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Mistakes to Avoid When Buying a Child Insurance Plan

Updated On Aug 15, 2021

With several investment instruments available today, it is essential for parents to ponder beyond just saving or even investing in a plan for securing their child’s future plans. They are required to recognize the suitable investment avenues at a favourable time in order to meet all their financial goals. However, you may want to consider not making certain common mistakes prior to purchasing a child education plan.

Mistakes to Avoid Prior to Purchasing a Child Insurance Plan

Some of the common mistakes that you need to avoid while purchasing a child education plan are as follows:

  • Underestimating Risk Appetite

    A policyholder needs to be well aware of the risk they are capable of taking as it is said that higher risk taking capability leads to higher returns. However, not everybody can understand the conditions of the market overnight and decide to invest a heavy amount at once. When we talk about doing investment in a child insurance plan, it is significant to decide whether to go for medicum level risk and expect stable rewards or no risk at all and expect lower returns. It is suggested to go for medium level risk in order to receive desirable returns in the future.
  • Not Insuring Your Own Life

    Do not forego the need of getting an insurance in order to insure your own life. Although, the financial needs of a child is one of the important concerns to be considered for a family yet do not mistake it to be the sole financial requirement. Your life cover acts as a safety net for your whole family. In the event of your unforeseen death, the death benefit received by your nominee would help your family financially. Moreover, your child would get financial support from a child education plan at significant stages of their life even in your absence.
  • Starting Late

    This rule is applicable on all types of insurance plans means, the earlier you start with your investments, the nominal premium you are required to pay and the better rewards you would receive. And a child insurance plan is no different. For example, in case you would purchase an insurance plan when your child is still a newborn, then by time they cross 18 years, you would have created a robust corpus for them in order to pursue higher education form a well-renowned university. However, purchasing an insurance plan when your child is in their teenage years would result in insufficient funds.
  • Overlooking the Education Expenses

    Whether you are dreaming of providing your child with a professional course within India or with a foreign education. The total cost of education would turn out to be higher as compared to the present scenario. Also, cost for overseas education would turn out to be 10 times higher as compared to the average national education expenses as per current trends. You can also make use of a child insurance calculator available online to decide how much you are required to invest in a child education plan to match their education expenses to be incurred in the future.

In a Nutshell

Buying a child insurance plan is of great significance in order to plan a better, brighter and safe future for their child. It is suggested to do a thorough research prior to investing in a child insurance plan. To decide the type of plan that would be best suitable for the future of your child, you should avoid making any of the above mentioned mistakes.

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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.

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