Why Do Your Children Need Life Insurance Coverage?
Updated On Apr 22, 2021
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Nearly all life insurance companies have child plans in their offering portfolio. Some are market-related policies that allow policyholders to invest in equity and securities, while others are traditional plans that only invest in debt. The premium charged for a child plan is liable for a tax deduction under Section 80C in the case of a life insurance policy, whereas any income from the plan is tax-free under Section 10 (10D).
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Benefits of Child Life Insurance Plan
Child life insurance plans are designed to fulfill the financial needs of your child in the future. The plan gives you the freedom to determine the period of maturity that you will select around the significant milestones in the life of your child.
Following are the reasons why children need a life insurance policy.
1. Protection Against Serious Illness
One of the main advantages of getting a life insurance policy for children is that, regardless of their future health, they will still be safe. If there is a family history of a critical illness, at an early point when your child is hale and hearty, you must buy a child insurance package. In later years, if your child was to fall victim to such illness, the funds saved in a child insurance plan would be useful.
Unexpected Demise of Parents: Death, especially when one is young, is never expected. The insurance provider offers a premium waiver in the case of a parent's death during the duration of the child's insurance policy. The beneficiary thereby earns a lump sum balance and is no longer expected to pay any premium on the policy.
2. Funding Children’s Education
The main portion of the parents' savings goes into providing for the schooling of their kids. After purchasing a child life insurance plan, much of that could be afforded as the balance received on the maturity of the plan would help alleviate this financial pressure to a significant degree. If you plan properly and engage in a child insurance plan that matures through these years, you will be relieved of the financial pressure.
3. A Habit of Savings
Child life insurance plans come with the twin advantages of insurance and savings, as we discussed earlier. When purchasing a child care plan, you must calculate the fund needs at various stages of your child’s life. Although it will sound like a hassle initially, paying annual premiums would quickly become a habit that will place you in good financial standing as your child grows up.
4. Loan Collateral
A child insurance plan is also widely accepted by all banks as collateral if you want to take an education loan or personal loan for your child. This will greatly help your child when he or she requires a lump sum for higher studies.
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As a parent, your primary responsibility is to secure your child's future, and investing in a child life insurance plan is a safe place to proceed. They are designed to fulfill the financial needs of your child in the future. Child insurance policies provide very valuable protection called the death benefit, in addition to systematic savings for your child. When the parent is not present, this lump sum amount keeps the child's future financially secure.
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.