Child education plans are life insurance policies that are meant to provide your child with a safe financial foundation. The savings plan has a premium waiver benefit that prevents future premiums from being paid if the parent dies during the policy’s term.
As a result, the savings plan develops a solid corpus with or without the parental contribution and is an excellent financial instrument for your child’s future. Begin preparing for your child’s education.
Your children are the most significant aspect of your life as a parent. They are responsible for even the smallest of your beautiful moments. Managing spending and savings may be difficult when maintaining a balance between emotions and practical living.
You would go to great lengths to make your children happy and guarantee their life and future.
<h2>What is a Child Insurance Plan?</h2>
A child education plan is a mix of insurance and investment that ensures your child’s future security. After the policy period, life insurance is accessible as a lump sum payout.
Not only that, but these programs also provide flexible rewards at vital educational milestones for your kid. While no one wants to think about tragic events like death or significant medical disease, you must protect your child’s future from such catastrophes.
Importance of Child Insurance Plan
As a parent, you have a great desire to offer the best for your kid, that your child get a good education and live a happy life. A child education plan might assist you in realizing this desire. The policy provides a concentrated approach to disciplined money saving.
The kid obtains the education they wish in exchange for a lump-sum payment in adulthood or when a terrible incident occurs. It also assists you in beating inflation and saving appropriately.
It is riddled with falsehoods, as beneficial as the savings plan may be. Most of us don’t comprehend the finer points of childcare arrangements and have preconceived assumptions. These fallacies keep you from purchasing a savings plan. Here are some prevalent beliefs concerning kid planning, as well as the truth behind them:
1. The policy ends if the parent dies
That is not the case. That is the appeal of a child education plan. The premium waiver rider is included in the plan’s coverage characteristics. If the parent dies before the kid, the rider takes effect. If the plan covers the parent, the death benefit is paid immediately upon the parent’s death. The savings plan is then carried forward.
The insurance company pays future payments until the savings plan matures. The guaranteed maturity benefit is paid again at maturity, regardless of the death benefit previously paid. As a result, the death of a parent has no effect on the continuation of the kid’s savings plan. Because of the premium waiver rider, the plan operates for the set tenure, generating a solid fund for the child’s future.
2. The terms and conditions of the policy are difficult
This myth is only believed by persons who have a poor grasp of insurance. Many people assume that the terms and conditions of a child’s education plan are difficult to grasp since certain aspects of life insurance policies are technical. They could hardly be more incorrect.
Child savings plans are straightforward. You only need to understand who is covered by the plan (parent or kid), the benefits offered, the duration, and the premium you must pay. Furthermore, you must be a parent to be eligible to purchase the plan. The rest is simple. Even if the death benefit is paid, the plan will continue for the selected tenure, offering a maturity benefit.
3. The policy locks in the investment for a long period
Insurance plans are designed with the long term in mind, and many of you accept this fallacy. However, this is not totally correct. If you acquire a typical savings plan, you may access policy loans after the first two or three years. This borrowing service allows you to access your cash whenever you need them.
Partial withdrawals are permitted in the case of kid ULIPs. After the first five policy years, you may withdraw a portion of your fund value. As a result, child education plans provide liquidity. Even if your assets are locked in for an extended length of time, the plan guarantees a corpus for your child’s future.
4. Only the child is covered under the plan
Many people assume that child insurance policies solely cover the kid. This is incorrect. There are two kinds of kid insurance policies: those that cover the child and those that cover the parent. Typically, most child education plans cover the parent’s life.
In the event of the parent’s death, the premium waiver rider kicks in, and the savings plan continues until maturity. So, while purchasing a kid plan, determine if it covers the youngster or the parent.
Why should you buy a Child Insurance Policy in 2022?
A child education plan coverage not only protects your child’s future but also provides the following additional benefits: –
- Guaranteed Benefit: A child insurance plan provides a guaranteed child education plan that other sorts of investments may not provide. Many child education programs provide a built-in incentive known as a premium exemption benefit. This benefit promises to pay a maturity benefit whether or not the parent is alive at the time of maturity. Thus, by purchasing a children’s life insurance policy, you may safeguard your child’s future.
- Dual Benefit: A dual plan is the greatest kind of child education insurance (investment-cum-insurance plan). The first is building a financial corpus, which is particularly important for children, and the second is peace of mind.
Furthermore, when required, these plans provide a partial withdrawal opportunity. In addition, you might get tax advantages for the premium paid.
Wrapping It Up
A child education plan is a gift to your child’s future. It’s your piggy bank, which you’ve carefully accumulated over the years to help your kid reach his or her objectives. Not only may the child’s objectives involve educational and career chances, but also exciting hobbies and ideas that, if nurtured, can revolutionise the world.
On the other hand, a child education plan is usually misunderstood, and the genuine advantages are neglected. It is vital to dispel these common myths so that all parents may benefit from these programs.