Importance of Child Protection Plans
Updated On Apr 22, 2021
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As parents your only concern will be to do everything in your power to secure the future of your children. The reason why many parents want to invest their money in child plans is that these plans allow you to save you money for your child, in a systematic way so that when the time comes the saved corpus can be utilised when needed the most. Before you invest your money in such plans, you should know about what a life insurance child plan is and how it works.
What are Child Plans?
Child plans are just like the regular life insurance plans. The only difference is that these plans are designed specially to fulfill your child’s financial requirements in the future. The premiums paid for these plans are invested in different investment instruments that you choose yourself. Just like a regular life insurance plan, if the policyholder passes away the sum assured or the death benefit to the child who is appointed as the nominee of the life insurance policy. You also get the flexibility to opt for maturity benefit and maturity period. Money from the death benefit or the maturity benefit helps in keeping your child’s future secured even when you are not around.
How Does a Child Plan Work?
Child plans work just like a regular life insurance plan but in child plans the nominee mentioned in the life insurance policy is the child. In case of unforeseen demise of the policyholder, the death benefit is paid out to the nominee i.e. the child of the policyholder.
One can also opt for maturity benefit where the policyholder can decide the maturity period of his/her life insurance policy. The money invested in such plans with maturity benefit options grows over a period of time through different instrument tools. The policyholder is paid out with a lump sum amount at the time of maturity.
Other than death benefit or maturity benefit, some child plans also offer Waiver of Premium option wherein in case the policyholder passes away all the future premiums of the life insurance policy is waived off, paid by the insurance company and the sum assured is paid out to the nominee at the time of the maturity. The sole purpose of purchasing a child plan is to ensure that your child has adequate financial resources even in your absence.
Benefits of Child Protection Plans
As a parent to making sure that your child has adequate financial resources is the purpose of your life. Your baby will not be a baby forever, a child grows and you must ensure that at every milestone of your child’s life, your child has financial resources when needed the most. Mentioned below are some of the reasons why investing in a child plan is important.
1. Unforeseen Death of the Parent
Death is unforseen, it will never come announced. Child insurance plans offer the option to choose Waiver of Premium wherein, if the policyholder or the parent passes away, the future premiums are paid by the insurance company (future premiums are waived off) and the nominee .i.e the child is paid with the sum assured. The child plans also offer death benefit and maturity benefit, you can choose what best suits you. The benefits receivable under the policy will help your child to achieve his/her goals and aspirations.
2. Funding Urgent Medical Treatment
In case your child falls severely ill or needs to be hospitalised due to severe injuries caused by accident or any other medical condition, you can withdraw money if such happened during the policy tenure. That means during such serious medical conditions you can partially withdraw for the medical treatment of your child.
3. Funding Child’s Education
Education these days is 10 times more costlier than what it was earlier. As a parent you would want your child to have proper education and be successful in his/her life. Some parents take loans, go above and beyond for their children’s education. If the policyholder opts for maturity benefit, the lump sum amount can be used for their child’s higher education. A child plan is the best plan to invest in if you as a parent are very concerned about your child’s education.
Conclusion
A child's secured future is a parent’s first and most important priority. When you purchase a child plan you secure his/her future. By investing in child plans you can make sure that your child has enough financial resources to achieve his aims with or without your presence. The money invested when returned can be utilised in many different ways such as your child’s education, marriage, urgent medical treatment or can be utilised to pay off debts so that your child is not financially bothered.
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