As a parent, you have a huge responsibility to secure your child’s future. This includes making sure they are able to achieve every milestone and aspiration without having to compromise on their preferences. However, with rising inflation, tuition fees, and general expenses, this can be tough to do so. You will need to ensure that you have a substantial fund so that your child, the most important aspect of your life, can have a brighter future. Buying a child insurance plan is one of the best ways a parent can ensure their child’s long-term stability and promising future considering the fact it comes with both investment and insurance elements. It lets you save enough money to safeguard your child’s future which later on can be used for important milestones such as higher education and marriage on the other hand, it also provides life insurance coverage to the policyholder which can fulfill all of their aspirations without depleting your savings in your absence. Does it mean it doesn’t make any sense to buy term insurance? Terms insurance plans are the best way to provide financial protection to your family. In Certain aspects, child insurance plan have an edge which we are going to discuss in this article below.
Let’s understand Child Insurance Plan in Depth
In simple words, it is the parent that owns the plan and their child is the beneficiary. Major aspects of the child insurance plan are:
- Death Benefit: You want to ensure that your child’s aspirations are not jeopardized. One distinguishing feature of a child insurance plan is that the policy is not terminated in the event of the life insured’s death. The insurer will waive all future premiums till maturity. If you die within the policy term as a result of an unfortunate incident, your child is entitled to the death benefits. The death benefit includes the sum assured and any earned incentives. If the child is a minor, the death benefit cover will be transferred to the appointed person (as chosen by you at policy purchase). They are responsible for keeping the money safe until the child reaches the age of 18.
- Maturity Benefit: The maturity benefit is essentially the sum assured, plus any accrued incentives. Remember that bonuses will only be given if the policy is a participating one and this isn’t the case if you buy term insurance because in the latter one, your child or nominee will only get the sum assured after the demise of the policyholder. Only accrued bonuses may be paid, depending on the plan the policyholder has chosen. The policyholder is eligible for the maturity benefit and may be paid in the form of assured payouts, lump sum payouts, or a combination of the two.
- Payout Customisation: You can tailor the payouts to your child’s needs. This could be –
- Assured payouts: It is a specified proportion of the sum assured that is paid annually or biannually throughout the benefit period. The plan you choose at the time of buying a child insurance plan helps you choose the time and frequency of benefit payments to be made. Some plans allow you to get benefits only after a few years have passed after the end of the premium payment term. Customers usually choose the periodic payment mode as it can cover regular expenses such as admission fees, extracurricular activities, and so on – in order to accomplish the child’s educational goals.
- Lump sum amount, plus any accrued bonuses: Bonuses will only be issued if you have a participating child plan. This is payable when the insurance matures or as a death benefit.
- Important: The customization of payout options differs by insurance and child insurance plan they have. Make sure you read the policy wordings attentively.
- Other customizations based on your preferences and the child’s future ambitions: The child insurance plan can be tailored to the goals you have set for your child’s future. They offer choices for rolling premium payment terms, rolling policy terms, and payouts across numerous benefit periods. This ensures that your child’s important milestones are covered.
- A policy’s rolling premium payment term allows you to pay off your premiums over a number of years, giving you more freedom. You can choose the most convenient choice based on your financial situation and milestones. For example, imagine the plan allows you to choose a period ranging from 8 to 32 years. You can select a payment term of 8, 9, 10, 11, or more years.
- Enhanced coverage: When you acquire the policy, you have the option to increase the coverage amount by 50%, 100%, or 200%. This is optional and requires an additional premium payment. If you die away within the policy term, the additional sum assured will be paid to your nominee immediately. They will have the option of receiving the sum assured in a lump sum or in a combination of lump sum and annual/monthly income.
So we are saying,
It is evident that as a parent, your children are the most essential aspect of your life. They are the cornerstone of your happiest memories. With that in mind, it is critical to thoroughly understand the numerous alternatives available for child insurance. Whether you buy term insurance or child insurance, the idea is to select the best one that matches your and your child’s needs. Make sure the child plan is tailored to your child’s future needs and ambitions, even when you are not present.