Parents always strive hard to offer their children the best opportunities possible to safeguard their dreams. Though many of the parents are dependent on scholarships, savings, or even the Children Education Allowance, that is still not enough. This is where a Child Insurance Plan comes into the picture. A Child Insurance Plan helps secure the financial future of your child & meet rising educational expenses. The funds secured for the child’s future can be used for expenses, such as marriage, education, etc. A part of the premium is allocated towards investments, which can be used to build a corpus for their education, marriage, etc. Another part of the premium is allocated towards insurance, which ensures the financial security of a child in case of the sudden demise of the parent.
Reasons to Consider a Child Insurance Plan
Provided are the reasons to consider a child insurance plan:
- Financial Security for a Child’s Future:
It offers financial security, ensuring the major life expenses, such as marriage or higher education, are included. These should be covered irrespective of the uncertainties of life.
- Building a Savings Habit:
As it involves regular investment commitments, it encourages & inculcates a habit of disciplined savings.
- Flexibility in Payments:
Some of the child insurance plans offer flexibility in terms of premium payments, frequency & amount of premium, etc.
- Protection Against Unforeseen Circumstances:
It covers the unfortunate event of the policyholder’s demise, i.e. life coverage, which includes payment of a lump sum amount to the policyholder’s beneficiaries. This protects the future financial obligations of the family members, ensuring future requirements are fulfilled.
- Tax Benefits:
The premium paid towards a child insurance plan is eligible for a deduction of tax under section 80C of the Income Tax Act, 1961.
- Educational Support:
Many of the insurance plans also allow partial withdrawals, which help parents deal with the higher education-related expenses. This ensures both education & financial requirements are met without any financial constraints.
Things to be kept in Mind while buying a Child Insurance Plan
Provided are the things to be kept in mind while buying a Child Insurance Plan:
- Assess the Coverage Amount:
The coverage amount should be such that it covers your child’s future expenses, i.e. higher studies or marriage. The amount should be assessed depending on certain factors, such as future educational expenses, the financial objectives of the child, inflation, etc.
- Review the Investment Component:
In case of ULIPs, review the available plans along with their past performances. The investment plan chosen should well align with your future financial objectives & risk tolerance level.
- Check the Flexibility of the Plan:
You should opt for a plan that is flexible enough to adjust to the changing educational needs & financial situations of your child. It should be flexible enough in terms of premium payments, partial withdrawals, investment options, etc.
- Partial withdrawals
Check for the options available under which a partial withdrawal can be made.
- Consider Additional Riders:
Check for additional riders, if any, required, like a critical illness rider, waiver of premium, accidental death rider, etc. These riders help enhance the value of the plan at an added cost.
- Compare Various Plans:
Compare the different child insurance plans available with different insurance companies to choose one that offers the best benefits, features, & rates.
- Read the Fine Print:
Go through the policy terms & conditions to check for the inclusions, exclusions, renewal terms & conditions of the policy document, loan against policy, surrender terms, etc.
- Plan Early:
Start planning at an early stage, which means when your child is small. The earlier you invest, the lower the premium, & more the corpus.
How to Buy a Child Insurance Plan Online?
Provided are the steps to buy a child’s insurance plan:
Step 1: Go to the section “Life Insurance Plans” & then from the drop-down menu, select “Child Insurance Plans”.
Step 2: Review all the available child insurance plans & choose one that best suits your requirements. This can be assessed on the basis of detailed information regarding the premiums, benefits, terms & conditions, etc.
Step 3: Calculate the premium amount with the help of child insurance premium calculators available online. These calculators consider the sum assured amount, tenure of the plan, child’s age, etc.
Step 4: Fill out the online application form with all the relevant details, including the policyholder’s details, child’s details, or any other relevant details.
Step 5: Upload the documents required, including identity proof, address proof, age proof, & any other documents as mentioned in the form.
Step 6: Make the payment towards the premium amount online via internet banking, debit or credit cards, or any other digital mode.
Step 7: The application will be processed once the payment is completed after submission.
Step 8: The policy document will be received through email along with the hard copy to be sent to your registered address.
Step 9: Review the policy document carefully once it has been received for its correctness & better understanding.
Types of Child Plan
Provided are the types of child plans:
- Traditional Child Plans
Child insurance plan helps provide safety & financial security to meet unforeseen circumstances, by offering a death benefit in case of the demise of the policyholder. The remaining premium amount gets waived off along with the maturity benefits. These plans are best suited for parents who are looking for long-term financial security.
- ULIP Child Plan
Every parent wants to provide the best education to their children, for which a huge corpus of funds is required. When it comes to securing your child’s future, a ULIP-based child plan is considered to be a great option, as it helps secure your child’s financial future. It helps meet future financial obligations, such as a child’s higher education, a child’s marriage, etc.
Considering the dual benefits of investments & insurance, ULIP can be a good option. The premium amount paid is diverted towards the funds opted for, & the remaining amount is allocated towards life insurance. This plan also offers an option to switch between the funds & your changing requirements.
Conclusion
Buying a child plan is crucial to ensure the availability of funds required to fulfil the children’s dreams. Selecting a plan requires careful assessment, comparison & planning. With a perfect balance between savings & protection, a secure future can be well built to fulfil dreams & future financial objectives.
