Types of Child Insurance Plans: All the Important Aspects!
Updated On Nov 29, 2021
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Child insurance is a plan that assists you in achieving your objectives by safeguarding the future and allowing your child's dreams to fly. It was designed to protect your child's financial future as well as provide their basic necessities in the event of a disaster. These plans serve as a solution to all of your issues, allowing you to live a worry-free life without having to worry about your child's future.
In this article, we will focus on the different types of advantages supplied by Child Plans and the different types of Child Plans offered by Insurance Companies in order to help you understand the plans better and in a clearer manner so that you can choose one that best suits your needs.
What Benefits Does the Child Plan Provide?
Child Plans give your children and families a life insurance policy to protect their financial future when you are not present.
- These plans have a premium waiver benefit, which waives premiums in the event of your death.
- According to the current tax regulations and Section 80C and 10 of the Internal Revenue Code, you can take advantage of various tax benefits through Child Plans (10D).
- Child Plans offer partial withdrawals, allowing you to make money from the fund's value based on your needs.
- Loan facilities are provided to help with unexpected financial needs.
- You can get a bonus if you save for a lengthy period of time.
Types of Child Insurance Plans
In the market, there is a variety of Child Plans to choose from. These Child Plans differ in several ways depending on your needs and requirements.
Child Endowment Plans
The main benefit of children's ULIPs is that they provide a three-pronged advantage, including high insurance coverage, disciplined investments, and stock market participation. Three benefits mean that if the insured parent dies, the sum assured is paid to the nominee Child, future premiums are canceled, and the maturity value is paid at maturity, ensuring that your children's future ambitions are realized.
Unit Linked Insurance Plans
Because the assets in ULIPs are invested in equities instruments, the distributions at maturity are determined by the markets. This strategy works well for policies with longer tenures (greater than 10-15 years). Insurers may provide you with the choice of selecting from a variety of investment funds, giving you more control over your money. Profits from stock instruments can be transferred immediately and automatically to debt instruments in some dynamic arrangements.
Traditional Endowment Plans
These plans offer consistent returns in the form of bonuses in addition to the sum assured. Bonuses on traditional plans are often paid starting in the second year, and you can verify whether the bonus is in cash or if a reversionary bonus will be compounded or have a simple interest.
If you as a parent do not want to take any risks with your child's bright future and goals, you should consider acquiring a well-beneficial plan that will help your child in the long run even if you are not present. The plan allows you to invest for your child's future while also ensuring that the promised corpus would be paid out even if you die prematurely. All of the above sorts of child plans are excellent in their own right, depending on your needs.
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.