Why Do You Need Child Life Insurance Plans?
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Many people deem it necessary, while others do not always agree. When it comes to your child, only you can decide what’s right and what’s not. To help you make an informed decision, let’s take a look at everything you need to know about insurance for children. As the name suggests, child life insurance is a policy that provides your little one with a whole-life cover. You pay an affordable annual premium to insure your child’s life. Additionally, the insurance plan helps build up funds for your child’s future.
What Are the Benefits of Insurance for Children?
If you’re wondering why a child life insurance plan might be a good idea, here are the benefits:
Guaranteed Insurability in the Future
We always hear how important it is to purchase life and health insurance when we’re younger. There are two reasons for this. Firstly, when you’re young, you likely do not have any major health issues that disqualify you from getting the health cover. On top of this, when you’re healthy and young, your premiums work out to be significantly lower. People use similar logic when purchasing child life insurance. By getting a whole-life policy when the child is young, they ensure that their little one has cover for the rest of their life.
Locks In Better Insurance Rates
The premiums you pay for a child life insurance plan are generally very affordable. You can opt for a high sum insured amount and still end up with a pocket-friendly premium. The premium amount remains static, so your child will not necessarily have to pay a higher premium once they’re older. When you purchase a policy when your child is young, you secure the premium rates for them.
Investment Opportunities
The premiums you pay for the upkeep of a life insurance policy get invested on your behalf by the insurance provider. When the policy matures, you receive the cash value of those investments. Purchasing child life insurance could help you grow some money for your child’s future. But, you must remember that these investments take time and will not show great returns immediately.
Disadvantages of Child Life Insurance
While there are some benefits, these policies also come with drawbacks:
Slow Growth
The money you pour into the insurance policy takes a while to grow and show returns. If you want to secure your child’s financial future, you should consider other investment opportunities instead.
Guaranteed Cover Could Depreciate Over Time
Let’s assume you purchase a whole life insurance policy for your child today. You’ve selected a cover amount that may seem like a lot of money. Over time, as inflation increases, the actual value of the cover will decrease significantly. So, if something happens to your child in a few years, their nominee will receive the entire sum insured, but it might not be enough.
When Does Child Life Insurance Make Sense?
Insurance for children only makes sense in two instances. First, if you have a family history of genetic health troubles, purchasing insurance as early as possible makes sense. Your child is still young and healthy. So, they cannot get disqualified from getting a policy. Secondly, you could end up in a scenario where your children help support you. Whenever children look after their family members, they must purchase child life insurance.
Conclusion
Most often, it doesn’t make sense for parents to purchase a child life insurance plan. There are many other investment and insurance policies you can use to safeguard your child’s future plans.
Also read: 10 Best Child Insurance Plans In India
