THINGS TO CONSIDER WHILE BUYING A CHILD INSURANCE PLAN
In the planning stage of your child’s future, start planning with “the end”.
We all want bright, successful, and financially accomplished future for our children, isn’t it? We all aspire our children to be an engineer, doctor, scientist, etc. Moreover, we all understand that a goal without a financial plan is a distant dream.
Hence, it is important to convert your dream into a financial goal. Make a concrete financial plan, start investing for the same, and transform that goal into reality.
When you have a plan in hand and you start early, you are in a position to cope up with the expenses of accomplishing your aspiration like fees of higher education, accommodation, transportation, holidays, lifestyle, clothing, food, etc. You should consider all these costs, determine your risk tolerance, time horizon, investing capacity, and then decide on an insurance plan that will cover your child’s future needs.
Before buying a child insurance plan for your child’s higher education, here’s the final checklist you should consider:
#1 Cover Amount Of The Child Insurance Plan You Are Planning To Buy
Sum assured or the cover amount or the maturity benefit helps to secure your child’s aspiration of higher education. Practically, this sum assured should be equal to or more than the amount your child will need for his/her higher education.
Hence, it is very important to first determine the amount that you might require and then choose the child education plan carefully.
#2 Understand the various benefits you will get along with the Child Education Plan
In addition to the base, sum assured, Child Education Plan also offers regular payouts or withdrawal facility at important stages of your child’s education life. It is very crucial for you to also check if there are assured bonus and loyalty additions, which might add value for your invested money.
Also, consider the tax benefits of child education plan under the Section 80C, and tax-free income from the child education plan under Section 10 (10D).
#3 Understand The Premium Term And The Withdrawal Facility
Choose the premium payment term based on your financial goal and your current investment capacity. If the child education plan you are planning to buy offers partial withdrawals, learn about the lock-in period, the frequency of withdrawals, and the amount you can withdraw.
#4 How much money will you be investing?
Since a child insurance plan is a money multiplication plan. Hence, it is important to determine your investment capacity, time horizon, and the amount that you would require, etc.
Thoughtfully choose the investment instruments and diversify your portfolio, such that you can beat inflation and maximize returns. Based on your financial risk tolerance choose the fund that will help you meet your requirements.