A Child Life Insurance Plan Can Help You Protect Your Child's Future
Updated On Jun 13, 2022
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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 the 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 provides a lot of benefits which help them in achieving their dreams and also takes 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. Financially Secure Future: On the maturity of the term plan, the amount received 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. Lump-Sum Death Benefit: Insurance policies must be taken up looking at the future scenarios which can be dire as well. If the policyholder dies then also 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 paid to the child on maturity.
3. Protection From Capital Erosion: Child plans offer privileges of fund selection and Systematic Transfer Plan to plan the investments as per expected returns required during different life stages. As markets fluctuate, the returns over investments will vary. To save it from capital erosion, 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: The investment mixes can be chosen as per the 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. Choose Riders: A few 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. 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 on its peak, it is very important to take child insurance plans judiciously which can protect the future of the child from uncertainty.
Also Read: Everything You Should Know About Child Insurance Plan
