We live in a material world of escalating costs and unpredictable future. In this scenario, it is natural for any parent to desire a secure future for their child in the form of educational needs and financial security. While the market is flooded with a plethora of choices and you may have already secured a life insurance policy for yourself to safeguard your family's future, do you really need a child insurance policy? Yes, because it envelopes your child in a security blanket while taking into account his future needs which regular policies like life insurance may not.
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 & a Regular Premium Plan. 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 to be paid over a period of time. 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 lump sum is given only at the end of the policy maturity.
Benefits of Child Insurance Policy
· Opting for this type of insurance automatically results in tax savings.
· Your child's important future milestones are secured financially.
· Thanks to an option of partial withdrawal, you can liquidate the 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 vis-a-vis this type of insurance.
· 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. The good news is that you have the option of choosing a low premium based on your needs.
· Evaluate and set future goals for your child to avoid being drawn into multiple confusing options. A clear head will lead you to the right choice.
· 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 & your child continues to receive the benefits till the policy matures.
· It may be a good idea to consult an insurance expert before you invest in any child insurance plan. That way, you are doubly sure of yourself and your child's future. 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 & is a transparent option.
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