Every parent wants to secure their child’s future, especially financially. A child insurance plan can be a smart move, providing the support needed to meet their life goals, even in your absence. By investing in a child plan, you are helping to ensure your child’s dreams are within reach, no matter what.
Child Insurance Plan & Its Features
Child insurance plans offer a disciplined approach to goal-based wealth creation, tailored for long-term life goals. Available in both guaranteed and market-linked options, these plans typically mature when the child reaches 18 to 25 years of age, ensuring a steady financial future.
These plans provide crucial support by offering an immediate lump-sum payout if the parent passes away, along with waiving all future premiums. This means that even if several years of premiums remain, the insurer covers them, ensuring the policy stays active and continues to provide all its benefits. This setup guarantees that the family receives financial support, and when the policy matures, the payout provides essential support for your child’s major milestones.
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Advantages of Purchasing Such a Plan
The biggest advantage of a child insurance plan is the discipline it brings to saving. You might wonder, why not just go for a regular insurance product? While regular insurance, like a term plan provides a death benefit with a lump-sum payout, a child plan provides focussed savings for your child’s life goals.
For instance, if you’re saving Rs 2 lakh every year to build a Rs 1 crore fund over 15 to 20 years for your child, a term plan might provide a lump sum—maybe Rs 50 lakh or Rs 1 crore—if something happens to you. That lump sum payout, however, could be used for various pressing needs. This may disrupt your financial plan for your child.
Child plans, however, are crafted for long-term goals, not short-term expenses. They’re designed to support milestones like higher education, marriage, or starting a business, ensuring the funds you set aside are used for their intended purpose.
Market-Linked vs. Guaranteed Child Plans
There are two types of child insurance plans, guaranteed and market-linked. In a guaranteed plan, cash flow is fixed upfront, offering stable, predictable returns. Market-linked plans, on the other hand,
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