Importance Of Child Insurance Plan For A Girl Child
Updated On Jul 27, 2022
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In the early stages, they need the support of their parents or guardians to finance their education to enable them to achieve financial independence later. Girl child insurance plans allow parents to secure the finances for the child to deal with unforeseen unfortunate circumstances later in life.
A girl child insurance plan is a type of policy that covers the risk of death of the girl child. Further, it offers financial assistance to the children if their parents die within the policy term. A noteworthy feature is the premium waiver benefit that comes with child plans. This feature waives off future premiums payable while keeping the policy in force. So, for instance, if the parent dies due to an accident, the unpaid premiums will be paid off by the insurer. The policy continues till the end of the policy term and the final amount is offered to the child as promised.
Importance Of Girl Child Insurance Plans
The cost of education is growing and should not come in the way of your child’s progress. While small monthly savings are important, it cannot protect you against inflation. Child plans can help you offset this concern and also shield your daughter from financial struggle while growing up. Here are some of the few reasons why insurance for your girl child is so important.
Offset risk of inflation
Inflation in the education sector stands at around 10% in India. At this rate, a typical engineering degree in the next 15 years can cost you around Rs. 42 Lakhs. Do you think that regular savings can help you pay such a huge amount considering that there will be other significant expenses in the future? A girl child insurance plan can cover around 10 times the amount paid as annual premium. If you plan this well, you can negate the inflation rate and comfortably pay off your child’s tuition fees.
Pay for your daughter’s marriage
Growing up, many young women have the fairytale wedding of their dreams already planned. While this should not be a priority, it can certainly help to plan ahead and give them the wedding they desire. Marriage being the biggest business in the country right now, you can expect to shell out anywhere between Rs. 20-25 Lakhs including the cost of venue, decor, and gold jewelry. By investing in a child insurance policy for your daughter, you can ensure a sizable corpus to fund their wedding.
Financial backup in the absence of a parent
The best child insurance plans offer the death benefit amount to the child on the death of an earning parent. Child investment cum insurance policies are designed to offer financial respite to the kids while keeping the policy in force. This ensures that the money keeps accumulating till the end of the policy term without the kid having to pay premiums. The final fund value can eleviate significant hardship on the girl child if the parent were to die within the policy term.
How To Pick The Best Insurance Plan For A Girl Child?
The number of options available can be very confusing for a parent. However, choosing the best child plan for your daughter need not be as complicated. All you have to focus on are a few fundamental factors. Here are some tips to pick the best investment plans for your girl child:
- Decide the budget - Do not go overboard with the budget that you have decided to pay for premiums. The end goal is that the promised benefits should reach the child at important milestones and paying premiums duly is a key aspect of it.
- Factor in inflation - The current inflation in the education sector is 10%. Pick a cover that enables you to beat the inflation and comfortably pay for your daughter’s pursuits.
- Take balanced risks - Sticking to traditional child savings plans may seem like a good idea, however, the rate of return is significantly lower. A high corpus requires you to invest in ULIPs that diversifies your investment portfolio among high-risk equity market and low-risk debt funds.
- Identify child needs - Once you have decided on a budget and an investment strategy, look where your child’s interests lie. It is advisable to save for a corpus that is high enough to accommodate any pursuit, be it international or local. However, certain technical fields such as engineering and medicine incur larger expenses than vocational fields.
- Cover against your death - The most critical part of this whole exercise is to make sure that your child is financially secure should any misfortune befall them. The insurance cover should be enough to take care of the needs of the family and also cover educational expenses of the girl child.
Conclusion
Thus, child insurance plans are part of broader child-specific financial products, which also include child education plans. Child insurance plans are a mix of insurance and investment products, which ensure the financial security of your child’s future. These plans pay the life cover as a lump-sum amount at the end of the policy term.
Also read: Inclusions And Exclusions In Child Insurance Plans
