How Do Child Insurance Plans Work?
Published On Dec 22, 2021 10:00 AM By InsuranceDekho
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A Child insurance plan is a combination of investment and life insurance that provides financial security for your child's desires and objectives. A Child insurance plan may be used to invest in your child's long-term ambitions, such as further education and marriage. While you are developing the corpus necessary to achieve these ambitions for your Child, an insurance plan serves as a safety net for the corpus in the event of your untimely death. In the event that you die before reaching your objective, the plan can invest the money on your behalf and pay the maturity amount you intended for your Child. Child insurance plans, like Child education plans, are part of a larger category of child-specific financial solutions. Child insurance plans combine insurance and investment products to protect your child's financial stability in the future.
How does a Child Insurance Plan Work?
Purchasing a Child insurance plan will help you achieve the following investing goals:
- Provides financial aid to help your child achieve his or her higher education goals.
- Provides financial help to your child's schooling, marriage, and other relevant ambitions in the case of your untimely death.
- Provides a variety of fund alternatives to assist you in generating big profits.
Benefits of a Child Insurance Plan
The following are some of the advantages of purchasing a Child insurance policy:
- Financial Security: You can create a comfortable and safe life for your child with your earned income. A Child insurance plan, on the other hand, would act as a financial safety net in the case of your untimely death, which would result in the cessation of financial assistance. It provides life insurance with a lump-sum payoff in the case of a disaster.
- Maturity Benefits: A child plan pays a lump sum benefit to the policyholder at the plan's maturity, or at the conclusion of the plan's term. You can set a maturity date based on the time range that corresponds to your child's future financial demands and requirements. Throughout the policy's term, the money you invest grows into a sizable corpus, adequate to fund your child's ambitions.
- Tax Benefits: Child policies are included in life insurance plans and provide tax benefits. As a result, the premiums paid are tax-deductible under section 80 C of the Internal Revenue Code. A policyholder can claim a deduction of up to Rs 1.5 lakh for premiums paid on a child insurance policy.
- Partially Withdrawals: If you have a ULIP child plan, you can take a portion of your invested funds to meet your Child's immediate needs. Once the lock-in period is ended, you can withdraw part of your units and utilise them for emergency expenditures such as school tuition, medical bills, and so on.
A child insurance policy is a crucial investment in your Child's future security. Investing in this plan allows you to leverage the power of compounding to build your money. However, if you want to take full advantage of the benefits given by a Child insurance plan, you should start investing early in life. Keep the aforementioned ideas in mind when looking for a suitable Child insurance plan to protect your child's future.
Do read - Exploring The Significance Of SBI Child Education Plan
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.