A child insurance policy offers dual benefits of insurance and investment. Parents can buy such a policy when the child is as young as 14 days. The plan matures when the child reaches adulthood. However, there are child insurance plans where policyholders are entitled to make periodic or occasional withdrawals before the maturity of the plan.
Buying child insurance means there is a lot of investment planning required for a significant number of years, which is why it is an excellent device when preparing for the future.
Following are some of the long-term advantages of a child insurance policy.
Funding Your Child’s Education: Major part of the parents’ savings goes into supporting their child’s higher education. Studying in a decent college means shelling out a whole lot of money. Higher education in overseas or MBA from well-known Business school would mean the depletion of the limited savings. All of that could be managed by buying a child investment policy as the sum received on the maturity of the plan would help reduce this financial burden to quite an intensity.
Medical emergency Aid: In case there is a history of critical illness in the family, it is prudent to purchase child insurance when they are young and fit. If due to any medical emergency, the child has to be hospitalised, a child insurance plan would help by extending financial support. You will be entitled to withdraw a lump sum from the about-to-mature insurance policy, which will make sure that your children get the required medical treatment.
Untimely Death of a Parent: Death is never predicted, especially when one is young. In case of death of a parent during the term of a child insurance plan, the insurance company gives a premium waiver. Therefore, the recipient gets a lump sum amount and is no longer required to pay any premium.
Well-thought of investment: Before purchasing child insurance, be confident of what you are planning for, whether higher education for your child, marriage or a debt on the house. While performing computations consider inflation. Prices fluctuate principally in less than 10 years. Once you have decided on the amount, get a suitable child insurance plan. You will soon be making regular premium payments, and hence, you will be successfully allocating money for your child’s future.
Income Security: This is an inherent benefit for children who are actors, singers and others who earn substantial incomes at a tender age. Their money tends to increase at a higher rate over a longer duration when putting in investment plans for your children.
When buying child insurance, search for policies that stress on the cash value. High cash rate, in the long term, can be used to get loans or make a down payment on a purchase. Do not buy policies that increase premium rates on a yearly basis. Most importantly, purchase child insurance while your child is young to take benefit from low rates and high returns.