Child Insurance.. A Must !!
From the day a child enters a mothers womb, we start protecting the child
. We ensure that we gave our best to the child. We give the best nutrition; find the best school, make big plans for the future. But most of us forget that in todays fast pace, expensive life, dreams are not so easy to realize. And lets not forget the inevitability of death. To ensure that our child gets a good quality life and any possible opportunity realizes his /her dreams, child insurance is must.Saving in banks or random investments or fixed deposits will not be enough for the expenses in coming years. Do backward calculations, keeping in mind the inflation rate, of how much will it cost for your childs education or marriage. Then see if your bank savings will be able to give you that amount. The answer will be NO as bank interests do not match the ever growing inflation rates. And savings continue only till you are alive. What happens if you die? This is where a child insurance plan becomes a sensible option.
Child Insurance Plans have an inbuilt term cover, which is a sum assured incase of the death of the parent/grandparent/guardian. That means that incase of the death of the insurer, the childs policy is secure. In such a case, the child would receive the Sum Assured of the policy plus any bonus / guaranteed additions and participating profits if any or the accrued value of the investments at a pre-determined age. This money would be payable irrespective of the proposer (parent / grandparent / guardian) surviving the policy term.
Child insurance plans insure that you have the required sums at the important milestones of your stages of your childs life. Along with an assured sum on maturity, you also have an option of withdrawing money at regular fixed intervals. You also get the bonus / guaranteed additions and participating profit, if any or the accrued value of the investment, whichever is higher.
Two types of child insurance plans are available these days. One is Traditional child plans which have a low risk factor as the funds here are mainly invested in government securities and corporate bonds. Second is Unit Linked Insurance plans where the funds are invested between equity and debt markets. Though these are little more risky, the time duration of an average policy is about 20-25 years, which decreases the risk exposure. And these investments can make a big difference the corpus you are building for your childs future.
Things to be kept in Mind
Always insure that that your child insurance plan term cover is 7 to 10 times the annual income of the bread earner of the family.
Always add waiver of premium rider to your policy. This rider will add to your premium but its worth it. The reason being that in case you not able to pay the premiumdue to loss of employment due to injury or accident which renders the person completely disabled, the policy will not lapse. The child will get the sum assured as per the policy.
Child Insurance Plans are must buys that every responsible parent should invest in for their child. Whatever the goal; education, marriage or setting up a business, this will ensure you can keep your promises to children.
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