Use This Festive Season to Plan for Your Child’s Future With Insurance

Child insurance: How to make sure your child gets funds at the right time - The Economic Times

A financially secured and safe future is needed for every people as our need is increasing today. Even if you have a good earning income, financial planning will be essential in such scenarios. As a parent, you always want to do your best to make your children’s dreams a reality. 

However, a sudden emergency or a tragic event could lower the savings plans you have created for your child’s future. This is exactly why a child insurance plan is very important.

What is a Child Plan?

A Child Plan is an investment cum insurance plan which offers financial safety to your child’s dreams and goals. You can invest in a child insurance plan for the big life goals of your child, like higher studies. This policy also helps to provide a financially secured future to your child even after the parent’s death. In a child insurance plan, the insurance company pays all future premiums on behalf of the policyholder in case of any unfortunate event, and the maturity amount is provided to the nominee selected by the policyholder.

Why Should You Purchase a Child Insurance Plan?

It is highly recommended that you buy a child education plan as soon as your child is born. The reason is that the more time you are invested, the more savings you will create. These savings can be used once your child reaches the age of 18 and plans for higher studies. You can expect a huge return by investing a small amount for a long-term period.

Benefits of Investing in a Child Insurance Plan

There are several advantages of a child plan. Here are some of the best of them.

Financial Safety

You will receive maturity benefits that can be used to fulfil your child’s future needs. By the end of the policy term, you will have a corpus that will help your child for higher education and a financially secured future.

Death Benefit

If any tragic event happens to the policyholder, the child’s future will still be financially secured by a child insurance plan. There is a facility for waiving off all future premiums in case of the policyholder’s demise. Moreover, your child will receive a maturity amount as a death benefit.

Tax Benefit

A Child Insurance plan is well-known for its Tax benefit. All the premiums you have paid are eligible for tax deduction under Income Tax Section 80C. Also, the death benefit or maturity benefit is tax-free under Section 10(10D). However, tax laws are subject to change from time to time.

Rider Benefit

The policyholder can enhance the scope of coverage of a child insurance plan by adding riders to it. You can pay an additional cost to include riders at the policy’s inception. Here’s the list of some riders you can add to your child insurance policy.

  • Critical Illness Rider
  • Hospital Care Rider
  • Accidental Rider
  • Surgical Care Rider

 Please note that riders are not mandatory and are available at additional cost.

The Flexibility of Partial Withdrawals

During the policy period, you can withdraw funds in case of an emergency or pay your child’s education fees. You have to follow terms and conditions while accessing your fund in the form of partial withdrawals.

A Child plan helps you to be financially prepared to overcome any challenges that can otherwise ruin your child’s career. By starting with paying a small premium amount, your children can fulfil their goals and dreams. However, one thing that you need to keep in mind while buying child plans is to opt for reputable insurance providers.

John Peterson

Amanda Peterson: Amanda is an economist turned blogger who provides readers with an in-depth look at macroeconomic trends and their impact on businesses.