3 Best Features Of Child Insurance Plan Which Make It Essential

Life takes a big turn when a child enters into it. Every parent tries and works hard to give their child the best possible care, education, and a healthy lifestyle. The entire parenting plan involves providing grooming sessions to an infant, then best schools and colleges, enrolling for extracurricular skills set, etc. Although caring and grooming for a child are very expensive matters.

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If you want your child to have a bright career, you require a solid financial plan to safeguard their future against life's uncertainty. Considering the average inflation rate, higher education is going to be more expensive. Hence, you do require a plan which will cover your child's future when the time arrives.

However, usually, parents invest their money in investment tools such as mutual funds, fixed deposits, etc. but these investment tools do not guarantee an expected corpus that you require to help your child achieve his/her goals. And God forbid your untimely death, this will leave your child in shock along with the financial burden. To overcome the sheer fear of such uncertainty it is advisable to buy a child insurance plan so that your child will be independent to further proceed in their desired career path with or without you.

Features of Child Insurance Plan

Child insurance plans are an essential financial tool that provides your child an ample amount of financial support to get a good education. Many Insurance companies offer child insurance plans intending to continue the regular cash flow so that any bad event of life would not stop your child's growth at any stage in life. 

The Industry experts suggest that when your child is 5 years old it is the best time to buy a child insurance plan because when they will turn 18 years old they will have a good amount of funds to pursue the career of their choice. 

Following are the top 3 features of a child insurance plan which makes it essential

Long-Term Investment

As discussed above, a child insurance plan can give you higher returns as compared to any other investment tool. Whether you think of it as a short-term investment option or a long-term investment option, it is going to aid you financially with a sufficient amount to secure your child's future. 

You should opt for a fixed income or a debt fund option as an additional benefit in your basic child insurance plan. This will make it easier for you to utilize the accumulated amount in an organized manner. 

Goal Security

It might have got cleared to you by now that the main reason to buy a child insurance plan is to secure your child's future so that when the time comes to pursue higher education, the money will aid. This is what makes it essential to have a child insurance plan for your child. A child insurance plan offers goal security. 

In case of your untimely death, the insurer ensures to pay off the remaining premiums so that the investment continues. This way your child will receive nothing less than the maturity amount you intended him/her to receive.

Auto-Risk Management

If you are planning to invest for the long-term via a child insurance plan, you are creating an opportunity for a higher growth rate with a little more risk. In other words, there is an option in a child insurance plan to allocate your investment to equity growth funds which can provide you higher growth in the long run.

However, you require an automated portfolio strategy to manage your investments from time to time. Following are the most common automated portfolio management strategies that can help you invest smarter and eventually will save time. 

  1. Systematic Transfer

    Under this option, you can systematically transfer the lump-sum investment to equity fund(s), to get rupee cost averaging.

  2. Automatic Fund Rebalance

    The debt and equity ratio goes like 50:50, this means, based on the market performance of your investments, the automated rebalance management service will automatically rebalance the amount between equity and debt. 

    If for any reason, your ratio goes from 50:50 (Debt: Equity) to 40:60 (Debt: Equity), the money will automatically move from equity fund to debt fund to rebalance the entire ratio again. 

  3. Safety Switch

    This option provides you to safeguard your accumulated funds during the last 4 years of your plan. Under this option, the money automatically gets transferred to debt from equity as your plan is near its maturity date. 

Final Word

When it comes to buying a child insurance plan, you must understand the importance of it. You can choose from various available child plans such as, unit-linked plans, traditional plans, etc.; however, you are required to determine how much cover your child would need in the future to accomplish certain goals. Also, to maximize your coverage, you have an option to add riders to your basic child insurance plan.

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