plans and endowments.
However, despite their similarities, there is one difference between them. Unlike endowment and ULIP plans, parents need to start investing in these child policies right from the birth of the child. In case of child insurance plans, parents can withdraw the amount saved once the child becomes an adult.
In order to secure the future of the children financially, the plans have their own in-built component; an assured sum in case of premature and unfortunate demise of the parents. The minimum coverage available for selection under these plans is – Sum Assured= Term*Annual Premium/2.
But, in most cases the assured sum is not sufficient to financially secure the future of the child. So, the benefit under these plans is that the child is allocated with enough funds in case of unfortunate demise of the parents.
Under child insurance policies, one part of the premium goes towards the payment of coverage of life, and the rest of the amount is invested in tools such as equity, debt and more. However, the premium allocation charge is deducted beforehand by the insurer and thus the investment during the initial years of the policy is bare minimum.
A child insurance plan not only covers the financial security of the child, but also safeguards the educational future. It can be said that the child plan offers savings cum protection.
The plan is curated with the sole purpose of not letting unfortunate events hinder the education of the children. The sum amount paid against child education plan can be used for covering the education related expenses.
Additionally, there is an option of money withdrawal for medical purposes such as children requiring medical treatment. These withdrawals can be made hassle-free in case the child requires hospitalization. The insurance companies also waive of the premium for the tenure of the policy in case the insured passes away.
Child insurance plan can protect the income of the children in case they start earning at a young age.
With the right approach and proper planning, child insurance, if purchased , can turn out to be the best tools to secure the financial future of the child. It is important to choose a policy that provides maximum coverage in a way that is economical.
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