“To be in your children’s memories tomorrow, you have to be in their lives today.” – Barbara Johnson
Congratulations! You are blessed with an adorable baby! I know it’s a time for joy and pleasure for new moms and dads. In this happiness, don’t forget your responsibilities? Bringing-up of the children, their education, and marriage….All these are costly affairs. You can remain in the memories of your children forever, by providing them a secured future. But, how is it possible? Well, the solution of your problem is Child’s Insurance Plan.
What Is Child Insurance Plan?
You might have heard the saying “Aaj ki bachhat, kal ki suraksha”. For many parents, it’s very difficult to invest a huge amount for the future of their child, at once. Child insurance plans allow you to invest a small amount for a long time and let you build a lump sum amount. It also gives risk cover that secure the future of your child, thereby, making the dreams of your little champ true.
What is the need to invest in Child Insurance Plan?
All the parents try their level best to fulfil all the requirements of their child, to give them a bright future. But, as we all know, future is unpredictable and uncertain. Have you ever thought about the future of your baby, in case, you are not there tomorrow? You should invest in child insurance plans, to safeguard your kid’s future from the unforeseen and unfortunate happenings. Your toddler has several needs like education, medical, and marriage. The insurance plans allow you to prioritise his/her needs and invest the funds accordingly.
Types of Child Insurance Plan
You may find several types of child insurance products in the market. All plans are not alike, and they differ according to the insurance companies. The following types of insurance plans are available in India:
1. Single Premium Plans
In this plan, the buyer has to pay a lump sum amount while purchasing the policy.
2. Regular Premium Plans
In this plan, the premiums are paid annually until the child becomes 18 years old. After this, amount is paid back, by the insurer, in instalments for 4 years.
The policy covers also the parent’s life. The premiums get waived off, and the policy is run by the insurer until maturity, in case of parent’s death, before the maturity of the plan. Therefore, in case of the demise of the parent, the child gets a sum assured; otherwise, you can take out the money whenever required.
3. Endowment Plans
These plans entirely depend on the performance of the insurer. The value of your funds grows if the insurance company gives you a share of the profit, earned by it. Don’t expect remarkable returns from such plans.
4. Child ULIPs (Unit Linked Insurance Plans)
Child ULIPs take advantage of equity investment. The risk associated with these plans can be reduced by sticking with them for a longer time. You have to pay high entry charges for purchasing these plans. The value of the money invested, remains less in the initial years and increases later. As these plans take advantage of long term investing, returns are always better.
What Points to Keep in Mind While Investing in Child Insurance Plan?
- The time, when you need the return.
- The rate of inflation, when you need the money.
- The charges associated with the plan.
- Check the terms and conditions of the policy well before investing in it.
- Always compare various insurance companies to find the best policy.
Steps in Buying the Insurance Plan
Step 1- Depending on when your kid requires the funds decide on the term of the plan.
Step 2– Compute the sum of money required.
Step 3- Choose ULIPs, if you want to invest for a longer duration (more than 8-10 years).
Step 4– Choose endowment plans if you want to invest for a short duration (less than 8-10 years).
Step 5– Consult with your financial planner to decide on the amount of life cover required.
Step 6– Before finalizing any policy compare different plans and select the superlative plan.
If you have not purchased any policy for your child, buy it soon and get relieve from all worries about your kid’s future.