Child Insurance Plans to Secure Your Child's Future

The best gift you can give your children is a financially secure future. While planning, you must consider the different stages of your child’s life, such as primary, secondary, and higher education, marriage, etc. As per August 2022 research by ET Online , the overall expenditure of schooling a child in India in a private school from ages 3 to 17 was whopping ₹30 lakhs.One way to plan for all these expenses and secure your child’s future is to buy a Child Life Insurance plan . Let’s understand how a Child Insurance plan can ease your worries. Also Read: How To Choose The Best Child Education Plan?

Child Life Insurance plans help create a fund to meet your child’s future financial needs. Most Child Life Insurance plans are traditional participating policies, where you earn bonuses while receiving life coverage. These are often fixed-duration policies, and you can decide the policy tenure. At the end of the period, the policy will pay the maturity amount along with accrued bonuses (if any).A Child Life Insurance plan is more like an investment-cum-insurance plan. It is specially designed to protect your child’s financial future. It offers a safety cushion for your investment, where the insurer continues to invest on your behalf in case you pass away and provides a maturity amount to the beneficiary. Also Read: Child Education Plan Comparison: How to Choose the Best for Your Child? A Child Insurance plan can help you meet two objectives.

• Provide financial protection in case of your untimely demise.
• Fund your child’s higher education or other necessary expenses.

The investment component of the insurance invests in various assets to help your corpus grow. Unit-linked child plans enable you to enjoy market-linked returns.The protection component of the insurance policy provides a safety net that pays a lump sum to your beneficiary in the event of your demise. You can specify the amount of money when you buy the policy. This money will be paid to the child to meet their needs in their growing years.

Assess coverage:

Determine the maturity amount based on the child's future needs, like education, medical emergencies, or financial support. Accounting for inflation and the cost of living in your calculation will ensure adequate coverage.

Choose required policy duration:

Consider events such as higher education, marriage, etc., while choosing your policy duration. Long-term plans can ensure coverage during the important periods of your child’s life.

Affordability:

Ensure the premium is affordable, as it can be a long-term commitment. Calculate your overall income and expenses to determine if the premium is reasonable enough for you to pay without financial strain.

Look for income benefit:

While it is impossible to predict a crisis, you can be prepared to tackle it. So, when you look for a Child Insurance plan, it is better to opt for a plan that offers income benefits that can help meet any sudden expenses during your child’s growing up years.

Riders and additional benefits:

Today, most insurance companies in India offer a waiver premium clause in all Child Insurance policies. But, if your plan does not have this option, you must purchase the premium waiver add-on. This benefit comes in handy if you pass away during the policy tenure. In such a situation, the insurer pays the full sum assured to the beneficiary and waives off the premium until the end of the policy term.

Claim settlement ratio:

Always check the company's reputation and claim settlement percentage. A higher claim settlement ratio is an indication that your claims will be processed without hiccups or delays during difficult times.

Consider tax benefits:

You can claim tax benefits on the premium paid on the Child Insurance plan and use the savings to invest in better return-generating assets.

Start investing early:

Many parents understand the importance of investing early. Even if you set aside a small amount of money for your children’s future requirements, it can grow substantially over time. The same concept applies to Child Life Insurance as well. Several plans, such as a LIC Child plan, can help parents start early when it comes to securing their children’s future. Also Read: Why You Must Have A Child Insurance Plan?

Financial protection:

A primary advantage of Child Life Insurance is that it acts as a financial safety net for unexpected events like death, illness, or accidents. It secures the child's future if anything unfortunate happens to you.

Cash value accumulation:

Some Child Life policies accumulate cash value -- a portion of the premiums that earn interest -- over time. The insurance company pays this out at maturity. You can use these funds to meet any specific future expenses of the child.

Partial withdrawals:

Some products like ULIP plans come with the benefit of partial withdrawal after the lock-in period is over, providing funds to meet any planned expenses.

Guaranteed insurability:

By purchasing Child Insurance, you can guarantee their insurability for the future, regardless of future health issues. This is particularly useful if they develop any health conditions that make it difficult to secure insurance.

Legacy and inheritance:

Child Life Insurance can also serve as a way to leave a financial legacy for your children. The maturity amount will give them a head start in their financial journey. Also Read: Child Insurance Plan: A Perfect Answer to the Expensive Higher Education

Higher education costs are among the most demanding expenses as children grow up. Whether your child wishes to pursue finance, medicine, engineering, or any other profession, parents need to start saving early to build a large corpus by the time their children graduate. Usually, most parents invest in 5-year, 10-year and 15-year child plans.

• Child Life Insurance brings the comfort of financial security and gives your child a head start in life.
• You can pick the policy depending on your child's education and career goals or milestones such as marriage, etc.
• It is also a way to pass on a financial legacy to them.
• A premium waiver rider will ensure that the child continues to receive the policy benefits even in the event of your untimely death.