9 Features of Child Plan That Makes it Worth Investing In
The next step in this progression is to have a baby, and that is when you should start investing in their future. Investment in your child’s future must address numerous goals for not just your kids but also the parents. Needless to say, every parent wants the very best for their child. This is where a child education plan comes as a blessing. It is an insurance product designed specifically to help your children secure their future.
The best time to buy a child plan is the moment they are born. Buying early will not only secure their future but also give your wealth more time to grow by the power of compounding. There are many different types of life insurance policy that can help you safeguard the future of your loved ones and protect them from life’s eventualities. But a child education plan. As such, they will have a more extensive corpus of funds, opening up more avenues for them.
A child education plan provides a triple benefit of investment, insurance, and saving to ensure that money is never the reason why they fail to fulfil their dreams. With the right plan in your portfolio, you can become an active part of your child’s growth story and help them spread their wings.
In this article, we will learn everything you need to know about child education plan, including key features and how to invest in one the right way.
Importance Of Child Plan
When a child is born, you need money to fulfil their basic needs as well as future needs. You will need funds to pay for their school, college, or education abroad. So, if you are wondering why you need a child education plan even if you have life insurance, you must ask yourself if you have the money to pay for these expenditures as and when they arrive? If the answer is no, you need to reconsider your investments.
The main objective of a child insurance plan is to secure your child’s financial future in your absence and ensure that their needs are met, in case of an unfortunate event. By investing in the right plan at the right time, you will have peace of mind knowing that their needs will be taken care of, even if you are no longer around. From education to marriage, a child plan can effectively cover all these needs.
Features Of A Child Plan
In most cases, the life insurance plans for children are designed to provide them with a safety net in case of eventualities and financial turmoil. Here are some of the features that make them a valuable addition to your portfolio:
The premium for a child education plan can be paid as a lumpsum at the start of the tenure. However, you may also choose to pay it on a regular basis for a certain period of time. Most reliable life insurers offer various payment methods that make it easier for the parents to invest in these plans. The premium amount will vary as per the sum assured you choose for the plan.
- Sum Assured
This amount is the benefit paid to the policy nominee in case of the policyholder’s untimely death. Mostly, the sum assured is at least ten times the annual gross income of the insured person.
- Maturity Benefit
Maturity benefit is given to the policyholder after the completion of the tenure. However, it is important to carefully assess the needs of your child and account for inflation as well as interest rates when choosing the maturity amount. When you fail to consider these things during the assessment of the maturity amount, the funds provided may not be able to meet the desired objectives.
Since a child education plan is meant for children up to the age of 21, the tenures can be chosen until the child reaches that age.
With a child plan, you can choose if the policy nominee will get a lumpsum payment or yearly payments. It is important to choose the right payout method so that it can be used appropriately for its intended purpose, such as marriage, college fees, funds to start a business, etc.
- Premium Waiver
One of the best features of a child plan is the premium waiver that becomes applicable when the insured person dies within the specified time frame. In this situation, the sum assured is paid to the policy beneficiary, and the premium for the remaining tenure is given by the insurance provider. In case a premium waiver is not automatically included in the plan, you can supplement it with a premium waiver rider.
Other riders that can be added to a child plan include critical illness and accidental death. With these riders, you will be able to expand the coverage of the existing plan and delivers an additional layer of security in case of accidental death/disability or critical illness.
- Partial Withdrawal
According to this clause, the policyholder will be allowed to make a partial withdrawal if they are faced with a financial emergency.
- Choice Of Investment Funds
A child education plan, such as ULIP, gives you the opportunity to select the investment funds as per your risk tolerance.
Having a child plan is an essentially important addition to your financial portfolio because it stays active and pays the maturity benefit, even after the parent dies. Thus, a child’s future is always secure, no matter what happens.