A child plan takes care of your kid’s financial requirements not only during your lifetime but also after your death. Your child, as the beneficiary, can get the maturity amount in flexible regular payouts or a lump sum. Therefore, the main objective of buying insurance for children is to secure your kid’s financial future.
Thankfully, a child plan acts both as insurance and a good investment avenue. By buying such a plan as early as possible, you can get more time to save and get high returns in the long term.
Benefits to Look for in a Child Insurance Plan
Tuition Fee Support: Check whether the plan offers an annual payout to fund coaching classes and/or extracurricular activities during the period your child is 13-17 years old.
Higher Education Reserve: After turning 21, your child needs to get ready for higher education. So, see if the insurance plan for children can help you finance your child’s post-graduation.
College Admission Fund: Check whether the plan offers a lump sum amount to finance your child’s dream to study at a reputed institution. Your child can therefore choose any preferred course, college or university without budget constraints.
Availability of Regular Income: The policy should offer regular income throughout its term and even after the insured parent’s demise without the requirement to pay further premiums.
Premium Waiver Availability: As the insured parent purchases the policy to secure the child’s financial future, the surviving parent must not be asked to pay premiums to continue the plan.
Option to Increase Existing Cover: If the insurance plan for children comes with a term rider, the parent can receive an extra sum assured equal to the plan’s sum assured. Just a nominal additional premium is needed.
Determining How Much Money to Save for Your Child’s Education
A child insurance plan comes with an online child education plan calculator to easily calculate how much you should put aside for your kid’s education. For that, consider the following factors:
- The course of studies that your child wants to pursue
- Tuition fees
- Cost of learning material
- Rent and living cost (if staying in a different city or country for studies)
Now follow the steps below to use a child education plan calculator:
- Enter your and your child’s present age.
- Choose the education that your child prefers to have (for instance, if he/she wishes to be a doctor, select the option “Doctor”)
- Enter the estimated cost for the chosen education
- Enter the age when you think your kid will require the corpus
- Research the expected rates of inflation over the coming years and calculate their average. Enter that value and change the investment growth rate. It is the annually compounded rate of expected ROI. The actual rate depends a lot on the type of chosen investments.
- Tap “Calculate” to check the total cost of education and the amount that you need to save annually to meet your goal.
Make sure to choose a renowned insurer in India to buy a child insurance plan and start investing as soon as possible to accumulate a significant corpus over time.
