Mumbai, Nov 20:Life is too short and is full of uncertainties. You can never tell what is going to happen but what you can do is ensure that you take the necessary steps to take care of your family in case of your unfortunate demise. Life insurance is a contract between a policyholder (the insured) and an insurance company. The latter promises to pay the beneficiary a sum of money in exchange for a premium, upon the death of an insured. Young or old, you must invest in a life insurance policy for yourself and your family. If you have children, you can opt for a child plan, a branch of life insurance which caters explicitly to building a safe and secure future for your child. Importance of Investing in Life Insurance
Should I buy life insurance for my child? Yes, absolutely! Apart from being a sensible inclusion in financial planning, investing in life insurance helps to secure yours and your child’s future. As a parent, you would want the best for your child and ensure that his/her future is well-protected and stable, especially in terms of money. Therefore, investing in a life insurance child plan is essential. Every plan comes with its share of benefits and risks. You need to recognize and understand your needs, your child’s needs and accordingly buy a child plan that is well within your financial capacity. This will ensure that it benefits your child in the long run. Types of Child Insurance Plans
#1 Child Endowment Plans
Under this type of child plan, the funds are allocated into multiple debt products. Since this is a low-risk child plan, the returns on investment are nothing big but offer a great deal of security. A child endowment plan is subject to no market risks. Child Endowment Plan lets you also avail tax benefits. #2 Guaranteed Returns Plans
If you choose this child plan, you are guaranteed an assured amount back on completion of the maturity period. This is a safe and assured way to save for your child’s future without including much risk. What’s more, it makes provisions for flexible premiums. Based on your income and liquidity levels, you can choose the amount and mode of premium payments. You can also select the maturity period based on your child’s age and the saving purpose. This makes the process more streamlined and easier for the parent(s) to buy a child plan which is most for them and their children. #3 Market Linked Plans
A Market Linked Child Plan, such as a ULIP (Unit Linked Insurance Plan) is where you buy life insurance and invest in the market under one comprehensive plan. This means that you get the dual benefit of protecting and saving for your child’s future. In this child plan, you choose the premium amount based on your needs and financial capacity. In a ULIP Child Plan, you are also given the option of selecting funds as per your choice. After a certain number of years (lock-in period), you can fully or partially withdraw funds. What is more, premiums paid are deductible from taxable income under Section 80C. The interest earned and maturity amount received is also exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961. Buying a Child Plan
Child plan can help you secure a better future for your child. Child plan or child insurance plan acts as a combination of a life insurance plan and savings plan. As a parent or guardian investing in a child plan, you will be creating a corpus over a long term and to gain profitable returns. You can also pre-define the stages when you will require these returns – child getting into college, getting married, etc. Life insurance ensures that your child’s finances are taken care of by the life cover, in case of the parent/guardian’s unfortunate demise. Conclusion
Children’s Day is here and what better day to give your child the ability to have a financially stable future! Investing in a life insurance policy for child will be one of the best decisions you will be making for your children.
(Disclaimer–Features may vary depending on the regions; subject to change without notice.) (agencies)
Follow our WhatsApp channel
