Things You Should Know About a Child Insurance Plan

Child insurance is a type of life insurance plan that offers the policyholders the dual advantage of life cover as well as investment. With the help of this insurance plan, one can safeguard the future of their children, while at the same time creating an investment corpus to help their children in meeting the major goals in their life. When it comes to a child insurance plan, the parent here is the policyholder whereas the child is the beneficiary. The increasing cost of availing of higher education today has become a cause of worry for every parent, thus, considering the situation it has become an absolute necessity for every parent to secure the future of their child by buying a child insurance plan.

Given below are some important things that every parent needs to know about a child insurance plan:

• Offers Various Benefits

While a child insurance plan helps the policyholder in building a financial corpus for their child’s education, they have various other benefits as well. A policyholder is allowed the option of partial withdrawal that can help them in addressing financial emergencies under some of these insurance plans. Moreover, some of these insurance plans also provide a waiver of premium options, wherein the insurance company waives off the further payable premium amounts in case of unforeseen demise of the policyholder during the plan tenure. Therefore, this plan ensures protection to the child financially even in the absence of the parent.

• Option of Pay-Out

A child insurance plan generally offers two kinds of pay-out options i.e. lump sum and regular. The policyholder receives a large fund in a single time under the lump sum pay-out option in order to take care of the main long term plans of your child like higher education and marriage, which undoubtedly needs a significant amount of money.  While a regular pay-out option ensures that the immediate needs of a child are fulfilled like learning new skills, admission fees for the new academic sessions, etc are met.

Also Read:  How to Plan for Your Child Education Fund?

• Availability of Various Types of Child Insurance Plans

A child insurance plan can be availed by the policyholder as an Endowment plan or Unit Linked Insurance Plan (ULIP). Generally, a child endowment plan provides fixed guaranteed returns as they are a type of savings tool. When it comes to a Unit Linked Child Insurance Plan, a portion is invested in the market to help the policyholder in building funds. This plan basically helps the policyholder in generating inflation-adjusted returns. Depending upon their risk appetite and choice, one can choose amongst the above-mentioned plans.

• Important Things to Consider Before Buying the Plan

It is very important to check the sum assured prior to purchasing a child insurance plan. There is a rapid increase in education costs and by the time your child graduates from school to university, you would require a significant amount of money. Therefore, it is necessary to opt for a sum assured that would support your child financially in receiving their higher education.

You may also like to read - What are the factors to be considered while purchasing child life insurance?

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.