Be a Responsible Parent by Choosing the Best Child Insurance Plan
by Mihir Shah Baja AllianzIt has been observed that most parents start planning for the
child’s future quite late. Their focus on meeting the rearing priorities
usually leads to overlooking their financial planning. To reap the benefits of
financial investments, it is always advisable to opt for financial planning for
child’s future during the child’s formative years (3-8 years) to ensure ready
sufficient funds when the child is ready to embark on a career. Given the
rising costs of school fees, this is a significant moment of truth for today’s
parents. The earlier they start planning and investing, the longer is the
investment period and better the returns.
There is a bewildering range of choices available today in child
insurance plan market. So, what do parents do? Parents must choose child
insurance plans that are designed to serve the sense of responsibility that
sets in new parents about giving the best to their child’s needs. If chosen
well, a child plan is a solid long-term vehicle to manage the future of a
child’s different milestones. These plans inculcate a sense of discipline among
the parents to invest systematically over the long-term. These investments can
be made in funds that can earn returns that match the escalating costs of
education. Finally, these plans have options that protect the child’s future
plans in the unfortunate event of death of the parents.
So, how should you choose an insurance plan for your child’s
future? I will offer you four simple tips.
·
Start
planning and invest for your child’s future as early as possible : Insurance companies offer plans with
maturity benefits structured to coincide with the child attaining 18 yrs or
‘timed’ release of payouts at critical lifestage from 18 yrs onwards. These
plans offer a long horizon to invest which helps you systematically build the
corpus. So, quantify your goals with a certified financial planner and choose a
plan that encourages such long-term behaviour.
·
Invest
in plans that offer premium waiver benefit: Most
child plans offer premium waiver benefit either as an option or as an essential
feature in the main plan. What premium waiver does is this – in case of the
death of the parent, the insurer waives off future premiums to be paid while
the insurer continues to fund the insurance policy till the maturity. This
makes sure that the maturity benefit that was set for a certain age remains
intact as planned in addition to the death benefit paid.
·
Choose
a plan that offers a mix of investment options and adequate risk cover: Make
sure you invest in a child plan which offers a balanced mix of growth &
debt funds and option of risk cover. Empirically, equities give the best
returns in the long run. Make sure that insurance plan that you choose offers
you the right mix of capital protection and growth. Also, choose a plan that
has the system transfer option to make sure your gains in the investment are
protected. Lastly, take adequate risk cover (atleast twenty times the annual
premium) to ensure that the death benefit is a substantial lumpsum that can
help your family in case of your demise.
·
Read
the product brochure and understand the costs of the product:
Insurers lay out the charges that the customer needs to pay for the policy
clearly in the product brochure. Compare the products available in the market
on their charges, the reputation of the insurer, claim settlement ratios
(available on the websites), flexibility offered and their service quality
perception.
Buying a best child insurance plan is a significant step in securing your
child’s future. I suggest you make it a high involvement purchase by
researching the products in the market, probing the insurance agent on the
features, charges and past performance and satisfying yourself with evidence on
every aspect of the product. Do this and your child will think of you as smart
parents twenty years from now. That should make it worth it.
Source: http://blog.hdfclife.com/best-child-insurance-plan-532360#
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Created on Dec 31st 1969 18:00. Viewed 0 times.