With a rise in material aspirations and the stresses of daily life, the cost of important life-needs like school and higher education have escalated like never before. Thus, it’s a wise choice to opt for a child insurance plan that will take care of a child’s future educational needs, important life events like marriage, etc. Now imagine by a sudden twist of fate, if the policyholder parent passes away unexpectedly. What happens to the Child Policy? Does it stop with the last paid premium or does it carry on further? How will it impact the financial burden related to higher studies? Is there a way to still secure the child’s future? Here’s a look at what really happens in this scenario.
What is a Child Insurance Plan?
A child insurance policy basically revolves around paying a fixed premium to the insurance company for a certain period. It factors in expenses arising from educational needs, future events like marriage and even higher studies abroad.
In event of the parent's death, the insurance company waives off the premium and provides lump sum compensation on the maturity of the policy. Depending on circumstances, emergency withdrawals are also allowed.
Though the market is throwing up innovative and varied choices quite frequently, generally child insurance policies are categorized in two levels: a Single Premium Plan and a Regular Premium Plan. In the first type of plan the policy buyer will pay a one-time lump sum as a part of a single premium while the second one has fixed premiums. In the latter, if the parent dies, subsequent premiums are waived off and the child receives a lump sum when the policy matures. Of course, there's also the option of withdrawing small amounts from time to time as per need. But in a Regular premium plan the lump sum is given only at the end of the policy maturity.
Benefits of Child Insurance Policy
· In the event of the untimely death of a parent, the child will definitely receive all benefits of the policy. Also, a lump sum is guaranteed at the maturity of the policy.
· Educational needs like school, college and studies abroad, events like marriage or aid in setting up business or other unforeseen events of the future for the child are taken care of.
· You also have the flexible option of attaching / buying additional riders like accidental death benefit, critical illness benefit and income benefit to the existing policy.
What to look for, while choosing a Child Insurance Plan
· It's a good idea to choose a policy keeping in mind your budget, investments and future plans.
· It may be a good idea to buy a plan in your name instead of the child's. That way, you ensure that the child receives a lump sum in event of an eventuality, like a parent's death. This sum, will of course be given on maturity of the policy. If you decide to buy a plan in the child's name choose the one that waives off the premium and your child continues to receive the benefits till the policy matures.
While buying these polices always read the fine print and compare existing Child Insurance quotes, benefits, disadvantages, sops, terms and conditions--to see what suits your needs the best. It's always best to buy an insurance policy online as it saves time, is cost effective and is a transparent option.
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