Best Tips to Buy Child Plans

How to choose the best child education plan?

It is nearly impossible to scan through all the options available, especially if you are in a hurry to pick one. To choose the best child education plan, you need to first identify what your goal is. Be it for their school fees, higher education, moving abroad, or their marriage, each of these will require different kinds of expenses.

Once you know why you want to invest in a child plan, figure out an approximate amount that can help fulfill these goals. With this information, you can finally proceed to pick a plan that best suits your and your child’s need.

Below are some important tips to help you choose the best child insurance plan.

Quick tips to choose the best child education plan

1. Tip 1: Longer investment period for a bigger corpus

   Insurance companies offer child plans mostly with maturity benefits. The payouts are released at crucial life stages from the age of 18. So look for a child plan that provides a long investment horizon so that you can methodically build a corpus.

2. Tip 2: Invest enough to take on growing inflation

   Parents, when investing in a child plan, must understand that the funds will be utilized only in the future. Thus, it is essential to estimate the inflation and rising cost of education. It is also essential to know the time required to generate good returns. Investing in a ULIP in the early years of the child should be a good idea.

3. Tip 3: Always have a contingency to avoid unfortunate shocks

   Always invest in plans offering premium wavier benefits. This feature enables the child plan to continue in case the parent loses the ability to pay premiums due to death. The child receives the maturity benefit as agreed upon for the policy term. In addition, they will also receive the death benefit.

4. Tip 4: Look for built-in features instead of add-ons

   Adding on the previous point, you can avoid extra premium payment if you pick a child education policy that comes with an in-build premium waiver benefit. Some plans also come with an in-built annual income benefit. If you can spare the extra amount, consider increasing the basic sum assured instead.

5. Tip 5: Do not overlook riders against accidental death/disability & critical illnesses

   There is no way to predict accidents. Most riders against accidental death and disability come at low costs and if you have the means to fund the premium amount, you should add it to the child plan. But be sure to read the terms and conditions of these riders before adding them.

6. Tip 6: Good idea to have the life cover on the parent

   Your child is dependent on you for survival. You should be preparing them against crises that may arise in your absence. This way, your child will receive financial support from the plan for your death. Therefore, in most cases, it doesn’t make sense to have the child be the life assured.

7. Tip 7: Triple benefit child plans to the rescue

   The child plan that you purchase should be all-inclusive. Triple benefit child plans offer the most comprehensive coverage. On your death, your child receives the death benefit, fund value at maturity, and an annual income benefit along with the premiums waived off.

8. Tip 8: Choose a balanced investment portfolio

   Child plans allow you to invest small amounts regularly in the equity market to earn greater returns over a long term. While this does balance out the risk of market fluctuations, you should also invest in a healthy mix of growth and debt funds. With child ULIPs, you can either manage your fund options yourself or get help from a professional fund manager.

9. Tip 9: Get adequate risk cover for the family as well

   To ensure that the proceeds from a child savings plan only go towards the benefit of the child, buy an additional life insurance plan to help the family in your absence. This way, the money that you save for your child will not be used to cover other expenses.

10. Tip 10: Income or a Lump Sum Amount – Choose wisely

    The final proceeds from insurance plans are to the tune of lakhs. Not everyone has the ability to manage finances to last a long time. While a lump sum may seem attractive, it is not for everyone. On the other hand, the income option may not be sufficient to pay for large expenses such as studies abroad, or an expensive degree.

11. Tip 11: Compare quotes of different insurers

    There are several child plans that may suit your budget and needs. Compare the child plan prices from different insurance providers before purchasing one. Also, look at the reliability of the insurer by checking its claim settlement ratio.

    Here are quick reasons to invest in a child education plan as soon as possible.

Benefits of Buying Child Plans

The best child investment plans offer a number of unique benefits like:

1. Secures your child’s dreams

   These plans allow you to save up a lump sum of money that your child can use in the future to fulfill their dreams.

2. Financial stability

   One of the main benefits of a child plan is that it provides financial stability to the child in case of some unfortunate incident. If you are not there with your child, he/she should have the ability to continue their higher education to achieve their dreams.

3. Maturity Benefit

   If you buy a plan when your child is at a young age, they will likely get the maturity benefit just when they are about to go to college to pursue his/her education.

4. Riders

   Various child plans come with rider benefits such as personal accident insurance riders or waiver of premium. These enhance the coverage of the base policy by paying an additional premium.

5. Partial Withdrawals

   Some plans allow you to partially withdraw from the corpus you have accumulated over the years. This corpus helps you in times of financial emergencies.

6. Tax Benefits

   The premium paid towards the child plans is exempted from taxes under sections 80C and 10(10D) of the Income Tax Act 1961.

Wrapping It Up!

Purchasing a child insurance plan is a crucial step in securing and protecting the future of your child. With the number of child plans available in the market, it may seem difficult to select an ideal plan that best suits your child’s needs. The above-mentioned tips might help you in making an informed decision in choosing the right plan for your child.