As parents, there is nothing more joyous and blissful than holding your new born baby in your hands, admiring their innocence. Almost all the parents often plan to guard their new born babies from harm. Ensuring a financially secure future is very much a part of this promise.
Often parents are worried about their children’s future education and are ready to forgo their own leisure expenses if required. This is where child insurance plan comes to your rescue. Buying child insurance plan makes sure that your kids’ future is financially secured irrespective of all unwarranted situations and incidences of life.
Quite expectedly, a large number of parents invest in child insurance covers to cater to the financial requirements of their children’s future. The core purpose of buying a child insurance plan is to make sure that your kids are secured financially, even when you are not around.
But do you know what should you keep in mind when buying a child insurance plan? If you’re nodding your head in a NO, simply read to get acquainted with 5 things you must keep in mind when buying a child plan.
Educational Cost and Inflation Rate - When mulling over the sum assured, you must take the estimated cost of your kids’ education with respect to the inflation rate very carefully. For example, an MBA degree at present costs between Rs. 12 lakhs and 15 lakhs in a premier university/institute and the current inflation rate is 2.18%. Now, keeping the current inflation rate in mind, you will need to carefully calculate how much would your children need for their MBA education, 10-15 years down the line. Ideally, you must go for a sum assured that is 10 times your current earnings.
Plan Tenure - When buying a child insurance plan, it is very crucial to decide the tenure of the plan. For example, if your kid is aged 8 years, he would need at least 8-10 years to make up his mind about the field of education he wishes to pursue. And then, you will need money to provide financial assistance to help him pursue his dreams and goals. Now keeping this in mind, you will need to choose a plan with at least 10 years of maturity period.
In case you end up choosing a short term plan, you may be faced with a cash crunch as you will require funds before the maturity of the policy. Therefore, it remains crucial to decide the term of the policy with respect to your child’s present age.
Partial Withdrawals – Think about a scenario where you end up requiring funds before the maturity date of the child insurance plan. In such events, the partial withdrawal clause may come to your rescue. Therefore, it makes sense to carefully check if your intended child insurance plan has a partial withdrawal clause or not. We are sure you will agree that it becomes easier to manage the ever-so-growing educational cost of children if you could withdraw money at fixed, regular intervals.
Riders - A rider is a supplementary benefit offered by life insurance companies to help policy holders strengthen their existing cover. There is an extra charge to get a rider added to your existing cover. But before you invest into riders, you must seek out detailed information about them. Here are a few riders that are usually offered with popular child insurance plans:
- Premium Waiver Rider – A large number of life insurance companies offer an inbuilt premium rider with child insurance plans, these days. In the event of the demise of the policy holder, all the outstanding premium payments are waived off and the beneficiary is entitled to receive the benefits after the maturity of the policy. It is suggested to add the premium waiver rider with your child insurance plan.
- Death Rider - In case of the unfortunate death of the insured, the beneficiary receives a lump sum amount from the insurer. The death rider makes sure that the procedure does not trail off because of any unfortunate events.
- Other Riders – A host of other riders are available with the popular child insurance plans. Some of the most popular ones are accident benefit, income benefit, and critical illness riders. Different riders are offered by different life insurance companies. And it makes sense for the proposers to get acquainted to these riders when buying a child insurance plan.
Comparison of Plans – In order to zero in on the best child insurance plan, you must be heedful of carefully comparing different plans online. It is seamless, paperless, convenient and hassle-free process. Different sites such as policybazaar.com also offer a 24x7 assistance to lend you a helping hand, clear all your doubts and apprehensions. Comparing and purchasing policy online helps you save time that’s otherwise wasted when visiting the insurance company in person or looking out for an insurance expert. You can also download child plan brochures from the official websites of the insurance companies.
To Sum it Up!
As proud parents, buying a comprehensive child insurance plan is one of the best things you can gift to your new born babies. Child insurance plans help you realize your dreams of not letting any unanticipated eventualities detriment the future of your child. But, before you jump into action and buy a child plan, spare a few minutes of your time and carefully consider what we have mentioned above. This will help you save a lot of time and money, and will help you ensure the best insurance plan for your child.
You may also like to read: Sukanya Samriddhi Yojana for Girl Child by the Govt of India
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