All parents want to financially secure their children, irrespective of whether anything happens to them during their working years. A sudden death of a parent or if both parents pass away- can you imagine the scenario that a child has to deal with? At the same time, financial worries remain regarding paying for the child’s higher education and other costs. This is where child plans can come in really handy for your portfolio. They can be excellent long-term investments, enabling you to save for your child’s future expenses while safeguarding him/her against the uncertainties of life. Why not gain mental peace with an intelligent investment? Here’s looking at how these plans are suitable for your needs.
Why Select Child Plans?
Choosing child plans is a strategic move with a view towards safeguarding your child financially against any unfortunate event that happens during your working years. Here is a closer look at some of the major benefits that these plans offer.
- Life coverage is one of the key aspects of these policies. You can ensure that your child stays protected in case of your sudden demise, by choosing a high life coverage amount. The insurance company will pay this amount as a lump sum or even through periodic payouts (if the option to choose is available). It ensures that your child gets ample financial support during their formative years, particularly for education and essential expenses, even when you are not around.
- Another advantage is that there is an investment component. You can choose various instruments to invest in, and a part of your premium will be allocated to them. As a result, you can build wealth for the future to meet your child’s higher education and other expenses. In case of your demise, the insurer will pay both the sum assured and the investment value, whichever is more, to the nominee, depending on the policy terms.
- Some plans also offer periodic withdrawals, particularly Unit-Linked Insurance Plans (ULIPs), which allow partial withdrawals after a specified lock-in period. This will help you get helpful financial support at strategic intervals to take care of your child’s educational costs at various stages of life.
- If you buy the policy at a younger age, then the maturity benefit will be available just when your child is about to pursue higher education. This will help you meet the costs without any worries. The maturity amount is paid to the nominee (child) upon policy completion as per the policy terms.
- Many of these plans have premium waiver benefits, ensuring that the plan continues without the child having to pay the premiums in case of the parent’s demise during the policy period. This feature is either inbuilt or available as an optional rider, depending on the insurer and the specific policy.
- The premiums that you pay will also be tax-deductible under Section 80C, provided that the sum assured is at least ten times the annual premium paid. Additionally, maturity benefits are tax-free under Section 10(10D) only if the policy meets the prescribed conditions under tax laws.
Secure Your Child Today with the Right Child Plan
Check available child plans from leading insurers and make your choice accordingly. Examine the plan features, investment options, tenure, terms, premium amount, and riders carefully before finalising your decision. It is also best to go with a trusted insurance company to avoid future hassles.