Everything that You Should Know- Child Insurance Plan

From sending your child to the school, university and buying other essential commodities, finance is always involved. Therefore financial planning for the future of the child is of utmost importance and should be considered by every parent.

Wondering how to go about with planning the bright future of the child? Well, you need to invest in the right child insurance plan that will help you to generate wealth corpus and help the child to manage future expenses even when you are not around.

Yes, you read it right. The benefits of a child plan will not leave your child in stress and help the child to achieve his desires and goals.

What are the Features of Child Insurance Plans?

Listed below are some of the key features of child insurance plans:

One of the key benefits of a child insurance plan is that it provides a safety net in case of any financial implication at any important stage of life. The child plan is available in both non-linked and linked varieties.

Let us have a quick understanding of the listed below features of a child insurance plan:

• Choice of Funds: A child insurance plan, for instance, a Unit Linked Insurance Plan permits the policyholder to choose the investment funds like a hybrid, debt, equity and money market. Besides, you also have an alternative of dynamic fund allocation and systematic transfer plan.
• Policy Tenure: The ideal time to avail the plan is up to the age of 18 years to 21 years. The term can be selected from the birth of the child until the child reaches a certain age to avail the benefits of a child plan. At the time of maturity, the policyholder need not be more than 70 years of age preferably. However, this may vary from insurer to insurer.
• Sum Assured: This is the sum that is paid when the policyholder is no more. Ideally, the sum assured should be 10 times the present gross income of the insured.
• Maturity: When it comes to choosing the maturity sum then it should be decided thinking about the future. Let us just assume that the child is eight years age and the child plan will mature in ten years time. So consider the factors such as interest rate and inflation likewise. In case you think these factors are not that important then you might fall short of the necessities in the coming times. Possibly the single premium plans do not provide features and benefits, therefore read the policy documents carefully before making the final decision.
• Premium: At the initiation of the child insurance plan it becomes payable as one lump sum. You can also select to pay it constantly or for a limited time. Mostly the insurance companies in India provide options such as annually, monthly, half-yearly or quarterly. The child insurance premium will differ as per the sum assured in case if a traditional child plan is bought.
• The Clause of Partial Withdrawal: The clause of partial withdrawal permits the policyholder to make the withdrawal partially in case of any financial emergency. Some policies come up with an alternative of partial liquidity.
• Segmented Pay-outs: With a child plan you can easily choose whether the child will get the payments in a lump sum or annual instalments. This sort of setting will help the child to manage the expenses accordingly.