Why Child Insurance Plans are Essential

by Roma Sharma adviser

Contrary to the name, Child Insurance Plans are meant for parents. As a parent, you want to ensure your child is safe and secure, even when you are not around. According to the National Crime Records Bureau, an Indian dies in an accident every 90 seconds. A lot of them obviously are parents, which makes it necessary that you have a plan to protect your children.

What is a Child Insurance Plan?

A Child Insurance Plan is both an insurance plan, as well as a saving and investment plan. A Child Insurance Plan offers the dual benefit of savings/investment and protection. In this, the parent availing the policy is the life assured and the child is the nominee. In case of unfortunate demise of the insured parent during the policy period, the nominee child gets the sum assured. If the child is a minor, the appointee receives the sum assured. The name of appointee is specified by the policyholder at the time of signing up for the policy.

Child plans with ‘investment’ feature gives periodic payouts, which can be aligned to the crucial stages in the career development of the child. Fundamentally, such plans are unit linked insurance plans. In Unit linked insurance plans, or ULIPs as they are popularly called, a part of the premium paid is allocated for providing life insurance cover and the other part is invested. The policyholder can choose from various funds in which they would prefer to get their money invested. These funds have varying levels of risks and returns.

Basis policyholder’s risk appetite, he/she can choose funds. The funds are managed by fund managers.

The policyholder will get returns basis the performance of funds.

A child plan that helps you ‘save’ over a long period is fundamentally a variant of endowment plan. In such plans, a part of premium is allocated for providing life insurance cover and the other part is used for long term savings. Guaranteed periodic payouts are received at fixed intervals which can be aligned to important points of time in the career development of your child. The payouts also include bonuses earned by the company. In case of untimely demise of the policyholder, the sum assured with accrued bonuses is provided to the nominee.

Do you need a Child Insurance Plan?

Becoming a parent is an indescribable feeling. When you first hold your baby in your hands, an innate feeling of protection arises. This is someone you will take care of, for the rest of their life. You only want what’s best for your child.

This is where a Child Insurance Plan comes to your rescue. Child Plans ensure a safe and secure future for your child, even if you're not around.

While investing in a Child Insurance Plan, keep in mind that the investment planning involved is long-term. You should consider the increasing inflation rate, and the number of years before choosing the sum assured. It is important that you plan systematically. Child Plans are specifically structured to meet any and every need your child might have in the future. Whether it’s education, health, or security, in today’s fluctuating economy, a Child Plan is essential for your child’s safe and secure future.

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Created on Jan 17th 2018 01:11. Viewed 604 times.

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