Is Child Insurance Plan A Necessity?
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A child insurance plan provides the dual benefits of insurance and investment. Parents can buy such a plan when the child is as young as 14 days. The policy matures when the child attains adulthood. However, there are child insurance policies wherein policyholders are allowed to make periodic or occasional withdrawals before the maturity of the plan.
Importance Of Child Life Insurance Plan
Buying child insurance means there is investment planning involved for a large number of years, which is why it is a superb tool when planning for the future. Mentioned below are some long-term advantages of child insurance plans.
Funding Children's Education
Major chunk of the parents' savings goes into paying for their child's education. Studying in a decent school means shelling out a lot of money. Higher education from abroad or MBA from a well-known B-school would mean exhaustion of the limited savings. All of that could be afforded by buying a child investment plan as the sum obtained on the maturity of the plan would help lessen this financial burden to quite an extent.
Critical illness/ Medical emergency Aid
In case there is a family history of critical illness, it is advisable to purchase children’s insurance when he/she is young and fit. If due to a medical emergency, the child has to be hospitalized, a child plan would help by offering financial support. You are allowed to withdraw a lump sum from the about-to-mature policy to make sure that your child gets the necessary medical treatment.
Unexpected Demise of a Parent
Death is never anticipated, especially when one is young. In the event of the demise of a parent during the term of a child insurance policy, the insurance company provides a premium waiver. Thus, the beneficiary gets a lump sum amount and is no longer obligated to pay any premium on the policy.
Well thought of investment
Prior to buying child insurance, be sure of what you are planning for, whether higher education for your child, marriage, or even a mortgage on a house. While performing calculations, take inflation into account. Prices fluctuate largely in less than a decade. Once you have decided on an amount, buy a suitable child insurance policy. You will soon get into the habit of making regular premium payments and as a result, you will be successfully earmarking money for your child's future.
Income Security for Your Child
This is an important benefit for children who are actors, singers, and others who earn great incomes at a young age. Their money tends to heighten at a higher rate over a longer period when put in investment plans for children.
Could be used to take Secured Loan
A child insurance plan is also largely accepted as security by banks and other lenders when processing education loans or other personal loans.
Conclusion
When buying child insurance, search for policies that emphasize cash value. High cash value, in the long run, can be used to take loans or make a down payment on a house. Steer clear of policies that raise premium rates annually. Most importantly, buy insurance while your child is young to take advantage of low rates and high returns.
Also read: Is Buying Child Insurance Worthy?
