What Are The Different Types Of Child Insurance Plans?

Do you get sleepless nights thinking about the rising cost of higher education? Are you concerned about your child's financial security in your absence? Is there any better gift for your child than a pledge of a bright and secure future? These questions can make any parent restless until you start proper planning to secure your child's future at the right time. Child plans are a simple and unique way to do financial planning and let your child soar high and fulfill his dreams. 

What are child insurance plans?

A child insurance plan is a simple way to create a corpus for your child's future financial needs. As a responsible parent, we all make our savings to create a corpus that will be useful in future fund requirements such as higher education or marriage costs. But what if there's a prolonged illness or an untimely death of a parent? 

Are you prepared for an eventuality like this? In such a case, what would happen to your child's dream? It is in these situations that the child insurance plan comes into play. The child insurance plan is a combination of an investment product with a guarantee of the promised predetermined corpus in the event of a parent's death. 

What are the different types of Child Insurance Plans?

There are different types of child insurance plans; these are:

• Child Endowment plans

The funds are invested in multiple debt products. Here, the returns are not significant but are guaranteed and tax-free. 

• Unit linked insurance plans.

The ULIPs based plans invest money in market-linked instruments. The returns are higher in comparison to debt instruments and is an ideal choice for long period investments (10-15 years). 

What are the essential features of child insurance plans?

Different features of the child insurance plan are: 

• Premium payment options

An investor can pay the premium either in lump-sum at the beginning of the policy or at regular intervals according to convenience. 

• Guaranteed sum assurance

In the event of the death of the insured parent, the nominee gets the full assured sum. 

• Maturity amount

An investor should select the maturity amount and period after considering factors like inflation, rising expenses, etc. It will help in the right selection of the assured maturity amount and tenure. 

• Premium waiver facility

In the case of the insured parent's untimely death, future premium payment is waived of without affecting the plan's maturity value. The insurer pays the future premium while the beneficiary gets the assured sum at the end of the maturity period. 

• Segmented payout

The investor can decide if the payment should be made in lump-sum or in installments to pay for different expenses at an appropriate time. 

• Different riders for convenience

The insurance policy comes with different riders to help the policyholder under challenging situations. The three basic categories are:

• Critical illness (premium waiver)
• Death (premium waiver, additional sum)
• Disability (premium waiver, additional sum)
• Partial withdrawal

In case of an emergency, an investor can make a partial withdrawal to meet the necessary expenditure. 

Conclusion

As a parent, you only want to make the correct choice for your children. Be it education or other requirements; you don't make any compromise on their well-being. This is why the child insurance plan is ideal for securing your kids' future financial needs. It provides money at the time of maturity. Still, in case of an unfortunate event, your child will not be deprived to follow his dreams due to fund shortage.