Child Insurance Plans

Benefits of Child Plans

While planning and managing your family’s finances, you devote a reasonable amount of time on your child’s future. Major requirements like child’s higher education need substantial savings, given the rapid rise in education costs. This involves regular investments made over many years so that you can accumulate the required savings. Equally important is the need to secure the child’s future in the event of your untimely absence. The issue then arises that given the paucity of time most parents have, can all financial requirements related to child’s future be met by one financial product? Luckily, life insurance companies offer child plans or children plans that combine financial protection for the child along with a child education plan. If you find the idea of this combination of protection and children education plan attractive, you need to be aware of the key benefits of children plans.

• Protection with waiver of premium

A children insurance plan, like other life insurance policies provide life insurance coverage to dependents. In this case, the protection is meant for the child. The life insurance amount from the child plan can be used to meet the immediate and regular needs besides meeting future needs of the child in the event of the untimely demise of the insured parent.

We all know how higher education costs have been rising in India. For young parents this is a great worry. How does one accumulate ample savings in order to meet the high education costs in the future? Help is at hand if one considers child education plans offered by life insurance companies. A child education plan or children education plan helps you save ample amounts through the regular premiums paid for this purpose. Typically, in a children education plan, a portion of the premium is earmarked for providing financial protection to the child. The other portion is used to invest the money so that it grows well during the long term of the children’s plan. These two aspects of a children plan ensures that the there is adequate provision for a child’s higher education in case of unfortunate event as when the term of the child education plan is over. Another important aspect of child education plan is you get tax benefits both for premium paid up to Rs 1.5 lakhs under Section 80C of the Income-tax Act, 1961, and for maturity proceeds under Section 10(10D) of the Income-tax Act, 1961, subject to fulfilment of the terms and conditions stated therein. This ensures that the growth of the money under a child education plan is tax-efficient as well.

As a young parent it is very difficult for you to put a finger on what exactly will be the cost of your child’s higher education. Therefore, it is important for you to have ample savings that will easily cover the costs. At the same time, the challenge is to also ensure that your investments for this purpose grows well enough to outsprint runaway increase in higher education costs as has been prevalent in the last one decade. It is here that a child education plan, offered by life insurance companies, comes to your help.

• Save big with small investments

Unlike children’s expenses like school fees, higher education costs can’t be met from regular income. These large amounts can only be saved over long periods. This actually is of great help since it helps you achieve this big goal in small steps of regular investments through your premiums for the child plan.