It is every parent’s dream to give their children the best of everything, including a world-class education. However, a good education can be rather expensive. This is where a child education plan comes in handy. A great start to figuring out such a grand plan is to invest in a child insurance plan. It will help secure the future of your children financially as well as build a corpus for important milestones in their lives, like a higher education.
Let’s take a look at how a child insurance policy works:
When you buy an insurance plan for your child, you become the policy owner, while your child’s life gets assured. It is a type of insurance plan that builds up funds over time. In case you pass away unexpectedly while the policy is still active, your child will have access to the funds accumulated in the policy, thus ensuring he or she has a secure future.
There are numerous benefits of investing in a child insurance plan. Here are six reasons why you should consider buying one:
- Protection benefit
The main reason to invest in a child insurance plan is to protect your child and secure his or her future in the unfortunate event of you passing away.
- Maturity benefit
Investing in an individual education plan for your child early on ensures that when it’s time for him or her to pursue a further education, the maturity benefit received will be large enough to fulfil all his or her educational needs. This also ensures that no loans have to be taken out.
- Rider benefits
Many children’s insurance plans come with the benefit of add-on riders like a waiver of premium rider, where all future premiums are waived off in case the insured passes away. A few children’s insurance plans also come with an income benefit rider that pays the beneficiary an amount equal to the annual premium at the beginning of every year, till the end of policy’s tenure, if the insured passes away. Depending on your insurance provider, your chosen rider benefits differ.
- Partial withdrawal benefit
A child insurance plan ensures that your child may use the maturity benefits during each milestone of his or her life. Apart from this, it also lets you take out funds from your policy in case of an urgent requirement.
- Tax benefit
All child insurance policies come with a tax exemption on premiums as per the Section 80C of the Income Tax Act. Section 10(10D) of the same act states that any income earned from these policies will also be tax free.
Investment plans for your child
Today, the Indian market has a number of insurance providers that offer customers some fantastic child insurance policies. For instance, Aegon Life offers a plan called the iMaximize that comes with a dual benefit of life coverage and an investment component. The minimum age for this plan is 7 years. The iMaximize plan comes with a choice of two death benefit options—higher of sum assured or fund value; or sum assured, additional savings benefit, and income benefit.
You may also choose between six different types of investments, namely:
- Blue Chip Equity Fund
- Opportunity Fund
- Stable Fund
- Accelerator Fund
- Debt Fund
- Secure Fund
So, to secure the future of your children, choose the plan that suits your needs the most and give the best to them, no matter what.