Child insurance policy offer both life insurance and investment opportunities. This insurance allows the policyholder to guarantee their children’s future while also accumulating an investing corpus to assist in meeting the important milestones in a child’s life. The parent is the policy owner in the case of a child insurance policy, while the child is the beneficiary.
If you are a worried parent, you may already be overwhelmed by the rising expense of education in India, which increased by almost 169 percent between 2005 and 2011. In 2018, parents pay around 2 lakh or more for elementary education, with the cost rising to over 4 lakh for secondary and higher education. College and university education might cost anything from Rs. 8 lakh to Rs. 35 lakh.
Here are some pointers about child insurance policy
While children’s plans assist you in establishing a corpus for your child’s education, they also provide numerous additional advantages. Some of these plans allow for partial withdrawals, which might aid with a financial emergency. Furthermore, some of these plans provide a waiver of premium option in which the insurer waives the future premium if the covered parent dies within the policy term. As a result, the plan assures the child’s financial security even in the absence of a parent. These plans can also be used as collateral for child-related loans.
Different types of child insurance policy
- There are two types of child insurance policy: unit-linked insurance plans (ULIPs) and endowment plans. Unit Linked Child Insurance Plans make market investments to help your money grow. Child ULIP plans can assist you in generating inflation-adjusted profits. Because they are essentially ‘saving’ devices, child endowment plans often give fixed guaranteed returns. You may choose based on your preferences and risk tolerance.
- Child insurance policies may provide you with two sorts of pay-out options: lump sum and monthly payments. A lump-sum payout provides you with a big chunk of money all at once to meet key long-term aspirations for your child, such as further education and marriage, both of which need a significant amount of money.
- Regular payments guarantee that your child’s intermittent requirements, such as entrance fees for a new academic session, acquiring new skills, and so on, are met with ease.
- Before purchasing a children’s insurance policy, it is essential to consider the sum assured. Education prices are fast-rising, and by the time your child goes from high school to college, you will require a sizable sum of money. As a result, it is critical to select a sum assured that would financially support your child’s further education.
Also, check to determine if the plan has a waiver of premium option, in which the life insurance company waives all future premiums in the event of the policyholder’s death during the policy term. Check the nature of the funds and comprehend the risks connected with them before selecting a Unit Linked Child Insurance Plan.
Child insurance policies, which provide a wide range of benefits, ensure that your child’s requirements are met even if you are no longer there.