A Guide to Life Insurance Policy: 3 Steps to Secure Your Child's Financial Future

Parents want everything to be perfect and go as planned for their children. However, life is an unpredictable journey, and it often throws up unexpected kinks in the road and catches one off-guard.Having a well thought out a financial plan for your child can ensure that their present and future are protected and secure.While there is a lot to do to secure the financial future of your child, buying a life insurance policy is the first key step in the right direction.Here is how you can secure your child’s future with a life insurance policy:

1. List down Your Goals: What all would you like to secure in your child’s future? Is it education, marriage, or health, etc. Keep a separate corpus for each of these goals.
2. Factor-in Inflation: Ensure that the cover is actually able to meet the costs of the future. Make sure you factor-in inflation for each of your goals separately. For instance, inflation in the education sector, according to estimates, is around 6-12%. This means an MBA course costing 5 lakhs today will cost 16+ lakhs 20 years later. (at 6% inflation)
3. Choose the Payout: Most life insurance policies do give you the option of choosing a payout method of the insurance cover. You can choose to opt for a periodic payment, lumpsum payment or a mix of both.

1. Fix Your Goals Sitting in the Future Every financial and insurance expert advises to first set goals before you take the cover. However, it is essential to be accurate when setting your goals.
2. Life Insurance Vs Term Insurance Policy There are broadly three types of policies you might want to consider. While term policy is usually cheaper, they only offer a death benefit. Life insurance policy, on the other hand, offers both death and maturity benefit. You can also opt for a child plan that let you build a corpus for your child. Choose one that best suits your needs and budget, or you could also choose a combination of these plans for added security.
3. Take the Necessary Riders: Every insurance plan comes with optional riders. While these may increase the cost of premiums, they also offer added protection. Riders, such as premium waiver benefit or accidental death benefit, can be considered.

When it comes to your child’s future every second counts. Plan a financially healthy and secure future for your child with the help of this guide to life insurance . Choose the right policy and cover and secure your child’s future today.

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.