The search for an online child insurance plan may throw up multiple options for you to choose from. Multiple insurers offering multiple plans, it may become difficult for the untrained eye to choose the best suitable policy. Comparing various shortlisted insurance policies on the features that matter is the best way to zero in on a policy that offers all benefits a child insurance plan is meant for.
Here is a look at some of the features that must be a part of your shortlisted child insurance plans to make your child plan truly protective and investment-friendly.
Flexibility in premium payment frequencies:
An ideal child plan should offer you as the policyholder the flexibility in payment of premiums. Usually, child insurance premiums, like other insurance plans, provide annual, half-yearly, or monthly payment options. Depending on the financial needs of an individual policyholder, one of the payment options may be more suitable than the others. Hence, choose the child insurance plans that offer you the option of choosing premium payment as per your choice.
Choice of the appropriate policy tenure:
A policy term of a child insurance plan can range anywhere between 5 to 25 years on average. Now, depending on the individual needs and requirements, how soon or late a parent opts for child insurance for his child, different tenure options may be suitable for different policyholders.
An ideal child insurance plan should be flexible in offering the appropriate policy tenure as per the choice of the policyholder. When choosing the tenure of a child plan, remember that the longer the tenure, the higher the chances that the policy will fulfill its investment objectives and offer adequate benefits.
Premium waiver benefit:
In the unfortunate event of the death of the policyholder during the policy tenure, a child insurance plan must continue and not lapse. A premium waiver benefit offers such an offering where the insurer pays for the premium costs if the policyholder expires during policy tenure and also pays out a death cover as a lump sum amount to the child on maturity.
Having such a waiver benefit is crucial in an ideal child insurance plan. Although the majority of child insurance plans come with a premium waiver benefit offer, should your selected policy not offer such a benefit, consider opting for a premium waiver benefit rider as an add-on to make child insurance truly protective.
Partial withdrawal clause: Partial withdrawal benefit provided with child ULIP plans.
A financial emergency can befall anyone at the unlikeliest of times. In an ideal scenario, the child insurance policy must come with a partial withdrawal clause allowing for any funds to be withdrawn to take care of such emergencies. Partial withdrawal facility can help safeguard the child’s financial future by not impacting the long term financial plan with its partial liquidity options during the policy tenure.
Choice of funds:
Child insurance plans pool in premium money from all polices and invest the pool in multiple investment instruments as per the policy, and the same is created with Equity, debt & money market exposure. An ideal child insurance policy must allow the policyholder parents the option to control the choice of markets they would like to invest in.
For example, the majority of child insurance plans come with a systematic transfer plan and dynamic fund allocation options. These can be used by parents to change the amount of investment made by the policy in equity and debt markets.
The insurance companies make sure that such allocation is done automatically with an initial investment in high-risk equity and as corpus builds the investment is moved primarily to safer debt instruments. So even if the parents or child insurance policyholders are not sure or not financially literate to make a call, they are safeguarded automatically.