Children are our greatest assets. We must plan a way for their future to ensure they are financially secure. Everything that you plan for your children should be provided at the right age. However, there is a possibility that it may not happen because either the cost of education increases or due to an unforeseen eventuality. Choosing the best savings plan for your child with insurance combined will be a good resolution in this case.
How to choose the best child plan in India? This article will list 5 ways to help you. But before that, let us understand what savings insurance plans are:
What are life insurance savings plans?
Savings insurance plans, also known as guaranteed insurance plans or savings-cum-insurance plans, are life insurance solutions that combine insurance with savings. The premiums you pay are invested in low-risk avenues, assuring guaranteed returns on the investment. In case of death of the life assured, a lump sum amount is paid out to the nominee.
Savings insurance plans can be used as child insurance plans. The guaranteed returns and regular payouts will help the child with their financial requirements for education, marriage, and even starting a business.
How can parents choose the best savings plan?
- Focus on high sum assured – In the case of sudden death, your child will have to sustain a normal life along with education. It is best advised to choose a guaranteed insurance savings plan that will provide financial security with a lump sum death benefit and guaranteed returns. The higher the sum assured, the better is your child’s life. It can be best employed to plan a marriage or get good quality education. Avail the best plan early in life so that the premium payment will be less, and the policy duration will be long to accumulate a higher sum assured.
- Check for premium waiver options: Some insurance plans offer to waive the premium amount if the policyholder fails to survive the policy term. In that case, the sum assured will be paid to the nominee, and refrain from paying additional premium amounts. Such a plan will help your child close the scheme and use the lump sum amount paid for future expenses.
- Regular Income Plans: There are guaranteed savings insurance plans wherein, apart from the life cover, a specific guaranteed amount is paid. The guaranteed amount can be availed as a single payment or in the form of regular monthly income. If you feel your child will not handle a large amount of money, you can always choose such a child’s plan.
- Look for Partial Withdrawal Feature – When you choose a savings plan for your children, you keep getting expenses frequently. For Example, School or College Fees have to be paid regularly, half-yearly or annually. In these cases, choose child investment plans that allow you to withdraw a partial amount at frequent intervals to manage the payments.
- Make use of the rider benefits: The insurance plans provide additional riders apart from the primary life cover to suffice various needs. There is the accidental death rider, critical illness rider, disability rider, terminal illness rider, etc. For Example, the accidental death rider will provide the sum assured in accidental death as against sudden natural death. The critical illness rider will provide a portion of the sum assured amount to handle the medical expenses. This will save the money you have been securing for the daily expenses that you might have used for the treatment.
Summing Up
These five ways give you a reasonable basis to choose a child future plan. However, you have to consider your personal income and commitments before you make a plan. Analyse your income and basic expenses. Consider the age of your child and the time frame to make the fund available. Depending on these factors, calculate the premium that you can afford and choose the right option. You are responsible for your child, and your savings plan will accomplish your responsibility!
