help create a corpus for crucial stages in the child’s life
In this age of growing consumerism and material display of wealth, it is no easy job to bring up children without saving sufficiently for them. With increasing rate of Inflation and a social demand for higher educational qualification as well as quality education, leading a happy life and providing sufficiently for children is no child’s play!
Though many people start saving for their children when they are born, not many invest wisely to secure their child’s future. It is common for parents to invest in fixed deposits, traditional insurance policies, or in public provident fund for their children. There are not many who invest in child insurance plans that provide for the children’s education in case of the parent’s demise.
And there are not many parents who save for their children’s future at an early stage of child’s life, and get anxious and even paranoid about having to face ever increasing educational expenditure. And when things take a wrong turn, with a parent’s untimely death, it is extremely difficult for a child to grow comfortably without having to worry about finances.
Is it Term plan or child plan? There is no disputing the fact that term plan is a great option where Premium rates are low; and the returns in the form of a lump sum amount, especially in the case of untimely death, is useful beyond words. But the Policy ceases to exist after that. In case of a child insurance plan, the policy does not end with the provision a lump sum amount; rather, the policy continues to exist after the policyholder’s death.
Premium Waiver benefit: In the event of untimely death of the parent, All future premiums are waived and the company continues with investments in the child plan. The child gets the money from time to time as per the terms of the policy.
Tax Benefits: Most companies have child insurance plans. Some plans are linked to the equities market and some are traditional. One can avail of Tax Benefit for the premium paid under section 80(C) and tax exemption under section 10 (10D) for any income from market linked plans.
Child plans do come with a higher cost, but the cost is worth mainly because of the premium waiver benefit. The need for money for a child’s education is not predictable – it increases or a decrease depending at what stage of schooling or college the child is in. Child insurance plans can be customized to suit the varying expenses.
Needless to say, like any other investment plan it is best to invest early in a child insurance plan for the investment to grow. It is also necessary to take into account adequate Coverage amount so that inflationary considerations are taken into account as well.