While you want to choose the best Child Plan to safeguard your child's future, you also must be considerate about how much money you want to invest in that child plan, which can take care of all the needs.
There are premiums that you need to pay to buy a child plan, and there are certain factors that affect that premium value.
Here is a quick run through those:
Ask yourself the following questions before buying a child plan, these will directly affect the premium cost.
- What are the key years of your child's life where substantial funds will be required?
- What is the lump-sum required at those stages?
- Based on those requirements, how much can you save, or invest as premiums towards child plans?
- What kind of a child investment plan is the best to meet key phase requirements such as higher education and marriage?
- What kind of life assurance you want for your child in your presence, and your absence?
Based on these questions, you may want to invest in following types of Child Plans, and find out how much premium you need to pay:
1) Money Back Policies offer the facility to withdraw money at regular intervals. Higher premiums.
2) ULIPs are market related insurance plans where in the child will receive the sum assured as a lump sum in case the parent dies and the future premiums are waived off. Medium to higher premiums.
3) Endowment Policies are simple policies based on debt investments and returns might not be too high. Lower premiums.
These plans come with basic features with basic premium values to be paid.
If you need to enhance the basic plans, you need to add riders. Riders are special benefits which one may opt at the time of purchasing the policy.
Listed below are some of the Riders available under a Child Plan which directly affect the premium:
Waiver of Premium Benefit Rider
This rider comes at extra premium and allows the plan to continue, without burdening the child for paying the balance premiums, in case the insured parent dies
Accidental Death Benefit Rider
A little premium is charged to buy this rider, under which, the child receives additional rider sum assured if parent dies in an accident.
Accidental Permanent Total/ Partial Disability Benefit Rider
If the parent suffers permanent or partial disability due to an accident, the child becomes eligible to receive a lump sum amount, which is equivalent to the rider sum assured. Again, little extra premium is to be paid for this additional benefit.
Critical Illness Benefit Rider
If the parent suffers from a critical disease like Heart Attack, Cancer, Coronary Artery By-pass Graft Surgery (CABG), Stroke, and Kidney failure, child receives an additional rider sum assured. A small to large premium is charged, based on the age of the parent.
Income Benefit Rider
This rider makes the child eligible to receive 1% of the rider sum assured, every month, in following occurrences:
i) Death of the parent.
ii) Permanent disability of the parent due to an accident.
iii) Parent being diagnosed with any of the critical illnesses specified in the policy.
A small premium is charged to get the benefits of this rider.
With extra premium costs, the child plan is enhanced to get extra benefits. Analyse at easypolicy.com and make the best suited choice.