What Is the Best Life Insurance You Can Get for Your Child?
A parent wants the best for their child. Along with giving them a healthy upbringing, you would also want them to be able to fulfill their dreams, reach their milestones at the right time, and lead a successful life. Dreams can be achieved by obtaining the right education and having the right amount of resources at one’s disposal. As a parent, you can ensure this by opting for a good child insurance plan. These plans are designed to provide adequate financial cover to your child when they reach the right age.
Ideally, these plans are bought when your child is very young, so that by the time they are ready to attend college or pursue other paths, you would have amassed a large corpus. Let’s look at what an ideal child insurance policy should look like.
Features to ensure in a child insurance plan
A high sum assured
The child plan you chooseshould have a high sum assured. Inflation is increasing at an alarming rate. By the time your child turns 17 or 18, the rates of education and other aspects would have risen even more. Furthermore, your child may want to pursue education abroad or may want to take an unconventional path that may require a large amount of money. Lack of finances should not deter your child from following their passions and succeeding in them. Therefore, remember to choose a plan that offers guaranteed maturity benefits and guaranteed additions.
You can use a life insurance premium calculator to get an estimate of the amount you will have to invest regularly to attain the goal you want.
The correct payout option
There are usually two payout options in a life insurance policy: lump-sum payout and installment-based payout. The former allows your child to receive the entire sum assured at once, while the latter pays the sum assured in regular instalments over a period of time, such as three, five, or seven years. In the case of children, an installment- based payout is recommended, as they may not have the necessary know-how of maintaining large amounts of money. Furthermore, college fees, rent for accommodation, bills for monthly expenses, and so on can be better managed with regular payouts.
Substantial returns on your investment
There are many kinds of life insurance products in the market when it comes to insuring your child’s future. Depending on your risk appetite, you may want to choose a ULIP plan which can lead to higher returns but is fraught with risks related to market performance as well. Or, you may want to stick with an endowment plan that offers assured savings at the end of the policy term and is relatively risk-free. A life insurance premium calculator, a child plan calculator, or even a ULIP plan calculator, can aid you in estimating the returns on certain kinds of investments.
An adequate number of riders
Unfortunate circumstances come in a variety of ways. When you are struck with one, your child should not be bereft of a bright future simply because the terms and conditions of the policy were not met. Therefore, when you buy a child insurance plan, do consider opting for the critical illness rider, accidental death benefit rider, accidental permanent total/partial disability benefit rider.
Why should you get a child insurance plan
Your child’s future is secure
In your absence, a child plan will ensure that your child continues to reap the benefits of your financial planning and thrive in their life.
The premiums are put to good use
If you pass away due to untimely events, your loved ones get the life cover that allows them to lead a life free from financial worries. And if you survive the maturity of the policy, you get to enjoy the maturity benefit payout.
Tax-saving is attained
As per prevalent tax laws, tax deductions can be claimed on the premiums paid against your child insurance plan. Furthermore, the death benefit payout and the maturity benefit payout are exempted from tax as well.
Children often have big dreams. By ensuring their future with the right kind of life insurance policy, you can bring them a step forward towards achieving their dreams.