Why Should I Buy a Child Insurance Plan?

What Does Child Insurance Plan Mean?

In simple words, a child insurance plan helps in planning the future of the child in terms of finances. Any parent can invest in a child insurance plan and protect the future so that the child leads a comfortable life.

A child insurance plan is the combination of both investment and insurance that ensures a protected future for the child. At the end of the policy term, the life cover will be available at the lump sum. The child insurance plans also offer flexible payouts at every important milestone of the child.

Life is uncertain and any eventuality can surely turn the world upside down. Uncertainty does not come with prior notice. Therefore, as responsible parents, it is of prime importance to shield the child's future and ensure that every need of the child is always taken care of even when the parent is not around.

Why Child Plan?

In today's times, monthly savings surely does not suffice the increasing education costs. It is indeed a rat race competition where the competition is extremely high. In this environment of tough completion, the educational expenses should not be a constraint.

The child insurance plans offer the flexibility to invest on the premise of the educational needs, present financial holding and various other financial objectives. Mostly a child insurance plan provides a life cover of around 10 times the annual premium. Moreover, the plan also offers the facility of partial withdrawal as per the need. One can also avail of tax benefits for the child insurance premium paid.

Features of the Child Insurance Plan

Further, let us understand the significant features of a child insurance plan:

1. Waiver of Premium

   The child plan offers an in-built waiver of premium that is applied when the parent is no more. However, this feature might differ from one insurer to the other. In case of an unfortunate event, when the parent passes away the child will not be burdened with the insurance premium payment as the insurance company will pay on its behalf.  And, the child insurance plan continues to exist.

2. Partial Withdrawal

   One can access the fund while the policy is active in the form of partial withdrawals; however, subject to the terms and conditions. Partial withdrawal could be done to take care of the child's educational needs, and so forth.

3. High Returns

   The returns of the child plans are mostly high and are above the inflation rate in the long-term. This not only shields the investment from being eroded because of inflation but likewise contributes to the funds' steady growth.

4. Tax Benefits

   The child plans are mostly characterized by the EEE exemption wherein the child insurance premium is entitled to a tax deduction and the earned interest remains tax exempted and likewise, the income also remains tax exempted.  

Importance of Child Insurance Plan

The joy of being a parent is inevitable. Nurturing a child and the well-being of them is a prime concern of every parent.  To foster the bright future of the child, a child insurance plan is a must in every responsible parent's kitty. Listed below are key reasons that highlight the importance of a child insurance plan:

1. Childs Education

   One of the most important and basic needs of the child is education. The more the child is educated the better will be the prospects. However, the educational costs can easily take a toll. The child insurance plan will help with the child's education cost. Let the child dream big and motivate them to accomplish those dreams. Let not money act as the barrier between the child and the passionate dreams. The child insurance plan enables creating the fund, which the child can draw on at the right time.

2. Wealth Corpus

   There will be a time when the child will turn an adult and plan to get married. The child insurance plan will take care of every important stage in the life of the child. Let not money get in the way of the child's happiness. There will be times when the parent would want to gift a two-wheeler or a four-wheeler to the child. It becomes important to have the means to account for any such expenses. Creating a corpus for the child is one of the best things that can be done for the child. This makes a child insurance plan an indispensable part of the financial planning for the child.

3. Setting the Right Example of Responsibility

   It is always important to set the right examples for the child. The best way to teach a child is simply by setting the right examples. The young ones have impressionable minds. Mostly, the child emulates the behaviour and learns from their parents. The decisions that the parents make have a great impact on the child and who they will be in the coming times. When it comes to the child, do not be rash and reckless. Buy the child insurance plan and it is going to be the wisest decision. When the child becomes a parent in the future, they too will make an informed decision.

Wrapping it Up

We understand that the life of a parent is not as easy as it seems. The parents have to take care of the needs of the child and accordingly manage.

Every parent wishes to give the best of everything so that the child need not compromise on anything.  This is exactly when the child insurance plan will let the parent create a corpus to take care of the prospective times expenses. Even if the parent is not around tomorrow, remain assured that the child needs will always be fulfilled and taken care of.

Buying the best child insurance plan today is always better than the perfect plan for tomorrow.