All parents want their child to have the best possible childhood and a safe and guarded future. But providing all of that can be a daunting task and therefore may seem scary. The best way to avoid such fears is to have planning for the unforeseen events.
The thought that always keeps wandering in the mind of every parent is the financial security of their children. The needs that parents want to financially secure are medical, educational and marriage. But education occupies the prime spot when it comes to prioritizing the above mentioned needs. It is therefore asked of all the parents to allocate appropriate funds to achieve the most important goal for their children- Education. The best way to secure your child's future is to invest in a Child Insurance Policy.
While you are looking for a child plan, do not forget to consider these important things:
1.Inflation - The amount is required at a much later date and therefore you must factor in inflation before investing your money in a particular plan.
2.Time of return- Exact time of receiving the returns is mandatory while planning your investment.
Taking these into account, you must then analyze the plans and choose the one that meets your needs and costs. There are a few plans, characteristics of which are discussed below.
Traditional Children’s Plans
Insurers provide policies such as children’s money back or endowment plans, which give a defined payout at a defined period. So, in case something unexpected happens to you as a parent, the child would be entitled to receive the sum assured on maturity and the interim premiums would also be waived off. But the return from such policies is very low, hardly covers the inflation.
Unit Linked Children’s Plans
These Children's insurance plans are same as any ULIP plan, the only difference is that the beneficiary in such plans is the child. Not to forget, many additional charges accompany theses plans like any ULIP. Please ensure that you know about all the charges applied before buying these plans.
How to choose a child insurance plan:
These two are other key factors to consider while buying child insurance
Premium: Almost all insurance companies offer child plans with multiple features at variable prices. Most of these plans have inbuilt riders like waiver of premium and accidental death benefit rider and in other cases you may have to buy them. While considering which insurance to buy, it is suggested that you include the cost of the riders with the basic premium for the policy. You should then compare it to the premium of the policy where the riders are in-built; and basis that you can ultimately decide.
Riders: For child insurance the riders are significantly important as it will take care of your child's responsibilities like his education and his/her career won't suffer in case anything unpredictable happens to you. Various riders are:
- Comprehensive Health Benefit Rider Sum Assured
- Waiver of all the future premiums
- Income Benefit Rider
- Accidental Death Benefit Rider
After reading this you will get a good clarity on what all you need to consider before buying insurance for your child.
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