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Friday, September 18, 2020

Why Should I Buy Child Insurance Plan?

Ask any parent about the biggest worry they may have for their children and the answer is likely to be education and future expenses like marriage. Inflation and growing education costs have meant that school fees right from kindergarten to higher education are growing at an alarming rate. The cost of doing an MBA from a reputed business school in India on an average exceeds Rs. 25 Lakhs and is only likely increase with time.

If costs are one factor to consider, risks are another. Statistics from the Indian National Crime Records Bureau reveal that a person dies on Indian roads every 90 seconds. Life is uncertain and the financial future of a child is at risk should the parents not be around once the child has grown up or while growing up.

Child insurance plans offer a safety measure covering both these risks, making it a go-to instrument for many parents. As an able investment-cum-protection plans, child insurance plans offer peace of mind for parents as they can be assured the financial future of their child is secure, even if the worst case scenario unfolds.

Benefits of investing in a Child Plan

Child insurance plans offer several core benefits which is why they are the go-to tool for every parent. Experts suggest every parent invest in a child insurance plan within 90 days of the child’s birth to maximize the available benefits.

Education and future emergency needs covered

Child insurance plans offer maturity benefits that can take care of all the financial needs of the child in the future. The money can be used towards financing higher education, marriage, any medical emergency, or any other needs of the children.

Payout benefits

Child insurance plans offer periodic payouts that help the children with their education needs even during the policy tenure. With even school fees on an upswing in most cities and towns, such periodic payouts ease the financial burden of payment of school or tuition fees.

Death benefits

In the unfortunate event of death of the policyholder or parent invested in a child plan, future premiums are waived off while the child receives a lump sum beneficiary amount as life cover along with maturity cover benefits at the end of policy tenure.

For example, say a policyholder buys a child plan for his or her child aged 8 years with a policy term of 10 years, maturity benefits of Rs. 25 Lakhs, and a life cover of  10times of annualized premium. Should the policyholder die midterm during the policy, the insurer will not only pay for all future premiums of the policy but will pay out the benefits of life cover(10 times of annualized premium) and Rs. 25 Lakhs as maturity benefits at the end of policy tenure when the child attains 18 years of age.

Tax deduction benefits

If tax saving is high on your agenda, it is another reason for you to seek a child insurance plan. Based on “exempt, exempt, exempt” principle, the premiums you pay for your child insurance plans offer tax deductions under Section  80(C) & the amount you receive at time maturity is tax exempted  of 10(10D) of the IT Act.

Loan collateral benefits

Child insurance plans can be used as collateral for any future loans like education loans for your child’s learning needs. This simplifies higher education loan worries for doting parents.

Guaranteed peace of mind:

Child insurance is not just any other financial instrument but is a safety shield that you offer your child, protecting him or her against any eventuality. With a good child plan in place, you can rest assured that all your child’s future needs are covered at all times.

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