Why You Need a Child Insurance Plan For Your Child's Education?
The joys
of becoming a parent are well known, and so are the responsibilities. A parent
always wants the best for their child, no matter what the cost. Parents want to
give their child everything, including the things they never had the luxury of
getting. A bright future is envisioned, and to achieve that a proper child
education plan along with sufficient funds are required.
A bright
future for the child is not possible without a proper, sound educational
background, which is getting increasingly expensive. Parents have realized that
quality education for their child is next to impossible if best investment plan
for child is not undertaken. This is where a Child Insurance
Plan comes in to the picture. Let us
learn more about them.
What is a child plan?
A child
plan is a life insurance plan, that allows parents to invest periodically so
that they are able to build a corpus for meeting the future financial
requirement of the child such as higher education, marriage etc. On the plan
reaching maturity, the maturity benefit is paid to insured.
But, if
the policyholder passes away before the plan achieves maturity, then the death
benefit is paid to the nominee. Furthermore, the insurance company takes it
upon itself to pay the premium for the remaining term, and on reaching
maturity, the maturity benefit is also paid out and the child insurance plan
terminates.
Why is it required?
The cost
of education has risen dramatically in the last decade. Thanks to inflation and
other factors, the amount required for a particular course has risen
alarmingly. Let us take the example of IIM-Ahmedabad for instance. The premier
B-school in the country will charge the 2018 batch Rs. 19.5 lakh for the
two-year course.
To put
things into perspective, the same course cost Rs. 4.87 lakh in 2007. Now, – and
this is why child plans are required – assuming that the cost continues to
increase by an average of 20% annually, the same two-year course will cost Rs.
95 lakh by 2025. From this example we can understand the need of having best
investment plan for children.
Child plan benefits..!
There are
many benefits that come with opting for a child’s plan. The first one is that
it ensures that your child’s future is secured, even if something happens to
you. It allows you to plan ahead and gives you the freedom to choose flexible
pay-out options as per your requirement and gives guaranteed benefits too.
Moreover,
the premiums that you pay towards the plan helps you in tax planning as they
are exempted from tax under Sections 80C and 10(10D) of the Income Tax Act. But
the best benefit is the peace of mind that a parent gets in knowing that no
matter whatever happens, their child’s future is in safe hands.
A word of caution..!
A child
insurance plan mostly has an appointee, who will take care of the claim amount
in the unfortunate event of the parent’s passing while the child has not
reached a mature age. This appointee must be carefully selected and should be
someone with whom you have a strong, reliable relationship.
This person must be
trustworthy and even wise, so as to not exhaust the money even before the child
has reached the age where he/she will need it the most. Therefore, it is
crucial that you take your own time and be extremely careful while selecting
this person for the child insurance plan.
Investing
in a child plan is wise move on the parent’s behalf. It ensures that the
child’s future is secured and also gives the parents the peace of mind that
their child’s financial needs are taken care of, even in their absence.
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