3 Features of Child Insurance Plan which Make it a Must have Cover
Updated On Jul 03, 2022
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The only solution is through life insurance and investment. While you are alive your investments will grow, but insurance will take care of your child’s goals if you cannot be there anymore. However, the best child plans will strive for a lot more than this.
Top 3 Features Of A Child Life Insurance Plan
Here are five unique features the best child plan has in India:
1. Appropriate Long-Term Investment Options
Just any investment option is not enough, your ideal investment plan for the child should offer an appropriate long-term or short-term investment option. Every investment option or asset class has a specific risk-return profile. Based on this risk-return profile, each investment needs a specific time to offer the best. Therefore, the ideal child plan will offer a long-term investment option or asset class, such as equity funds.
However, as you get closer to your goal, you will need safer investment options to park your accumulated funds. Thus, the child plan should also have a fixed income or debt fund option which you can utilize to keep your funds safe. The best child plan can offer all these asset classes at the same time and allow you to create a suitable mix as per your time to goal.
2. Goal Protection Feature
We have already highlighted that insurance is a necessary part of a good child's future plan. However, simple life insurance which gives a lump sum amount at the death of a parent is not enough. The insurance has to be for the goal, as the child will need to ultimately achieve the goal of higher education and become independent.
Goal protection the feature does exactly this. If this option is present in your child plan, your family not only receives the life cover amount at death, but the investment continues. The plan will mature at the intended time and pay the maturity value to the child. The amazing part is between the death claim and maturity, the insurer will deposit all remaining instalments, as you would’ve done. Thus, your child will receive the amount you intended her to receive at maturity, and nothing less.
3. Tax-Free Partial Withdrawal Option
Often, a higher education goal is not a one-point destination, but a gradual climb with multiple milestones. The best child plan should address all these milestones and without increasing your headache in the process. The best child plan will let you withdraw from the accumulated corpus without tax liability or affecting investment. You can make multiple partial withdrawals from such child plans and continue investing towards the next.
The child plan will also allow you to invest in both higher-education and the marriage goal of your child at the same time.
Conclusion
Child plans are life insurance plans. Payments from life insurance plans remain tax-free so far the annual premium into the plan does not exceed 10% of the life cover. It is likely that you will want to invest more into the plan a few years down the line. Thus, the additional life cover. Thus, using the best child plan will help you not only invest in your child’s future but also safeguard the goal with maximum tax-efficiency.
