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Things To Look for Before Purchasing a Child Plan

Published On Mar 11, 2021, Updated On Apr 23, 2021

Nothing is more satisfying than watching your child grow up and make success every day. However, times have been rough, and parenting a child is not a child's play today. Both parents face a lot of responsibility and work hard to ensure that their child has a healthy life and a good future.Taking this into account, it is better to have a decent insurance policy for your child that will take care of your child's rising education and other needs.

Also Read:-  Child Plans or Mutual Funds, Which is Better?

Things To Look for Before Purchasing a Child Plan

 Let's explain the five things you need to look for before choosing a child policy.

1. Your Expectations For The Policy and The Tenure

Preparation for the future of your child should begin as soon as he/she enters this world. Starting early will mean that you are still a step ahead of your child's needs. Invest in a plan that guarantees that you get the highest return and that your child gets the funds needed each time to achieve his or her potential aspirations, no matter what his or her condition might be.

2. Plan is Expected To Have a Premium Exemption Value

Since most child plans include a premium exemption advantage as an alternative or core feature of the basic plan. Mostly, the exemption from the premium is significant, as in the event of the death of a spouse, the insurance is shielded from financial losses and lack of profits. Any additional premiums will be waived and the insurance will be valid for the full term of the policyThis guarantees that besides the death benefit paid, the maturity benefit stays unchanged throughout the whole policy period.

3. Go for Equity Linked Policies if You Have a Risk Tolerance

If you have a risk appetite and want your child plan fund to expand, it is advised that you go to equities and consider opting for unit-linked child plans for a significant timeframe (at least 10 years and above).Long-term equities aim to provide good returns which, in return, help your child plan fund rise. In the perfect future, the Child Policy should provide a healthy combination of the debt and development fund, along with risk coverage. Look for a child policy that has the possibility of a scheme transition such that investment returns are secured.

4. Go For Endowment Plan if You Don't Have a Risk Appetite

If you do not want to take the risk of your savings and want a child plan with some kind of guarantee, you can go to an endowment plan that will provide you with sufficient coverage and ensure security against unpredictable market conditions.

5. Check For Bonus

Check for the benefits that you are eligible for under the plan. Bonuses begin to build up after the first year and help to contribute considerably to the corpus. Look for the kind of incentive that is added to your plan, too. For eg, whether it's a revision incentive, you can ask if it's a simple or compound bonus or if there's a cash bonus paid out then what incentives are allowed for it.

You May Also Like to Read:- How Are Child Plans Different From Sukanya Samriddhi Yojna?

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All children's plans have varying characteristics and offers. Look over the specifics of the strategy carefully and choose the one that suits your desires that will help your child reach his or her life goals.

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