Reason to Buy Child Plan

Posted by kiran singh on August 13th, 2018

From her/his auspicious birth onwards you have been nurturing, caring and making your kid fit and fine for the world and life. As parents, our primary responsibility is towards the protection of the future of the kid. The best way to start on it is by investing in a child insurance plan. Such a plan provides not only the security net needed for your child, it also gives the benefits of investment.

Education

In today’s day a primary concern of all parents is rising cost of education in the world that we live in. Getting your child into a good school will not come cheap. Besides, as the time flies by, your child will go for higher studies that will be even more expensive. As long as you plan well and invest in a child insurance plan that gives good returns, your burdens will be easy to handle for you.

Saving

As already mentioned, a child care plan includes both insurance and investment. Prior to buying a child care plan, go back to your financial plan and calculate the need for funds during the various stages of life. Calculate what you are saving for such as primary and secondary education, higher studies, marriage etc. Also take into consideration your other liabilities such as a mortgage, personal loans etc and zero in on an insurance scheme that is a perfect fit with your financial plan. While initially it may seem as a burden, paying periodical premiums will soon become a habit that will put you in good stead when your ward grows up.

Protection against serious illness

In case there is a history of some kind of chronic illness in the family, it will be a great idea to purchase a child insurance plan at an early stage while your kid is hale and healthy. Later on, if the kid happens to catch any kind of illness, the invested money from the child insurance plan will become useful.

Loans

An insurance plan is also mostly accepted by financial institutes as a security if you want to take an education loan or personal loan for your child. This will greatly help your son or daughter when he or she requires a lump sum for higher studies.

Death of parents

One does not like to think of their own death, yet you can never be sure as where and when life might end. In the situation of an accidental death, the insurer offers a waiver on the premium on a child insurance plan and the beneficiary (your child) receives a lump sum on maturity and is no longer required to make the premium payments.

As obvious, a child insurance policy is about starting early and saving time.

Tax Benefits:

You also get tax benefits with a child insurance plan. The premium is deductible under section 80(C) of the Income Tax Act, 1961 and the maturity amount is exempt from tax; unlike fixed deposits or equity shares which attract a long-term capital gains tax.

Take right steps at right time, be the parent who is prepared for the future. Invest in the right plans that help in securing your child's future, in your presence and even in your absence.

Remember to Start Early:

Initiating a child plan early has all the benefits that you need. Starting in time translates to reduced pressure on your finances since needs only a minor outflow.

Assume a target of INR 30 lakh, you need to save only INR 6,005 on a monthly basis for now. Now assume you delay this by six years. In this case your monthly investment will go up to Rs.10000 to achieve the saving goal. In another three years, the required saving will go up to INR 25,875/monthly.