What are the Common Features of Child Life Insurance Plans?
Updated On Aug 19, 2021
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A child insurance plan is a financial supporting tool that serves a child with all the necessary financial support on their journey of life. These plans are used to save consistently for your child over a long period to create a financial foundation that will guarantee their financial security and the completion of their dreams in the years to come.
A child plan is carefully built to meet a growing child's financial needs. These plans can help you save for expenses from school admission and higher education to eventual marriage and other requirements. A child plan lets you rest easy, ensuring that you have made the best possible investments for the future of your little ones.
5 Common Features Of Child Plans
Following are the 5 most common features of child plans -
1. Goal Protection
We've already mentioned that insurance is an essential component of a sound child-future strategy. Simple life insurance, which pays out a lump sum upon the death of a parent, is insufficient. The insurance must be for the purpose of achieving the objective, as the child will eventually need to obtain higher education and become self-sufficient.
This is exactly what the goal protection function achieves. If this option is available in your child’s plan, your family will receive not only the life cover sum but also the investment. The plan will mature when it is supposed to and pay the child the maturity value.
2. Long Term Investment Option
Any investment option will not suffice; your child's ideal investment plan should include appropriate long-term and short-term investment options. Every asset class or investment opportunity has its own risk-return profile. Each investment requires a set time to deliver the greatest risk-return profile based on this risk-return profile.
As a result, a long-term investment choice or asset class, such as equity funds, will be available in the ideal child plan.
However, as you move closer to your objective, you'll need to put your money into more secure investments. As a result, the child plan should have a fixed income or debt fund option that you can use to protect your savings.
3. Tax-Free Partial Withdrawal
Higher education is sometimes viewed as a long ascent with several milestones rather than a single destination. All of these stages should be addressed in the finest child plan, without adding to your stress level.
The finest child plan will allow you to withdraw from the accumulated fund without incurring any tax consequences or harming your investment. You can take many partial withdrawals from these types of kid plans while continuing to invest in the next.
The child plan also enables you to invest in both your child's further education and marriage goals at the same time.
4. Low Management Expenses
You'd think that an investment package that includes features like autonomous portfolio management, life insurance, and goal protection would be costly. Fortunately, the situation is reversed. All of these services are available with Canara HSBC OBC Life's Invest 4G plan for a low monthly fee.
On the investment corpus, the Invest 4G plan only charges a modest fund management fee (maximum 1.35 percent p.a.). Only the mortality fee, which you can choose to obtain back from the insurer at maturity, and the goal protection premium will be the other charges.
Automatic Risk Management
When investing for the long term, say 5 years or longer, you have the option of taking a bit more risk in exchange for a higher growth rate. For example, you invest a bigger part of your entire commitment in the plan's equity growth funds.
With a bigger stock exposure, there will be more volatility. You need automated portfolio techniques to keep your portfolio current because you can't spend a lot of time managing it.
In conclusion, child plans are a great way to secure a child’s future financially. They provide a strong financial foundation to support your child’s goals.
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.