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Child Insurance Plans - Necessity or Liability?

July 22, 2019 1534
In the investment market today, an investor has multiple options of investment which might meet the needs of the investor adequately. In such a lucrative market, it is essential to analyze our options to make smart choices. Child plans are one such insurance option which are taken by many investors but let’s see whether it is a necessity or a liability!

A Child Insurance plan is a plan that provides us opportunity to invest specifically for our child’s future. A corpus is build up for the child’s future.

Experts say that a child insurance plan is an important avenue for investment as it secures the future of the child in the uncertainty of the life as it guarantees giving a pre-decided amount to the nominee child in the case of premature death of the investing parent. This amount could be used for child’s education or marriage hence, securing the child’s financial future from every perspective.

Some child insurance plans give you the inbuilt premium waver benefit. So the parent knows that not only the child’s future will be secured but the family will also be not burdened to pay the premiums when she/he is gone.

The child insurance benefit includes the addition of rider during the ongoing policy for extension of the coverage. The policy holder can choose the add-on riders for the policy.

One of the additional benefit of the child insurance plans is that one can enjoy tax benefits on premium paid, under section 80C up to a maximum of 1.5 lakh.1 Also the maturity or death benefits received are tax free.

It helps the investor in building a habit of disciplined and consistent savings.

 

Buy Child Insurance Plans

Benefits of a Child insurance plan at a glance

  1. Fluid pay out of funds on maturity or death.

  2. One may choose either ULIP or endowment plan.

  3. Fluid periodic premium payment opportunities.

  4. Funds given on demise of the insured before maturity, and/or if the policy has reached maturity.

In a child insurance plan, investor must always choose a maturity date carefully in order to get the insured amount before it is needed! For example, if you think that you need money when the child turns 21 years then the maturity date for the child insurance plan must be 6 months before the child turns 21.

With these ample benefits, child insurance plans are definitely a necessity. It is ideal to buy a child insurance plan as early as possible.

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1Tax Benefits are governed by prevailing tax laws. You are requested to consult your tax advisor.

ARN: ED/09/19/15935

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Are Child Plans a Necessity or a Liability - An Analysis

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