Do I Need Life Insurance For My Child?

Child Plans provide the dual benefit of life insurance as well as investment. This policy enables the policyholder to secure their children’s future; while simultaneously building up an investment corpus to help meet the major milestones in a child’s life. In the case of a child insurance plan, the parent is the policy owner while the child is the beneficiary.

If you are a concerned parent, you might already be overwhelmed with the increasing cost of education in India, which registered a hike of about 169% between 2005 to 2011. In 2018, parents are spending approximately ₹2 lakh and above for providing primary education, while this cost increases to almost ₹4 lakh in the case of secondary and higher education. College and university level education can cost you anywhere between ₹8 lakh to ₹35 lakh.

Reasons Why You Should Buy A Child Term Plan

In present situations, availing of a child plan has become an absolute necessity. Here are some pointers about child insurance plans –

• Wide Range Of Benefits

While child plans help you create a corpus for the education of your child, these plans have several other benefits too. Some of these plans allow partial withdrawals that help to address any financial emergency. Also, some of these plans offer a waiver of premium option whereby the insurer waives off the future premium in case of the death of the parent, who is the insured, within the policy term. Thus, the plan ensures the financial protection of the child even in the absence of the parent. These plans can also be used as collateral for loans for child-related borrowings.

• Choice Of Pay-out

Child insurance plans may offer you two types of pay-out options – lump sum and regular. Lump-sum payout gives you a large fund at once to address major long-term goals of your child such as higher education and marriage, which require a substantial amount of money. Regular pay-outs ensure intermittent needs of your child such as admission fees in a new academic session, learning new skills, etc., are taken care of with utmost ease.

• Essential Things To Lookout Prior to Buying

Before buying a child insurance plan, it’s important to look at the sum assured. Education costs are increasing rapidly and by the time your child graduates from high school to college, you will need a substantial amount of money. So, it’s essential to choose a sum assured that supports your child in his/her higher education financially.

• Waiver Of Premium

Also, you need to see if the plan offers a waiver of premium option, whereby the life insurance company waives off all the future premiums in case of the policyholder’s demise during the policy term. If you are choosing a Unit Linked Child Insurance Plan, check the nature of funds and understand the risks associated with them.

Conclusion

Offering a wide range of benefits, child insurance plans ensure that your child is not deprived of his/her needs even when you are no longer around.

You may also like to read - 

How Can You Utilize PPF In The Best Way Possible?

Are Mutual Funds A Good Choice Of Investment?

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.