Benefits of a Child Insurance Plan

The day when your child was born and you had first taken them in your arms would have been very special. The realization of having your little bundle of joy in your arms would have made you feel responsible for fulfilling all their needs and providing them with the best of everything in life. Being a parent, your first and foremost duty is to offer protection to the future of your child, and an ideal way to begin this is by investing in a child insurance plan. A child insurance plan does not only offer a financial safety net that you would wish for your child but it also provides you with the benefit of investment too.

Benefits of a Child Insurance Policy

Here is a list of few important benefits offered under a child insurance plan:

1. Inculcates a Habit of Savings

A child insurance plan offers dual advantages of investment as well as insurance. Before you decide to purchase a child insurance plan, carefully analyse your financial plan and calculate the funds required at different phases of life. Calculate the funds that you are saving for primary and secondary education, post graduation, wedding, etc. Moreover, also consider your other responsibilities like mortgage etc and choose an insurance plan that fits in your financial plan perfectly.

2. Financial Security

A stable income would help your child in living a comfortable and secure life. However, in the event of any unforeseen incident that results in stop to your financial support, a child insurance plan would act as a safety net. It provides life coverage, and a lump sum pay-out if any eventualities arise. This amount is decided at the time of purchasing the plan; it can offer coverage to your child’s needs during their growing years.

3. Investment Component

Alongside a life insurance cover, a child insurance plan also offers an investment component. Moreover, ULIP child insurance plans allow you to leverage the potential of the capital market for higher returns. According to the Ministry of Statistics and Programme Implementation, the inflation rate of India from 2012 to 2020 was averaged at 6.05%. These data depicts that investment made in the equity market can bring inflation beating returns. Moreover, ULIPs act as a bridge between your investment goals and equities.

4. Partial Withdrawal

A ULIP child insurance plan lets you withdraw some portion of your funds in order to meet the urgent requirements of your child. Once the lock-in phase is over, you are allowed to cash out some of the units and pay for sudden healthcare expenses, school fees, in case any.

5. Lump Sum Amount Upon Maturity

A child insurance plan offers a lump sum amount at the end of the duration of the policy as maturity benefits. You are allowed to choose a maturity date according to the time frame matching the future requirements of your child for funds. Throughout the policy tenure, your investment builds itself into a tidy corpus, enough to finance the aspirations of your child.

6. Tax Benefits

Child insurance plans are a type of life insurance plan. Therefore, the premiums payable are eligible for tax benefits. As per section 80C of the Income Tax Act, you are allowed to claim deductions up to 150000 for the premiums paid towards your child plans.

Therefore, as you can observe, a child insurance plan is an extremely important investment that every parent should make in order to secure the future of your children financially.

Also read - Adavantages of Purchasing Child Life Plans Online

Features of a Child Insurance Plan which makes it Essential

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.