help create a corpus for crucial stages in the child’s life
Planning for child's future is incomplete without a good child insurance plan. Child plans are advantageous for both you and your kids. It secures your kid's future so s/he gets good life even when you are not with them. Taking the best child plan, you complete your responsibility as a parent by providing them security for higher education and monitory support in future.
With the growth of competition, there are a host of products available to choose from. However, it has become very subjective to decide on which one you need. Child insurance having following features is considered the best child plan:
A child plan should serve as an instrument of saving for future uncertainties. The saved money helps in meeting important financial requirements of your child.
A child Policy covers Risk related to child education, health and life. It provides protection to your child’s future after you. It provides fixed income and insurance Coverage to you or your child.
Child plans are capable of generating higher returns than other traditional investment methods like fixed deposits and NSCs. You can get very high returns on child plan if you are willing to take high risk.
The amount of Premium paid for insurance is Deductible in calculation of tax liability as per sec 80C of the Indian Income Tax Act.
In event of death, there is an option of Waiver of premium that enables the beneficiaries to get waiver from the payment of further premium. However, for getting this benefit, the Insured must have opted for this feature at the time of taking policy.
Child plans are designed keeping in view different requirements of the customers. Basically, the following three types of child plans are available in the market:
Endowment plans are traditional insurance plans in which life of the parent is insured. Like other Term plans, the rate of return on this plan is also very low. In the event of death, remaining premium is waived off till maturity. When the policy matures, a lump sum amount of sum Assured is paid to the beneficiaries along with bonus.
In this policy, life of child is insured. A definite amount of premium is paid for a fixed tenure and if any unfortunate event happens during the tenure, the whole amount is paid at maturity.
This insurance plans are linked with mutual fund units. In it, the life insured is parent on whose death; beneficiaries receive a particular amount of Sum Assured as annual payment. Returns on such plan are based on risk you are willing to take. The premium paid is invested in equities and debt market based on your risk factor. The higher risk means more investment in equities and lower risks will create higher deposits in debt instruments.
Now, when you have got an idea about what a child plan is, you can easily choose a child plan for your kid. A complete analysis is required before getting the best child plan. The analysis is done considering following points:
The benefits of a child plan depend from product to product. It is advised to choose the plan which provides you with maximum benefits.
When any investment is done, cost is always considered. The best child policy is one which has least possible cost. Always take a child policy which is cost effective.
Along with the features of your child policy, you can get some features as an add-on to your policy. This way you can get your child plan custom made. For instance, you can add child health plan to your child insurance so as to get a complete protection in a single child policy.
It will be needless to say that the best plan should provide highest returns. However, in an urge to get high returns, you shouldn’t overlook risk. Always take calculative risk so that it doesn’t affect you much.