Parents always want the best of all worlds for their children and wish no obstacles come their way. Today, with growing competition and inflation, meeting most of the basic needs have become more expensive. Higher education, be it within the country or abroad or medical expenses or wedding plans have become expensive. In such a time, having a child insurance plan is imperative, as it works as a financial umbrella for your children. A proper financial plan ensures that your child achieves his/her life goals by giving a financial cushion at every milestone of their life.
These insurance plans work as savings and investment plans, wherein, you are able to avail of a life cover as well as fund returns when in need. So, your family and children are secure in the future. These plans enable you to build a corpus for your children’s future and pay for their higher education and dreams without having you to compromise on your finances.
Read along to know the different kinds of insurance plans for children and their benefits.
Types of child insurance plans
Here are the two types of child insurance plans available for parents to protect their children’s future:
1. Child savings plans
A child savings policy is a non-linked insurance policy that comes with low risk. Thus, allowing parents to invest without having to worry about market-related risks and returns. Such policies are safe options that offer life coverage, tax exemptions, maturity benefits, etc.
2. Child ULIPs (Unit-linked Insurance Plans)
ULIPs provide both investment and insurance options. The premiums paid yearly are divided into two parts:
The first part acts as a life insurance policy’s premium.
The second part is invested in various types of funds.
However, investing in equities always has some risk involved, since they are affected by the volatility of the market.
Why opt for a child insurance plan?
Here are a few benefits of investing in a child insurance plan:
It gives you and your child a financial security. In case of any unfortunate event, affecting the family’s source of income, this insurance plan will act as a safety-net. These plans offer life cover, through which the nominee will receive a lumpsum amount in case of any mishap.
A great way to invest. ULIPs enable you to invest in different funds and you also have the flexibility to switch between funds, as and when the fund performs well in the market. Of course, it considers your risk appetite as well.
You receive a lumpsum amount as maturity at the end of the policy tenure. By then, your investment has also grown, allowing you to create funds to afford your child’s aspirations.
When needed, you can also partially withdraw money from the policy to fund your child’s urgent requirements. However, you can withdraw only after the policy lock-in period is over.
The premiums paid against the policy are eligible for tax exemption under the relevant sections of the Income Tax Act.
Some child insurance plans also offer a waiver of premiums in case of any mishap.
A child insurance offers you and your child the required financial stability to fulfill their dreams. So, they do not pause in their life or need to worry about funds before seeking education to achieve their loved careers. It also helps you by ensuring you do not dent your savings and stay financially prepared for any situation.
