5 Mistakes to Avoid When Buying Child Insurance Plan

After becoming a parent, the financial burden turns heavy on the shoulders specifically when the parent is the breadwinner of the family. If you are a parent and wish a secured and bright future for the child invest in a child insurance plan.

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All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Why Do You Need A Child Insurance Plan?

To be financially wise is to be a conscious consumer. You can't keep on spending money and expect your next 10 years to be in a financially stable situation.

It is important to support your child at every important milestone and build a corpus for them. There are plenty of options available for you to invest in to secure your child's future. However, you might want to consider avoiding common mistakes before buying a child insurance plan.

05 Mistakes that You Should Avoid Before Buying a Child Insurance Plan

  1. Overlooking the Future Cost of Education

    Whether you are plan to provide your child with foreign education or professional course within India. The education cost is going to be higher than the present time. Moreover, as per the current trends, overseas education will be 10 times higher than the average national educational cost. A child's current aspirations can be helpful to make assumptions for future lifestyle goals. In this scenario, you must avoid overlooking the future cost of education. You can also use a child insurance online calculator to determine how much you should invest in the child insurance plan to match the future educational expenses.   

  2. Underestimating Risk Appetite

    The policyholder must know, how much risk he or she can take. It is believed that higher risks possibly lead to higher rewards. However, everyone can't understand the market overnight and invest a hefty amount all at once. When it comes to investing in a child plan it is important to determine whether to go for mid-level risk to expect stable returns or no risk to expect low returns. It is advisable to opt for a long-term investment with mid-level risk to get desired returns in the future. 

  3. Opting for a Wrong Policy Term

    The policyholder needs to know when they will need the money in the future. Opting for a wrong policy term can either make you fall short of funds or the new costs for the same policy can make a hole in your pockets. It is advisable to wisely match the policy tenure with the child's future needs. For example, if money is required for higher education 16 years from now, a policy tenure of less or more than 16 years will not beneficial to your child.

  4. Not Insuring Your Life

    Do not be an ignorant individual when it comes to insuring your life. A child's financial need is one of the financial requirements in the family. However, do not mistake it as the only financial requirement. You can see your life cover as a protection cover for your entire family. In case if your family loses you due to an unfortunate event, your death benefit would aid your family. Besides that, in your absence, the child insurance plan will separately support your child at crucial stages in life. 

  5. Starting late

    This one is applicable for almost all kinds of insurance plans. The early you will start, the nominal premiums you will pay and the better returns you will get. A child insurance plan is no different. For instance, if you will buy a policy when your child is a newborn, by the time he/she will turn 18, you would have built enough corpus for them to pursue higher education. However, buying a policy when the child is in teen years would lead to inadequate funds. 

Wrapping It up

A child insurance plan is of utmost importance for a better, bright and secured future for the child. It is advisable to do thorough research before buying a child plan. To determine what kind of plan will be the best suitable for your child's future, you must avoid making the aforementioned mistakes.

Written By: PolicyBazaar - Updated: 19 July 2021
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