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Shaheen Shaikh
by on March 5, 2021
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The increasing cost of education and inflation rates only add to your pre-existing financial challenges. This is why you should think of buying a child education plan.

Why is a child plan crucial?

Children tend to dream big, oblivious to the practical aspects of it. So, as a parent, one of the wisest ways to help your child fulfil his/her dreams is by creating a substantial financial corpus to support them. A child insurance plan provides the required financial assistance for your child’s future, reducing any additional monetary burden on you.

When should you consider a child insurance plan?

A simple answer to this would be – as early as you can. In an ideal scenario, you should consider buying this insurance policy as soon as your child is born. This gives you more time to accumulate/create a substantial financial corpus.

Furthermore, plan the policy tenure carefully. For example: if you are buying this plan for your child’s higher education then, the maturity period of this policy should be around the time your child turns 17.

What are the benefits of a child insurance plan?

1. Helps in saving:

Given the basic design of this plan, you need to make a monthly contribution of a pre-decided amount. This means a portion of your income will go towards this plan as savings for your child’s future.

2. Allows partial withdrawals:

Another benefit of this plan is that it lets you withdraw partial amounts. You can use this money to support and nurture your child’s special talents, such as acting or music.

Moreover, certain plans come with periodic pay-outs which are useful to meet the expenses incurred while helping your child hone their talent.

3. Supports your child's education:

In case anything unfortunate should happen to you such as death, the insurance company pays a small part of the sum assured immediately. Furthermore, the insurer also recompenses small amounts of the sum assured annually, as specified by your plan. This pay-out is done each year until the end of the policy’s tenure. Such pay-outs can help to pay your child's school fees in your absence.

4. The benefit of riders:

Generally, a child insurance plan comes with an inbuilt premium waiver rider, however, it is better to check your policy documents for this.

The three basic riders available are:

*** Premium waiver

*** Critical illness

*** Accidental death and disability

The critical illness rider provides coverage for a set of pre-defined critical illnesses. An accidental death and disability rider offer to pay an additional sum assured in case of unfortunate accidents which may cause physical disability or death of the insured.

There are plenty of child insurance plans available in the market, and it can get a tad bit confusing when choosing the right one. Seeking professional advice can help you make an informed decision.

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