We list and explain the three factors that determine the kind of child insurance plan you choose for your child’s future.
The development of your child into a happy, confident adult is the mission of your life. You are committed to providing them with all the material comforts that money can buy. At the same time, you wish to give them the best educational opportunities you can find, so they may get the best start on a successful career and future.
But higher education is increasingly expensive in India, and many parents fall short when it comes to providing their children with quality education. Often, the best way to give wings to your child’s dreams is to buy child insurance. However, choosing the right plan is key – and the choice is governed by these 3 factors:
1 The plan with a premium waiver.
This is an important feature to consider when investing in a child plan in India. As the term ‘premium waiver’ suggests, it is a feature in the plan wherein it offers to waive off the remaining premiums on the unfortunate demise of the child’s parent, especially the primary guardian that pays the premiums on the policy. Leading child insurance plans offer this feature, while also securing the maturity benefit and the death benefit on the plan, to be paid when the child attains the age of 18 years.
2 The plan for those with a higher risk appetite.
In the age of rising inflation and ever-climbing living costs, you worry that you may be unable to finance your child’s future educational ambitions. Though you have taken a child insurance plan, you are concerned that plan corpus may not be commensurate with the costs of future higher education. If you don’t mind a bit of risk in exchange for higher returns, you can opt for a unit-linked child plan. The best unit-linked child plans in India offer excellent appreciation over a long vested timeline (exceeding 10 years, in most cases) with equity investments offering good returns. Opt for unit-linked child insurance plans that offer a combination of equity funds (for high returns) and debt funds (to mitigate risk). A further icing on the cake is a unit-linked plan offering an STP (Systematic Transfer Plan) option to protect returns.
3 The plan for those with a lower risk appetite.
But if you would rather secure the child plan as much as possible and not expose it to much risk, it is always better to go with an endowment plan. The endowment plan helps beat market fluctuations and other uncertainties, while offering you the best benefits over a shorter period of time. Normally, endowment child plans have a tenure of 10 years or less, but this depends on the plan you choose. The returns cannot be compared with those of the unit-linked equity and debt child insurance plans, but there is good insulation against market fluctuations.
We hope these guidelines help you buy a good child plan in India, and secure your child’s future in the best possible way.