Questions to ask before buying a child plan

 

Every parent dreams of etching the perfect academic path for their child. But to ensure that, it’s important to arrange a smooth flow of funds. This is where a child plan can play a crucial role and take your worries away. But before you pick and choose a plan to invest in, from an array of options, it’s essential to ensure it’s the best fit for your needs. 

Confused? Here’s a guide to the questions you can ask yourself. The answers will help you in choosing the right child plan that suits your requirements best.

But before that, let us understand a bit about the child's plan.

• Why a child’s plan is helpful?

A child insurance plan is insurance cum investment plan designed to secure your child’s future. Here, if the parent dies an untimely death within the policy term, the sum assured is paid to ensure the child doesn’t have to bear the brunt of the crisis. Meanwhile, the parent can invest a part of the premium in market-linked funds to grow the money. The maturity benefit accumulated along with accrued bonuses (if any) are available at the end of the policy term and paid in a lump sum which can be utilised to fund higher studies or other educational needs of the child. Thus, having a child plan can be an assurance that no matter what lies ahead, your child won’t face a hindrance in his/her academic career.

• Top 5 questions you need to ask yourself

Let us now guide you to the instrumental part of your decision-making regarding the child plan. Here are the set of questions that can help you in choosing the right plan for your child’s future.

What’s your target?

Are you saving for your child’s school education or undergraduate courses in your home country? Or are you planning to stay prepared for his/her further studies or overseas courses? Keep in mind that educational costs vary from country to country and hence the corpus you build should take that into account. Decide on your target and choose the child plan accordingly.

When to start and what should be the tenure?

Starting early gives you an edge whenever you invest in insurance. The child plan is no exception. The longer you stay invested, the higher the gain and consequently the corpus. Ideally, the policy tenure should depend on your child’s age for optimized coverage. For example, if the child is now a 10-year-old, he/she will be doing the post-graduation or further studies 10-12 years later. So, a child plan with a 10-year term can be a good fit here.

How to do the estimates?

Child plans are supposed to take care of the future needs of your child. Hence, while you decide on your budget and consequently the coverage amount, it’s essential to take into account the yearly inflation rates. Ideally, it’s assumed that the cost of education doubles in 10 years, considering an average rate of inflation of 7%. Thus, if you are planning for costs a decade later, having coverage 2 times the current cost of a course can be helpful.

Is there a premium waiver option?

A premium waiver option in a child plan waives off the remaining premium payments if the policyholder parent dies untimely within the policy term. But here the child remains entitled to the maturity benefit in full in due course. It’s therefore important to check if this option is available in the plan you are eyeing to invest in.

Does the plan allow partial withdrawals?

No one can predict sudden requirements. It can be a financial crisis in the family or an unprecedented hike in course fees. Here, a partial withdrawal facility in your child's plan can come to aid and help you cope with the emergency.

When it comes to child plans, there are ample options available in the market, each alluring you with its own set of benefits. Visit us at https://www.hdfclife.com/children-insurance-plans . Check our child insurance plans and find the one that's right for you. 

• To sum it up

With the growing uncertainties of life, it’s getting more and more important to ensure a secure future for your child. Hope you choose the right plan that helps him/her in all possible ways.

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ARN - ED/12/23/6776