Child-Plans
As a responsible parent, you would always want your child to get the best of everything. To ensure that you fulfill all the dreams that you have for your child, financial planning for their secured future is imperative. Child Insurance Plan is the right way to ensure that you have a safe future for your child, which offers strong financial security for your child′s future in your absence. Child insurance plan is an endowment plan which offers both death and maturity benefits.
Child plan is a mix of investment and insurance that usually aids in financial planning for kids′ future needs and requirements at the right age. You can protect and secure the future of your child with child insurance plans encompassing child insurance plan. Under a child policy, life cover is available as a lump sum payment at the conclusion of the policy term. This is not it; such plans also offer coverage your child with flexible pay-outs at the crucial milestones of the child′s education.
Like most parents, you would also have various concerns when it comes to the future of your child. And, of course, a lot of questions too. Questions like...
A college degree, regardless of the surging cost of education, remains a major and the most important achievement in the modern economy. You′re more likely to get a job and earn an adequate salary the more educated you are.
Yet many parents aren′t preparing for it. The outrageous cost of higher education, with a lack of parental savings and the economic advantage of going to college or university, has led to historic levels of education loans.
What is a Child Education Plan?
A child education plan offers a secure future and comprehensive benefits of life insurance along with maturity benefit. A child education plan helps to meet expenses of child′s education and future needs. The plan can also be used as collateral for an education loan.
The surging cost of education is one of the biggest troubles for Indian parents.
Here are some facts supporting this statement:
In an online survey conducted by ET Wealth, over 60% of Indian parents listed this as their biggest worry. This was shadowed by not saving enough, lack of knowledge, and starting too late.
However, here they didn′t consider the actual biggest worry - the risk of their own unfortunate demise. Well, you should have. As per statistics of the National Crime Records Bureau, every 90 seconds an Indian citizen dies in an accident.
Key features of Child Insurance Plans:
A child insurance plan comes loaded with a wide range of useful features to ensure a rewarding return and protection. Quite expectedly, a child education policy is a must for every parent.
Quite often, a child insurance plan is designed to offer safety to the kids in the case of financial crunch during vital decisions of life. Child plans are available in both non-linked and linked types.
Here′s a little overview of just some of the many helpful and useful features of the best Child Education Plan: A child plan comes loaded with a wide range of useful features to ensure a rewarding return and protection. Quite expectedly, a child education policy is a must for every parent.
Quite often, a child education plan is designed to offer safety to the kids in the case of financial crunch during vital decisions of life. Child plans are available in both non-linked and linked types.
Here′s a little overview of just some of the many helpful and useful features of the best Child Education Plan:
Sum Assured The sum assured in a child education plan is the amount of money that is paid out in event of the unfortunate or untimely demise of the policyholder. Most of the time, the sum assured must be more than 10 times the current gross earning of the policyholder.
Premium Amount It is subject to the sum assured and the amount of maturity benefit you opt for. You may opt to pay the premium amount frequently on regular intervals or for a certain period of time. Most of the life insurance providers offer options such as annually, semi-annually, quarterly, and monthly mode of payment. The amount of premium varies depending on the sum assured you choose in case of the traditional child plans.
Policy Term When you realize that your child should get on his/her feet is the best time for the policy to mature. Choose the policy term to meet the exact period. For example, if one of your children's age is 10 years, then choose the policy term of 8 years.
Waiver of Premium Benefit Waiver of Premium (WoP) is an inherent rider of a child education plan. This feature is applicable if the policyholder dies in a stipulated period of time. In such a case, the sum assured will be paid out to the nominated beneficiary, while the due premium for the remaining policy term is paid by the insurance company.
At the maturity of the policy, the nominee is entitled to receive the maturity amount as mentioned in the policy document. In case this feature is not a part of the plan, it is recommended to include it without failure.
Partial Withdrawal
It is often seen that parents instead of holding back themselves for the policy to mature, like to withdraw the sum assured in multiple fragments whenever they need it. This is often selected to fulfil the financial needs of the child at certain key moments. Many child plans also come with an option of partial liquidity.
Premium Payment Mode Sum Assured The sum assured must not be less than at least 10 times your current income, says the thumb rule.
Advantages of a Child Plan
A child plan offers a wide range of exciting and unique benefits to the policyholder. With amazing advantages, a child education plan is a must-have in your kitty. This will help you make sizeable savings for your child without having to run from pillar to post.
Here′s a rundown to the advantages of the best Child Education Plan:
Corpus for Child's Education
Even with minimum premium payment, child plans are able to provide as much as 10 times the amount paid in the child plan. This lump sum amount in child education plans can be foremost utilized towards education expenditure.
A child education plan is often enough to pay for college education, and even higher education in a foreign country. The money available from a child education plan depends on the terms and conditions of the plan and on the amount one has invested in it by way of premiums.
A Kitty for Medical Treatment of the Child
Child plans also allow the option of withdrawing money during the tenure of the child investment plans. This can be used for medical treatment of the child when he or she falls ill. Such partial withdrawals come in handy when the child is hospitalized due to an ailment, minor accident or a more serious medical condition. The best child plan helps to reduce the financial burden caused by medical expenditure and such payouts act as an add-on for one's health insurance plan.
Supports the Child in the Absence of Parent(s)
Death does not come with an invitation and no amount of preparation can leave on ready for such an event. The consequences are more so for the innocent child. The death of the parent(s) causes severe trauma to a child and can leave his or her future hanging by a thread. The insurance company offers a premium waiver if the parent (i.e., the insured) passes away during the policy term of a child education plan.
The premium waiver benefit often comes inbuilt with the best child education plan. If not, one should definitely opt for this rider. The child receives a lump sum amount promised at the time of purchasing the best child plan and does not have to pay balance premium.
This rider enables the policy to continue without any breaks and passes the financial burden of remaining premium to the insurer.
Income Protection for the Child
A child education plan also protects the income of those children who start earning at a young age. It includes child actors, musicians, artists and performers among others. It provides the advantage of capital appreciation over the long-term for the child.
Benefits of Child Education Plan
A child education plan offers dual advantage of comprehensive life insurance cover and maturity benefits. A child plans secure child′s future when you are not around. The plan can also be used as collateral for an education loan.
Tax Benefit
You can avail tax benefits under a child plan on death or maturity claim profits under section 10 (10D). Moreover, the premium paid for a child education plan is eligible for tax deduction under section 80C of the Income Tax Act, 1961.
Maturity Benefit
At the time of maturity of the child plan, the sum assured is paid out to the guardian or parent. In the event of the early demise of the insured, the kid is allowed to get all the benefits of the child plan.
Importance of Having Child Plans
Having a Child Plan is very important for your child's future.