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Ulip for childs future

How ULIPs can help to save your child’s future

Securing a child's future is every parent's dream. Whether it's about education or marriage, we all look for a good investment plan which will provide fine returns when required. To give their child, the best is every parent’s wish. And to fulfill that wish, they look for all the possible ways. Now, let us tell you there is a way to make your child's future secure. And for these requirements, a child insurance plan is exactly what you need. The plan offers an avenue of investment for your child's future and also guarantees the promised corpus even if the parent dies at an early age.

ULIP

A ULIP plan is a market-linked product that provides the advantage of investment and insurance under a comprehensive plan. A plan linked to the capital market, ULIP, offers flexibility to invest in equity-based or debt in the risk appetite of the investor. Hence, ULIP can be a useful plan to save your child’s future.

Child ULIP

The key feature of a children’s ULIP plan is that it gives individuals a three-pronged benefit, together with insurance coverage, participation in the equity market, disciplined investments. Three benefits mean that the sum assured is given to the nominee child on the sudden demise of the insured parent. The future premium is waived off, and the maturity value would be paid at the time of maturity, making sure that your child’s future dreams are fulfilled.

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Features of a child insurance plan

Now let’s head towards the features of a child insurance plan:

  • Premiums - Paid as a lump sum at the start of the policy term. You may also choose to pay it frequently or for a limited time period. Most Life Insurers offer options such as quarterly, half-yearly, monthly, yearly premium payment modes. The premium amount selected by you determines the sum assured.
  • Sum assured - This is the amount that will be paid out in case of the investor’s sudden yet unfortunate demise. Most of the time, the sum assured should be above ten times the current gross income of the policyholder.
  • Maturity - The maturity amount should be chosen with a vision of the future. Let’s suppose your child is 8 years old, and his policy will get matured in 10 years’ time, then you must keep in mind the factors like inflation and interest rates. But, if you fail to consider these factors, the funds received may fall short of the requirements in the near future. Also, plans like single premium plans may not provide appropriate maturity features and benefits, so we advise you to check the policy properly before finally applying for it.
  • Policy Tenure - Mostly meant for children up to the age of 18-24 years. Here, tenures can be selected from birth until the child reaches a predefined age. The insured is not to be over 70 years at the time of policy’s maturity.
  • Segmented pay-outs - With child life insurance plans, you can select if the child will get paid as a lump sum or in annual installments. Doing this will help in paying dues such as college fees, higher education expenses, marriage expenses, or appropriate funds for a start-up.
  • Premium Waiver Benefit - Another feature of a child insurance plan is that premium waivers become applicable when the insured dies in a specified duration of time. In this situation, the sum assured will be paid out to the beneficiary, while the premium for the remaining term will be paid by the insurance company. At the end of the policy tenure, the maturity amount will be provided as detailed in the policy document. In case a premium waiver is not provided with the plan, then you should go for a premium waiver rider.
  • Riders - Specific riders are available that provide you much more out of the life insurance policy. The riders are available in three main categories - critical illness, premium waiver, and accidental death or disability. The premium waiver may already be attached with your policy, so we recommend you to check the documents properly. The critical illness rider offers coverage for a set of predefined critical illnesses, while accidental death and disability riders pay the extra sum assured in case of unfortunate accidents that cause partial or complete disability or death of the policyholder.
  • Partial Withdrawal Clause - A partial withdrawal clause allows the insured to make a partial withdrawal if there is some kind of financial emergency. ULIPs come with the option of partial liquidity.
  • Choice of Funds - A child insurance policy such as a ULIP scheme gives the insured the opportunity to select the choice of investment funds, be it debt, equity, hybrid, or money market. He/she also has an option of a Dynamic Fund Allocation and Systematic Transfer Plan.

Now that you are well-aware of the features of a child insurance plan let us tell you about its benefits. Here, have a look at the following:

  • Flexible disbursing of funds on maturity or in case of unfortunate accidental death of the insured.
  • Premium waivers in case of the sudden demise of the policyholder within the policy collection period.
  • Tax benefits under various sections of the Income Tax Act, 1961.
  • Hassle-free premium payment options.
  • Funds available on the death of the policyholder if the policy has reached maturity or even before the policy is matured.

How to get the Best Child Insurance Plan

For some of you wondering how to get the best child insurance plan, you must give a read to the following points:

Start Early - This is the most common as well as an effective step. Starting early will help you build a bigger corpus for your child’s future. Most of the policies start providing maturity benefits by the time the child reaches the age of 18 years. For instance, starting a child plan when the child is one year old is a far better option than investing when the child is ten years old. In the second case, the maturity payout will be delayed by the time your child is ready for college, and then you may have to take an education loan.

Economic Variables - A child insurance plan is a scheme with a long investment vision. You need to consider multiple economic variables like the rising cost of living and education, inflation, etc. This will help you analyze the actual cost of your child’s future requirements. Also, it can change drastically if the child wishes to study abroad where the cost of education is twice as compared to India.

Terms and Conditions - You must read and understand every aspect of the child plan mentioned in the terms and conditions and policy documents very carefully. This will help you understand how a particular plan works and will give you a deep insight into the benefits and returns associated with the policy. You can also compare online the various terms and conditions of different policies so that you invest in the best policy.

Premium Waiver Benefit – You can avail of it as a rider option as well. Most of the insurers waive off any future premiums in case of the death of the parent during the premium paying tenure. This does not have an impact on the policy as the child will get full benefits on maturity.

In short,

ULIPs can be your savior in terms of securing your child's future. Buying a child insurance policy is as important as taking the best care of your little one. We at Coverfox advise you to compare and then invest. For more details about the child insurance plans, you can also visit www.coverfox.com. We ensure to provide you the best experience.

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