If you want dual benefits of insurance and investment, child insurance plan is the best choice. Plans can be bought by parents when the child is as young as 14 days. Once the child enters adulthood, the policy matures. However, periodic or occasional withdrawals before maturity of the plan are allowed by some child insurance policy providers. Getting insurance for your child is a long term game, meaning there is investment planning involved for a large number of years, which is why it is a perfect tool when planning for the future.
Here we've listed some long term perks of getting a child insurance policy.
Think Long Term
Before getting child insurance be sure of what your plan is, it could be higher education for your child, marriage or even a mortgage on a house. Also, while making calculations don't forget to take inflation into account. Once you have a number in your mind, buy a CIP that best suits you. You will soon get into the habit of making regular premium payments and earmarking money for your child's future.
Critical illness/ Medical Emergency Aid
It is advisable to get a child insurance when the kid is young, especially if there is a family history of critical illnesses. If a medical emergency arises and the child has to be hospitalized, this plan would help by offering financial support. Some policies allow the holder to withdraw a lump sum from the policy to make sure that your child gets the necessary medical treatment.
Funding Children's Education
As time passes you'll realize that majority of your savings as a parent will go to paying for your child's education. Studying in a good school means spending a decent amount of money. Also, higher education in a foreign country or MBA from a B-school would mean shelling out a lot of cash at once. All of that can be made affordable by buying an investment plan for your child because the sum obtained on the maturity of the plan would eventually help lessen this financial burden.
Untimely Demise of a Parent
No one can anticipate the time or circumstances of one's death, especially when one is young. In the event of the death of a parent during the term of a child insurance policy, the insurance company provides a premium waiver. Thus, the beneficiary gets a lump sum amount and is no longer obligated to pay any premium on the policy.
Could be used to take Secured Loan
A CIP is usually accepted as security by almost every bank and other lending parties when evaluating education loan requests or other personal loans.
Income Security for Your Child
This is especially beneficial for kids who are actors, singers ( Children making good money at a relatively young age). Their money tends to increase at a higher rate over a longer period when put in investment plans like these.
Important points to remember:
- Look for policies that emphasize cash value, high cash value, in the long run, can be used to take loans or make a down payment on a house.
- Don't bother with policies that raise premium rates annually.
- Buy insurance while your child is still young to make the most of it. (Low rates and high returns)