Features of a Child Insurance Plan Which Makes it Essential

Life is full of uncertainties and in case you wish your child to have a better future, then it is essential for you to have a robust plan. Taking into consideration, the average rate of inflation, the cost to avail higher education would take a toll on your pockets. Therefore, you do need an insurance plan which would offer coverage towards the future of your child whenever any need arises.

However, parents generally invest their savings in investment instruments such as fixed deposits, mutual funds, etc but these instruments fail to promise an expected corpus that you would need in order to assist your child in achieving his/her goals. Moreover, in the venet of your untimely demise, your child would not just undergo emotional turmoil but also would have to face financial burden. Therefore, it is advisable to purchase a child insurance plan in order to overcome such obstacles.

Child Insurance Plans Features

Child insurance plans are one of the important financial instruments that offer your child a sufficient amount of financial security in order to receive quality education. Various insurance companies provide child insurance plans in order to continue the regular income flow  so that no unfortunate venet can halt the growth of your child at any phase in life.

Given below are some of the features of a child insurance plan which makes it absolutely essential:

• Long Term Investment

A child insurance plan can help you in yielding higher returns in comparison to any other investment instrument.  This plan is going to assist you financially whether you take it as a long term or short term investment option, by providing an adequate amount in order to shield the future of your child. You should consider a debt fund option or fixed income as an added benefit in your standard child insurance plan. It would make it easy for you to use the acquired amount in an organized way.

• Auto Risk Management

In case you are looking for long term investment through child insurance plans, you are designing an opportunity with an increased growth rate with some additional risk. To state simply, in a child insurance plan there is an option to allocate your investment to equity growth funds which can offer you increased growth in the long term.

However, you need an automated portfolio strategy in order to handle your investment occasionally. Given below are some of the automated portfolio management strategies that can help you in investing smartly and eventually would help you in saving time.

• Safety Switch

With this option you can protect your accumulated investment of your plan during the last 4 years. Here in this option, the amount gets automatically transferred to debt from equity as the insurance policy is near to the maturity date.

• Systematic Transfer

Under systematic transfer option, you can transfer the lump sum investment systematically to an equity fund in order to receive rupee cost averaging.

• Automatic Fund Rebalance

The equity and debt ratio forms 50:50, which means depending upon the market performance of your investments, the automated rebalance management service would automatically rebalance the amount between debt and equity.

• Security of Goal

One of the most important features of a child insurance plan is that it offers financial assistance in order to secure the future of your child so that whenever the time comes to go for higher education, your child does not have to suffer from any obstacles. Purchasing a child insurance plan gives you goal security.

In the event of your unfortunate death, the insurance company makes sure to pay off the leftover premium amount in order to continue with the investment. By following this your child would receive nothing short of the maturity amount that you wanted him/her to get.

At the End

When we talk about purchasing a child insurance plan, you need to understand the significance associated with it. There are various child insurance plans available to choose from such as traditional plan, ULIP, etc, however, you need to decide how much coverage your child would need in the future  in order to attain certain goals. 

Also read 

How To Secure A Girl Child’s Future?

How do I Invest in My Child’s Future?

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.