Why Is It Important For Parents To Invest In A Child Plan?
Updated On Feb 25, 2022
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A child insurance policy is a type of policy that pays out a lump-sum payment if the insured person passes away. So, how does it differ from other insurance policies? A kid insurance plan waives all future premiums, and the insurance provider continues to invest the money on the policyholder's behalf in the event of his or her death. A smart financial plan ensures that your child is financially supported throughout his or her life. Child insurance plans are specifically developed to meet the financial needs of children. As a result, investing in a child plan to help your child achieve all of their life objectives is an excellent decision. Some of the advantages of having a child insurance coverage are as follows:
The Importance of Having A Life Insurance Plan For Your Child
Some of the advantages of purchasing a child life insurance policy include:
1. Financial Well-being
Your child will be fully dependant on you for all of his or her financial needs as a working parent because of your salary. A child life insurance policy, on the other hand, acts as a safety net in the event of your untimely death, which could leave your child financially disadvantaged. This plan provides a death benefit in the case of a parent's untimely death during the policy's term, which will help the kid fulfil their financial commitments while their parents are gone.
2. Premiums are waived
A waiver of premium benefit is available with child life insurance, which may be useful if a parent dies unexpectedly during the policy's term. The coverage remains in existence, and any past-due premiums are waived. When the child turns 18 or the plan matures, whichever comes first, the child will receive the death/maturity benefit.
3. Advantage of Maturity
The parents might choose a maturity date that matches the child's financial needs in the future. As you continue to invest in the child's life plan and construct a corpus to fund your child's future expenses, your corpus grows.
Partially withdrawing from a child's life insurance policy is permissible, allowing parents to use a portion of the investment to satisfy their child's immediate financial requirements. After the lock-in period, you can withdraw a portion of your investment to cover your child's extracurricular activities and other expenses.
5. Payouts that are Customised
After all, this is one of the most significant advantages of a child investment strategy. You might go for a child insurance plan that pays out in installments. This is usually a predetermined percentage of the entire amount insured. Periodic payouts are designed at various stages of a child's development, making it easier to meet short- and long-term objectives.
Child life insurance policies are comprehensive insurance policies that financially protect your child, allowing them to meet their daily financial obligations and achieve their goals even if you are not around. A premium waiver, a maturity benefit, and the opportunity to make partial withdrawals are all features of some kid life insurance plans.
Also read- Learn About The Various Types Of Child Plans
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.