As per the research conducted by the National Sample Survey Office (NSSO), the average yearly spending for education beginning from primary level to post-graduation and other higher studies has increased massively by 175% between 2008 and 2014.
The year expenditure regarding professional and technical related courses has also seen a whopping jump of 96%. The cost includes – tuition fees, course books, transportation, coaching, and other education-related expenses.
And, if your child wishes to move abroad for further studies, it can be a bit more pricey deal. According to Prateek Mehta, Co-Founder of Scripbox, the course fees in reputed universities like Ivy League, United States, can exceed $50,000. And with the growing cost of studies and other things included such as – course books, fees, accommodation, and other related expenses, the price now will be more than $70,000.
This blog will help in understanding,
- What is a child protection plan?
- Benefits of child insurance
- Factors to consider in a child insurance plan
- Best child insurance plan in India
An open announcement to all the responsible parents reading this blog; if you want to secure your child’s future, then continue to read this insightful content.
What is a Child Insurance Plan?
Purchasing a child insurance plan is equivalent to investing in a secure monetary bubble for your children so that they can take successful steps for their milestones without compromising on their lifestyle or anything.
Child insurance is a wise amalgamation of life insurance and investment. Parents use this insurance mechanism to help their children achieve the best of their long-term objectives, such as higher education and marriage.
While you are developing the corpus to achieve the ambitions as mentioned earlier for your child, an insurance plan serves as a financial cushion for the children if the life insured meets with an untimely death.
One of the best perks of owning a child insurance plan is that even after your death, the insurance company will take care of your child’s financial needs with the help of maturity benefits under the child insurance plan. The maturity benefit is given to the beneficiary (child) when the parents no longer fulfil their dreams.
Moreover, all the future premiums are waived. Doesn’t child insurance look like a mandate in your kitty of essentials?
Benefits of Child Insurance Plan
After going through a detailed definition of a child insurance plan, let us understand the importance and benefits of owning a child insurance plan, and they are as follows:
Rising Education Inflation: With rising education costs and inflation shooting up to 12%, do you think you have it all covered if your child demands that they want to go to London to pursue MBA?
If you belong to a middle class or even upper-middle-class, your hands might be tied for such a situation because this situation would lead to immense cash flow. After all, studies abroad require more than 30 lakhs, including course fees, accommodation, health insurance, travel tickets, and many more.
Reap Tax Benefits: Buying insurance means multiple tax benefits coming in handy. For instance, the premiums paid towards the plan are tax-deductible and available for the maximum tax exemption of Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961. Furthermore, as per Section 10 (D) of the Act mentioned above, the life insured benefits with tax-free earnings at maturity or death.
Coverage for Liabilities: For instance, you took a home loan or debt. It might be a helpful option that you took at that time, but it might become an economic burden for your family if you are not there. In order to realize your dreams and goals, you may have needed financial support in the shape of loans or other sorts of debt.
If you don’t have a stable source of income, managing such commitments can inflict significant financial stress. Therefore, having life insurance pans out to be a beneficial deal to protect your loved ones from being crunched under the loan and debt repayment.
Financial Aid for Your Child’s Future Objectives: Which parent would not wish to secure their child’s future, especially in terms of finance? Life is unpredictable, and one should always be prepared for the worst at any time. By owning the right child insurance, with an apt chunk of benefits, riders, and sum assured, you can undoubtedly rest in peace because your child is assured of every possible assistance, even in your absence.
Maturity Benefits: If the life insured manages to survive through the term plan by paying all the required premiums, the insurance company shall pay the maturity benefit on behalf of the premiums paid.
What are the Factors to Consider While Purchasing a Child Insurance Plan?
Will you start building your retirement base when you are 40 or early 60s? A sensible and responsible individual will start planning by their early 40s so that by the time they retire, they will have a swelled up financial reserve by the prime time of necessity.
Similarly, every investment requires time to mature, and the longer the period, the better and more extensive the benefits. Therefore, the best time for a parent to invest in a child insurance plan is to be born. It means by the time they are ready to enter college (at the age of 18), they must have accumulated a sizable corpus.
Buying insurance is an important job, especially when purchasing one for your child. Therefore, one must consider the following points to avert any possible blunder, and they are as follows:
Coverage: Always go for a more considerable coverage. Because more extensive the cover, you will reap a better and more profitable deal for your child so that they can attain every possible goal without compromising on their dreams due to lack of economic aid. However, the coverage amount you receive is determined by a number of factors like – age, annual income, and lifestyle behaviours.
Policy Term: Duration of the plan matters because the longer the term plan, the more time you are letting your investment grow. You can ensure that the child plan provides adequate financial protection throughout their growing years by doing this.
Claims Settlement History: What is the whole point of buying insurance when you are not confident about the insurance company? Therefore, it is essential to double-check the company’s claim payment percentage to guarantee that your premiums are safe and will reap a good ROI.
Other Advantages of a Child Plan: A child insurance plan is specially designed to cater to the future objectives of your children. However, there is no harm in making your child’s insurance more likely by checking on the other benefits that can help your child attain their future objectives in a better manner. There are multiple child insurance plans available, and they come with distinct advantages. It would be best to choose a plan that meets your requirements and criteria.
Riders: They are an additional set of perks at an affordable cost. Parents can opt for riders to make their child’s insurance plan more extensive and inclusive. However, it would help if you remembered that adding premiums equals paying more premiums. Apart from the associated perks, riders give an additional sum of money for prescribed situations such as – critical illness, surgical care, accidental death, and many more.
Maturity Benefit: Want to enjoy the complete sum assured? It can happen once the term plan is over.
ABSLI Vision Star Plan: Best child insurance plan in India
It is one of the best child insurance plans by Aditya Birla Sun Life Insurance. It serves regular guaranteed reimbursements for financing your child’s education and safeguarding your child’s future even if you are not present. Some of the enlisted benefits under this plan are as follows:
Death Payment: As per this feature, if the life insured (parent) meets with an untimely death when the plan is active, the insurance company shall pay the death benefit to the legal heir/beneficiary (child). Once the insurer settles the payment, the plan is annulled.
Assured Payout: At the beginning of the fifth year (once the premium-paying term has ended), the life insured will begin receiving assured payouts. It is a pre-established percentage of the sum assured opted by the user.
Reduced Paid-Up Benefits: For instance, if the life insured decides to stop paying premiums after two years, it shall not result in the lapse of your child insurance but will continue on a reduced paid-up basis.
Maturity Advantage is one of the best perks if the life insured manages to sail through the term plan. Here, the insurer will pay the earned bonus plus the terminal bonus. And once the maturity benefit has been paid, the insurance will be cancelled.
Riders: Last but not least, you can make your child insurance more comprehensive and valuable by adding the riders. Riders can also be tagged as benefits that come with certain additional expenses.
- ABSLI Accidental Death and Disability Rider
- ABSLI Critical Illness Rider
- ABSLI Surgical Care Rider
- ABSLI Hospital Care Rider
- ABSLI Waiver of Premium Rider
- ABSLI Accidental Death Benefit Rider Plus
Click here to know more about this child insurance – ABSLI Vision Star Plan.
Child insurance is one of the essentials that one must have and other types of vital insurance. Therefore, one should look through all the child insurance plans to understand, compare, and buy the best for your child because you would not want to compromise with your child’s future milestones.