With a plethora of options for child insurance plans in the market, parents find it difficult to select the best child plan. Check out the 5 things which will help you in selecting an ideal child plan.
There is nothing more rewarding than seeing your child grow and make progress every day. However, times have got tough and raising a child is no child’s play today. Both parents face a lot of pressure and strive hard to ensure their child gets a good upbringing and future. Taking this into consideration it is best to take a good insurance plan for your child that will take care of your child’s mounting education expenses and other needs. Let’s understand the 5 things to look for while choosing a child plan.
Your expectation from the plan and the tenure
Preparation for your child’s future should commence as soon he/she comes into this world. Starting early will ensure you are always a step ahead of your child’s needs. Invest in a plan that ensures you get the best return and that your child gets the required fund each time to reach his/her future goals no matter what his situation may be.
The two main needs for which most parents need substantial financial funding is education and child’s wedding. You need to calculate the required funds taking into consideration the year of requirement for the respective milestones. With respect to future needs, don’t just consider funds for academics but also plan for child’s extracurricular activities. With the growing talent competition on TV channels and successful careers in sports, singing, dancing, painting you should not suppress your kid’s talent in other fields by not planning funds for those activities. Who knows your child could be the next Sachin Tendulakar, Sania Mirza, PT Usha, Mary Kom or Arijit Singh. Inflation should also be kept in mind when calculating expenses as the value of INR 10 lakhs today will be obviously lower 10 to 15 years down the line.
Plan should have premium waiver benefit
Although most child plans offer premium waiver benefit as an option or key feature of the base plan. The premium waiver is mostly important as in case of the death of a parent, the policy is protected against financial and income loss. All future premiums get waived off and the policy continues to be active till the entire policy term. This ensures that apart from the death benefit paid, the maturity benefit remains intact for the whole policy period.
Go for equity linked plans if you have a risk appetite
If you have a risk appetite and want your child plan fund to grow then it is recommended to go for equities and consider opting for unit linked child plans for a considerable time frame (at least 10 years and above). Long-term equities tend to give good returns which in return helps your child plan fund grow. In an ideal world, the child plan should offer a balanced mix of debt and growth fund along with risk cover. Look for a child plan which has a system transfer option so the gains in the investments are protected.
Go for an endowment plan if you don’t have a risk appetite
If you don’t like taking risk on your investment and want a child plan with some form of guarantee, you should go for an endowment plan which will give you an adequate cover and ensure protection against volatile market conditions.
Bonus pay out like in Traditional Plans
Check for the bonuses that you will be eligible in the plan. Bonuses start getting accrued after the first year and help in adding to the corpus significantly. Also check for the type of bonus which is linked to your plan. For example, if it is revisionary bonus you can check if it is a simple or compound or if there is cash bonus paid out then what options are allowed with it. All child plans have different features and offerings. Go through the plan details carefully and select the one that meets your needs and will help your child to achieve his life goals.
Recommended Read: Secure Your Child's Future with a Customized Child Plan