Starting a family means you must prepare well in advance to pay for your child’s education and other financial expenses. One way to financially prepare your future and avert any crisis few years down the line is to purchase a child plan.
Among the popular investment products available in the market today, child investment plans are arguably the most sought-after policies. Given the ease of purchase and flexibility offered by these plans, many investors invest in child plans to meet the future financial needs of their family and child’s needs.
However, like any other life insurance product, you need to carefully evaluate the benefits offered by different plans and compare them against each other before making a purchase decision. Here’s how you must proceed about buying a child plan that is best suited to your needs.
Factor-in the Rising Cost and the Changing Needs
The most important aspect of buying a child plan is to determine the right amount of sum assured. Given the fact that the coverage amount should be large enough to suffice for most small and large financial needs of your family, you must first identify the changing needs of your child in the years to come and factor in the rate of inflation, before deciding a suitable sum assured.
It is equally important to start with the investments for your child’s future as early as possible. Most child investment plans offer payouts and maturity benefits at crucial life stages, once the child turns 18. Therefore, starting early would give you ample time to build a greater corpus and avail higher returns on investments.
Read Through the Policy Documents Carefully
Haste makes waste. This adage applies even today. Every child plan comes with a distinctive set of benefits and disadvantages, which makes it vital that you spend adequate time comparing plans and reading carefully through the fine print. Doing this would help you avoid any shortfalls of your policy in the future.
For example, the policy documents would describe the claim settlement process in detail. Instead of brushing over the policy details, therefore, you must be thorough in your evaluation and make a note of all the significant dates and investment timelines. Remember, even a single hidden clause in the policy is enough to derail your child’s dreams and render your investment futile.
Look for Waiver of Premium Rider
Reputable insurers such as Max Life Insurance offer the Waiver of Premium Rider. The rider helps ensure that even in case of demise of the policy buyer during the tenure of the plan, any remaining premium payments are taken care of by the insurer and the policy continues up to maturity.
In case of an eventuality, therefore, your nominee would receive a lump-sum amount from the insurer and all the due premiums after that, are waived off as the insurance company continues to invest on your behalf.
Support your Finances with Other Options
Essentially, a child investment plan is designed to take good care of your family’s future financial needs. That said, it is always beneficial to diversify your investment cum savings portfolio through additional schemes.
By supplementing your child plan with other plans, say small saving schemes offered by post offices, can help you make your financial security more comprehensive and create a surplus of available funds for your child and spouse while providing significant tax benefits on both amount invested and maturity yields.
When we talk about small saving schemes offered by post offices, it is important to note that their interest rates are revised every quarter by the government. Thus, your investments are not only protected from market volatilities but are also maximised with increasing interest rates every quarter.
Overall, you must support your future financial needs with a child plan along with other schemes such as a postal life insurance child plan, Post Office Savings Account, 15-year Public Provident Fund Account (PPF) and Sukanya Samriddhi Account.
Purchasing a Child Plan Isn’t Rocket Science
Seeing your child grow into a responsible and successful adult is every parent’s dream. However, the rising inflation levels and lifestyle costs can put a severe dent in your financial planning for your child’s thriving future.
Expenses such as those for your child’s medical check-ups and treatments, higher education, and marriage are likely to increase manifolds in the foreseeable future. Therefore, you need to prepare yourself from any untoward eventuality by starting with suitable investments for your child’s future. And a child savings plan is just the right instrument to help you achieve your objectives.