4 Things About Child Insurance Plan you Should Know

Becoming a parent can be a joyful experience. But, raising a child is a big responsibility, and it involves various expenses. Right from providing the best medical care to paying for a child's school and college fees, you may have to spend money.So, how do you plan your child's financial future? You may invest in different financial instruments. While these investments may give you good returns to provide for your child's future expenses, have you thought about what will happen to your family in the event of your untimely death? This is where a child insurance plan is so critical. The plan provides the opportunity to invest for your child's future while protecting them from uncertainties; it guarantees a promised corpus if the event of parents' premature death.If you are looking for the best child insurance plan, here are four important things you must know to make an informed purchase decision.

• The Child ULIP gives you three benefits – insurance cover, savings, and exposure to investment in the equity market. Under this plan, the insurance company pays the sum assured to the nominee child on the demise of the parent.
• ULIP is one of the best long-term savings-cum-insurance plans. The payout at the policy's maturity depends on the market condition as the funds in ULIPs invest in the equity instruments.
• The endowment plans provide a stable return in the form of a bonus on the sum assured.

1. Types of Child Insurance Plan There are different types of child insurance plans that you can consider purchasing, depending on your specific needs. The most popular childcare insurance policies are Child ULIP (Unit Linked Insurance Plan) , ULIP, and Endowment Plan.
2. Premium The premium you pay for the child insurance plan depends on the sum assured and the type of plan you choose. Most insurance companies in India give policyholders the flexibility to select the mode of premium payment; you can pay a lump sum amount at the start of the policy tenure or pay the regular premium. Most regular premium policies have options such as monthly, quarterly, half-yearly, or annual premium payments.The premium amount may also vary based on any additional riders or add-on covers you may choose along with the regular policy. More the number of riders you choose higher will be the premium.
3. Policy Duration Child insurance plans are long-term insurance, and it usually has a maturity period of 10-15 years. Typically, child insurance plans mature when the child attains the age of 18-21.
4. Premium Waiver Benefit A significant feature of the child insurance plan is that if the policyholder dies within the stipulated time, the insurance company pays the sum assured to the beneficiary i.e., child). In such a situation, the insurer waives off premium for the remaining tenure. At the end of the policy tenure, the beneficiary receives the maturity amount. If the plan you choose does not have the premium waiver clause by default, it is better to select a premium waiver rider.

Secure Your Child's Future with Child Insurance Now that you are aware of the important things about the child insurance plan, make sure to compare the different plans and choose the one that best suits your needs.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.