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The rising cost of higher education has made it necessary for parents to invest in child insurance plans to secure their kid’s future. Let’s discuss the points to remember while choosing a child insurance plan.
Child insurance plans are highly beneficial because they bring twofold advantages of investment as well as insurance. These plans can be acquired by parents from as early as the 14th day of the birth of the child, thereby allowing the parents to accumulate a lump sum amount by the time the child reaches adulthood.
With the continuous inflation leading to rise in the cost of education, healthcare and other things, procuring a child insurance plan has become pivotal. These child insurance policies mature when the child reaches adulthood. Further, there are some child insurance plans that allow the policyholder to withdraw a certain amount from the policy occasionally even before the plan matures. So, if there is an emergency requirement like a medical need, parents can use a portion of the policy money for the child.
Let us find out the points that should be kept in mind while buying these child insurance plans.
Since child insurances allow investment planning for a long period of time, they serve as an excellent tool of saving for the child’s future. However, the availability of numerous insurers offering several good insurance plans for the child, it becomes difficult for the parents to choose the right plan.
So, here we are talking about some important points that parents can keep in mind while buying child insurance plans in India:
1. Coverage Offered under the Plan – The Coverage amount of the child insurance policy depends on many other factors like the age of the child, the annual income of the parents, the lifestyle of the family etc. This is because the future requirements of the child depends to a large extent on the lifestyle that he/she is used to. The choice of higher education and the preferred destination where the child wants to pursue his/her education is also a factor to consider. So, it is important to buy a policy that could offer maximum coverage as per your need. And to avail a policy with maximum coverage, you must compare various child insurance plans offered by numerous insurers to choose the policy that allows maximum coverage so that it could fulfill the maximum financial needs of the child at a reasonable premium amount.
2. Claim Settlement Ratio – The claim settlement ratio or CSR of an insurance company states the competence of the organization in terms of insurance claim settlement. The insurers with higher CSR are the ones settling a higher number of claims. Thus, opting for an insurer with higher CSR is important. So, this is another factor to keep in mind while buying a child insurance policy.
3. Term of the Policy – The maximum benefits that can be accrued from a child plan depends on the length of the policy. A plan with longer duration is more beneficial as compared to a plan with shorter policy tenure. Thus, if you want to gain maximum benefits from the child plan you are procuring, you must choose a plan with maximum duration of policy term.
4. Add-on Riders – There are several insurance companies that allow the insured to buy add-on riders to maximize the coverage benefits available under child insurance plans. By acquiring these add-ons, the insured can ensure to gain some additional amount of money along with the benefits of the base policy. These add-on can support the insured in case of an unforeseen event in life like disability due to accident, diagnosis of a critical illness etc. Hence, if you are looking for such additional coverage, you must buy the policy from the insurance provider offering such add-ons along with the child insurance plan.
5. Maturity Benefits – Like other investment plans, a child insurance allows the nominee to acquire a lump sum amount of money at maturity that has been accumulated through the duration of the policy. So, while looking for the best child insurance plan, you must compare and choose a plan that allows maximum benefits at maturity.
6. Partial Withdrawals – Another important consideration while choosing a child insurance plan is to check that the policy allows partial withdrawal before maturity. Now, why you need this facility is because you cannot predict the future. Life is very uncertain. So, if you ever come across a scenario where you need funds because of an emergency situation, the partial withdrawal clause of your child insurance will rescue you. Hence, it is important to ensure that your child plan comes with the partial withdrawal clause.
7. Premium Waiver Rider – Most child insurance companies these days offer plans that come with a premium waiver rider. So, if the parents of the child die during the term of the policy, the insurance company waives off all the remaining payments of premium. However, the policy continues and the nominee or the beneficiary receives the policy benefits at the time of maturity. This is a very significant clause and you must check if the insurance provider you are seeking the child insurance plan from is offering this rider under the plan.
A comprehensive child insurance plan is the best thing that parents can get for their children. Buying the plan early on after the birth of the baby will allow parents to accumulate a maximum amount. Moreover, this financial protection allows the child to realize their educational and career dreams even if the parents are not there anymore. But, it is advised to carefully consider the above mentioned points before buying any plan in a hurry. This way, you can save money and time while ensuring the best future protection for your child.
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