Child Insurance Plan: A Smart Way to Save & Protect Your Child’s Future
Dante Ulanday - News Writer and Moderator 
A child insurance plan offers dual benefits of savings & protection for the child’s secure future. It provides life insurance coverage for the parents & corpus funds accumulated by the parents for the financial future of the child. This ensures fulfilment of the child’s future needs even in the parents’ absence.
This plan works as a Child Saving Plan, where a part of the premium is invested to be used to build a corpus for their education, marriage, etc. And, another part of the premium is used towards insurance, ensuring the financial security of a child in case of the sudden demise of the parent. 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.
What is the Need to Buy a Child Plan?
With rising educational costs & the need to maintain the present lifestyle, parents need to consider buying a child insurance plan. The following are the reasons to buy a child plan:
- To provide higher education
These plans help you plan your child’s higher education or studying abroad without giving it a second thought. This plan ensures sufficient funds are available whenever required.
- Using Collateral to Secure Loans
As parents, you can use these plans as collateral against a loan to meet your child’s future costs.
- Life Coverage
This plan offers life coverage, besides savings corpus funds for your child.
- Financial Protection
This plan offers financial protection, ensuring the child will receive a lump sum amount in case of the sudden death of the policyholder. Also, it ensures that the amount provided is enough to meet the future financial obligations of the child.
- Good Investment Instrument
This plan is a good investment choice, building enough corpus funds for your child’s future. This plan involves regular payments towards the premium amount, letting you meet all future financial obligations.
- To Develop a Saving Habit
This plan inculcates a habit of disciplined savings towards your child’s financial future, letting you beat the rising education costs.
- Tax Benefits
The premium paid towards this plan is eligible for a tax deduction u/s 80C of the Income Tax Act, 1961. Additionally, the maturity or death benefits received are also exempt from tax u/s 10(10D) of the Income Tax Act, 1961.
Types of Child Insurance Plans
Let us understand the different types of child insurance plans available:
- Child ULIPs
Child ULIPs are insurance cum investment plans that help in safeguarding the financial future of your child. These plans offer a monthly income to meet the child’s educational costs, along with a lump sum payment to deal with routine expenses. Additionally, the insurance company also pays the future premiums in case of the unfortunate death of the parents.
- Child Endowment Plans
It includes the benefits of both investment & insurance in one single plan, allowing the policyholders to choose the amount of sum assured depending on their financial objectives. The sum assured will be received by the child either on maturity or in case of the sudden demise of their parents.
- Single Premium Child Plan
This plan includes payment of the premium in one lump sum at the start of the policy tenure. As it is a participating endowment plan, it involves payment of a bonus throughout the policy tenure.
- Regular Premium Child Plan
Under this plan, parents are required to make payments towards premiums regularly, i.e. monthly, quarterly, or annually. This plan may suit many investors due to its low premium cost.
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How to Get the Best Child Insurance Plan in India?
To get the Best Child Insurance Plan, follow these suggestions:
- Buy Early
One should start investing early to get maximum benefit out of a longer tenure, due to the interest amount getting compounded, providing high returns. Due to high returns, the corpus accumulated can be utilized for fulfilling your child’s future aspirations.
- Choose Investment Fund
One can choose the funds in which investment is to be made, depending on the risk tolerance level, which includes equity, debt, or balanced funds. Equity funds offer high returns with high risks. On the contrary, debt funds offer stable returns. The choice of funds can be made depending on the risk tolerance level, financial objectives, & investment horizon.
- Partial Withdrawal Clause
Some of the plans also allow partial withdrawal of funds during the policy tenure, enabling the availability of funds.
- Premium Waiver Benefit
In case the policyholder is unable to make premium payments, the insurance company ensures the timely payment of the same.
- Compare Child Plans Online
Compare the different child plans available offered by different insurance companies.
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Factors Affecting Child Insurance Plan
Provided are the factors that affect the child’s insurance plan:
- Financial Condition
The finances should be planned in such a manner that they allow you to secure the child’s future comfortably, depending on your financial condition.
- Claim Settlement Ratio
The claim settlement ratio depicts the ability of an insurance company to pay the amount of the sum assured to the insured nominees in an unforeseen event. It is the ratio of total claims settled to total claims received in a financial year.
- Plan Tenure
Consider the policy tenure to ensure all the benefits are received in line with your child’s milestones.
- Other Features
Look for all required features & riders to ensure a smooth financial future.
Conclusion
Parents should look for a child insurance plan which ensures the financial security of their child, ensuring disciplined savings to meet milestones like education, marriage, etc. These plans provide taxation benefits with flexibility in premium payment options & worldwide coverage. It is always advised to start early by comparing the different plans available, reviewing them for correctness, & remaining invested for a longer tenure to build a strong financial base.
The post Child Insurance Plan: A Smart Way to Save & Protect Your Child’s Future appeared first on Entrepreneurship Life.
