A comprehensive and judiciously done financial planning exercise has its own advantages as compared to one done in an ado manner. Why should the financial planning for your child be any different? With child insurance plans, you have the option of ensuring your child’s financial future is secure since these plans are tailor-made keeping in mind the long term benefits for children.
Benefits offered by child plans
With growing financial awareness and rising inflation, more and more parents are today making use of child plans to safeguard the financial future of their children. Child insurance plans with their investment cum protection offerings come with a number of short and long term benefits for children. Some of the most prominent benefits of a child plan include below.
Financial support for your child’s future
A child’s plan ensures your child’s financial future is secure with payouts on maturity. The money thus accumulated over a period of time can be used towards higher education needs or other financial needs of your child.
Doing MBA from a reputed college in India today may cost anywhere between Rs. 15-20 Lakhs. By the time your child grows up, this cost may escalate to Rs. 25-30 Lakhs. Child plans take into account the inflation as they offer, on average, the benefit on total premium paid over the policy tenure on maturity.
The majority of the child plans in the market today offer periodic payouts as a prefixed percentage of the sum assured. With periodic payouts being planned at various stages of a child’s life, any short term or medium-term financial needs can be fulfilled with ease.
No worry about premium payment in the worst-case scenario of premature death of a parent
As a parent, you will not have to worry about future premium payouts should you not be around at the time of premium payment. In the unfortunate event of the demise of a parent, child plans come bundled with the feature of premium waiver as well as a lump sum death benefit offered to the surviving child at maturity.
Flexibility to choose the investment mix
Parents can choose the investment mix for a child plan between high-risk equity investments and lower risk debt investments. Depending on the risk factor and financial needs, parents can either choose to regulate the investment mix either on their own or opt for an automatic mode keeping the safety of child’s financial corpus paramount.
Collateral option for a higher education loan
Should your child need an education loan for higher education needs, your child plan can be used as collateral security for the loan. Thus, with a child plan, you do not have to worry about offering collateral security for education loans.
Child plan advantages at a glance
- Child plans ensure the financial future of your child is secured with maturity benefits & Payouts.
- Child plans are ideal for saving for a child’s future education or expenses like marriage.
- Child plans offer the benefit of waiver of premium, doing away with the premium obligation if the policyholder parent expires during the policy tenure. Child plans also offer a lump sum payout as death benefits to the child on maturity.
- Such plans offer period payouts helpful for managing child-related expenses like school or tuition fees.
- The policyholder can chose the quantum of investment in debt and equity for ULIP child plans.
- The child insurance policy can be used as collateral for higher education loans in the future.
- Child plans also act as an income protector tool for children who start earning at a younger age like talented actors, singers, etc.