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5 Reasons to Invest in a Child Insurance Plan

Updated On Oct 10, 2021

Nowadays, the cost of receiving a higher education from a renowned university is touching the sky. Therefore, parents today are on a search for an investment tool that can help them in securing the future of their child.
A child insurance plan can help you in supporting your child financially in the time of need to fulfill their future major goals such as marriage expenses, higher education expenses, etc when you are not present with them. Other than this, there are various other reasons why you must consider investing your hard earned money in a child insurance plan:

1. A Financial Cushion

By deciding to purchase a child education plan, you can create a financial cushion for yourself and your dependents against the future uncertainties. If there is a decrease in your income or  an unforeseen event happens resulting in your death during the plan tenure,then  a child education plan would offer financial stability to your child and would help them in fulfilling their future goals and objectives.

2. Inculcates Savings Habit

Investing your hard earned money in a child insurance plan would not only ensure financial security to your child in times of emergency but would also help you in inculcating a habit of saving. The art of saving helps you in yielding results of years of discipline and commitment at a later stage in life in the form of a comfortable corpus. Committing oneself to invest in a child insurance plan would help an individual to get themselves into the habit of disciplined savings.

3. Tax Benefit

A child insurance plan offers tax benefits on both the funds invested and the benefit received. This is done mainly to motivate the policyholder in investing in a child insurance plan and to further reduce the financial stress from it. Moreover, the additional benefit of a child plan is that you  can reinvest the money that you have saved from the tax. A child insurance plan is also tax exempt on maturity benefits and capital gains as per section 10(10D).  

4. Coverage Against Disability

One of the biggest hindrances that a parent can encounter is the uncertainties presented by life from time to time. If you undergo any severe disability, then it would negatively impact your work and further your capacity to earn the same amount of  income. A child insurance plan helps in mitigating these risks and pay for all the future premiums so that there is no negative impact on a child’s education.

5. Collateral For Loans

In case you are planning on purchasing an education loan or personal loan for your child then you must definitely consider investing in a child education plan. It would get accepted as collateral for obtaining loans by several banks. For example, if your kid wants a huge amount of money to pursue higher education in India or abroad, then investing in a child insurance plan would be of great help to them.

At the End

By investing in a child insurance plan, you can ensure financial stability for your child in meeting their future goals even in your absence. Putting your money in a sizeable child insurance policy would be  a smart move by every parent who wants to secure the future of their child financially. 

Also read - Most Common Child Life Insurance Queries: Answered!

Are Child Life Insurance Worth It?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard. 

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