Child Insurance Plan – Is it required?

Child Insurance Plan – Is it required?

Every parent dreams of a secure and healthy future for her child. While the basic concept of child insurance was financial security, today it is seen more as a valuable investment tool. This has opened up several options in terms of child insurance.

But the main question is this: is child insurance really required?

Benefits of child insurance

Besides being an investment tool, child insurance plans are designed to offer the child a financially secure future at specific life stages such as:

•   Pursuing education

•      Studying abroad

•      Settling in life (marriage, etc.)

•     Ongoing living expenses on losing a parent

• The future premium waiver option without loss of benefits in the event of a parent’s death

• The insurance plan includes lifetime health insurance

• Provision for income loss on parent’s death or disability

• Flexibility to withdraw funds based on policy terms

• In unit-linked plans, an addition of dividends to the sum assured

• Continuation of the policy until its maturity date even when the insured dies with the insurance company bearing the premium in addition to death benefit for the family.

• Planned pay-outs to meet funding needs at different life stages

• A variety of investment options with the ability to switch for maximum gains

The cost of education is high and naturally, parents want to give their children the best chances and choices to achieve their goals. This entails early investment planning to make sure that adequate finances are available when needed. Insurance plans to bundle in both investment and insurance, making this possible.

In a highly competitive industry, parents can now enjoy the flexibility of choice to match their unique needs while researching child plans. They can customize them with “riders” to add value in the form of premium waivers and more. Perhaps the biggest advantage of a child plan is the financial security the child is assured of in the unfortunate event of the sudden death of a parent.

It is best to go in for child insurance as early as possible as it enables better risk management with the best returns.

Five compelling reasons to buy child insurance plans

 

Child insurance plans are basically long-term investments that help plan for the future. Here are five critical reasons to invest in one.

Education Expenses

Today, one of the reasons most parents work hard to save is to create an education fund for their children so that they do not have to be loaded by the burden of loans when the time comes. Even school expenses are difficult to manage in many families. As children complete school, if they aim for higher studies in India or abroad, parents have to dip into their savings to fund them. A child insurance plan makes it easier to handle.

Healthcare

For families with a medical history of ailments, the sooner they go in for child insurance, the better. The policy allows the withdrawal of cash to take care of emergency hospitalization expenses.

Death of parents

The worst thing for a child is the loss of a parent. One can never predict death, particularly if in good health. However, in the event that it does happen, the child is eligible for a premium waiver on the insurance policy without foregoing the benefits due to her.

Wise investment tool

Depending on the goals, the child insurance plan can be an excellent investment strategy. Whether the aim is an education fund, savings for wedding expenses, health or to manage your home mortgage, price fluctuations, and insurance must be considered before investing. Regular premium payments based on the options chosen can result in excellent returns that will also secure your child’s future. Usually, insurance companies offer Child ULIP and Child endowment plans. While the ULIP focuses on equity investments, the endowment plan focuses on debt instruments. The money invested can be switched between funds. Child insurance plans are also acceptable as security for loans. 

Financial security

This is the primary purpose of the plan. This is especially relevant to professionals whose income is higher at the peak of their career. By going in for an investment-oriented plan, it will yield a higher rate of return in the long run.

Thus, child insurance plans are worth it and definitely required as they offer several benefits while helping parents meet their financial goals. The most important points to remember are these:

With the various options available in terms of tenure and format, it is best to compare before buying a child insurance plan. Keep inflation and the duration of return in mind when you plan.