How to Secure Your Child’s Future through Child Life Insurance Cover?

Amid the inflation, it has become important for almost every parent to start investing money for their child’s secured future. Every parent aspires to provide their children the best in life. While you strive to provide them a healthy and holistic environment, a lot more planning is involved when it comes to their education and their professional future. Here are some tips to secure your child’s future with a child education plan or a child insurance plan:

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Investing in your child's future:A wise decision & a loving choice
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Start Investing Early

As they say- ‘A good plan today is better than a perfect plan tomorrow’. So, the early you start investing for your child the better it is. Nowadays most parents, or even expecting parents, start saving a small amount of money to secure their child’s future. This way it is better to build a huge corpus with time even with small investments. When you stay invested for over a period of 15 to 20 years this small amount grows into a substantially large corpus. There are a number of child-insurance plans where you can start investing a small amount every month or every year like a LIC Child plan.

Identify Your Child’s Future Financial Needs

While choosing a child insurance plan make sure that you take into consideration your child’s aspirations and interests and then choose a plan that would encompass all the expenses. While selecting a child plan do not forget to factor in inflation. When choosing a child education plan make sure that the plan includes costs of travel, extra-curricular activities, lodging and boarding if you are planning for higher education in an international university. You can use a child education calculator to ascertain the inflation-adjusted amount that you should opt for.

Have Adequate Insurance Cover

Waiting for the right time and delaying the investment is not the right approach if you really want to secure your child’s future. The purpose of investing in child insurance or child education plan is to ensure that your child is not financially impaired and continues to live a life that you have planned for him/her even when you are not there. This is where a child insurance plan helps.  A child plan would serve both insurance and investment purpose. This will help you ensure a secured future for your child is even when you are not there.

All you need to do is start investing early and enjoy the other benefits like pay-outs for every important milestone, death benefit and your peace of mind.

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So, what is a Child Insurance Plan?

A child insurance plan is a perfect combination of investment and insurance under a single plan.  A child plan offers life insurance cover and the amount is paid in lump sum payment at the end of the policy term. Moreover, child plans also provide flexible payouts for every important milestone like your child's education or marriage, etc.

Nobody would want to think about an unfortunate situation like death or getting diagnosed with any life-threatening condition like cancer, kidney failure that may lead to unemployment or even put your life at risk.  But it is always important to safeguard your child’s future from any such unfortunate incident. For example, the LIC Child plan would cover up your child’s future expenses even in your absence.

Why Should You Buy a Child Plan?

The soaring higher education costs have forced almost every parent to look for child education plans that would cover up for higher education fees.

Like every parent, if you also desire for your child to study in one of the best B-schools or to be able to fund the course that your children desire to pursue, then paying off the fees should be the last constraint.

With a child insurance plan, you would be in a position to invest based on your child's aspirations, your current financial status, and other monetary goals. Mostly, a child insurance plan would offer a 10 times life insurance cover of your annual premium. Some child plans also provide partial withdrawal facility. And the best part you get tax exemption on the premium that you pay.

How a child insurance plan will secure your child's future?

  • It is a perfect combination of savings and investment in a single plan
  • Financial cover for every important milestone in your child’s life
  • Safeguards child's future, even after demise the of the parent
  • And it ensures long-term saving habits in a disciplined manner

How to Choose the Right Child Education Plan?

Before you select a child education plan, below are some questions that you can consider:

What Should be the Tenure to Meet your Child’s Career Goals?

Once your child completes his 12th starts you would need to pay for his higher education that can either be M.B.B.S, B.Tech, or any other professional course and after 3 or 4 years there will be MBA.  So, if you start investing when you start is already in school, you would be able to build the desired corpus to fund the course that your child wants to pursue after he clears his 12th examination. Most people invest in 5-year, 10-years, and 15-years child plans. It can further be 20 years and 25years as well.

How Much amount will be Required for my Child’s Higher Education?

The first thing that you need to decide is the amount that will be required for your child’s higher education. The fees of a B.Tech course that costs Rs. 3 lakh now would easily cost more than Rs. 10 lakhs in the next ten years. So, while you make the estimation do factor in inflation. 

Expected fees of select courses over the next few years:

Name of the Course Fees Likely in 5 years (in Rs.) Fees Likely in 10 years Fees Likely in 15 years
B.Tech 16 L 25 L 42 L
M.B.A 30 L 48 L 78 lakhs
M.B.B.S 40 L 60 L < 1 Crore

The figures mentioned above are for illustration purpose only.

You can even take the help of a financial advisor or use a child education online calculator to determine the required corpus.  The basic thumb rule is at least 5 to 10% of your monthly salary in a child education plan.

Will my Family and Child be Secured if I am not around?

This is one of the major reasons why a lot of parents plan to invest in a child insurance plan. You can find some of the best child plans from top life insurance companies India that offer better coverage benefits than other traditional investment plans like fixed deposits that do not solve child-specific purposes.  On the other hand, a good child insurance plan would provide the child with a lump-sum payment on the death of the parent, without discontinuing the policy.  The insurer would continue paying the premium on behalf of the policyholder. The insured would get funds for schooling as well as higher education.

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Over to you

A child’s secured future is one thing that no parent would want to compromise on, and therefore it is important to plan in advance to ensure that your child has a financial backup. You can start to invest early and save in a disciplined manner by investing in a child insurance or education plan. One wise investment that you will start today will help you create an adequate corpus to fulfill your children's ambitions and desires future.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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Insurers Offering Child Plans

Tata AIA

Aditya Birla Sun Life

Bajaj Allianz

Max Life

HDFC Life

ICICI Prudential

Bharti AXA Life

Edelweiss Life

Kotak Life

Future Generali

PNB MetLife

SBI Life

Aviva

Bandhan Life

Canara HSBC

IDBI Federal

IndiaFirst

Pramerica Life

Reliance Life

Sahara Life

Shriram Life

Star Union

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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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