A Child Life Insurance Plan Can Help Protect Your Child's Future
Updated On Jun 17, 2022
Table of Contents
A child insurance plan provides a lump-sum payment even if the policyholder dies. In a child insurance plan, all the future premiums are waived and the insurance company continues to invest in the policy even if the policyholder dies. Some of these child insurance policies are lined up with market policies, which assist the policyholders to invest both in equities and debt.
These plans ensure the future education needs of the child and also provide a lot of benefits that help them in achieving their dreams and also take care of all the future needs of the child in absence of the parent.
The Benefits Of A Child Investment Plan
A child insurance plan has several advantages which are beneficial and protect the child’s future in the following ways:
1. Securing The Child’s Life Financially: On the maturity of the term plan, the amount received by the policyholder creates a corpus big enough to fulfill the future needs of the child and help him/her to fulfill their child’s dreams and gives them a bright future.
2. Provides Lump-Sum Death Benefit: Insurance policies must be taken up looking at the future scenarios which can be dire as well such as physical inability and death too. If the policyholder dies then in that case, the child’s future will still be secured by a child investment plan and all the future premiums will be waived off. In addition, a lump-sum death benefit is also paid to the child on maturity.
3. Protects The Child From The Erosion Of The Capital: These child plans offer privileges of fund selection and Systematic Transfer Plans (STP) to plan the investments as per expected returns required during different life stages. As markets fluctuate, the returns over investments will vary. To save them from capital erosion, a dynamic fund allocation strategy needs to be adopted. Through STP, an automatic switch between the purchased units of funds is possible to make the best of market volatility.
4. Flexibility Of These Plans: The investment mixes can be chosen as per your preference or requirement. There is an option to choose between the high-risk equity investments and the lower-risk debt investments. Depending on the risks involved and financial needs, parents can either choose the investment mix either on their own or opt for an automatic mode for the safety of the child’s financial corpus paramount.
5. Option To Choose Riders: Many of the child insurance plans come along with riders. One such rider is the personal accident insurance which along with accident insurance provides an additional benefit in case of the death of the policyholder and in those cases the investment plan premiums will be waived off.
6. Can Be Used As Collateral For Loans: One major advantage of a child insurance plan is that it can be used as collateral for taking an educational loan. With a child plan, collateral security for educational loans is not to be worried about.
Conclusion
As life is unpredictable and inflation is at its peak, it is very important to take child insurance plans judiciously which can protect the future of the child from uncertainty. They have a lot of advantages as mentioned in the article but they must be chosen after utmost analysis so that these plans genuinely prove to be helpful to the policyholder. A lot of companies provide plans but the best one must be chosen after analyzing your expectations and the amount you are ready to invest for the future financial security of your child.
Also Read: Some Considerations Before Purchasing A Money-Back Guarantee
