As a parent your main aim is mostly to provide your child with all what he needs and save enough to secure his future. With the growing cost of education, it can get difficult to save enough for his future and manage other responsibilities as well. This is why we see many parents invest in child plans today to systematical save enough for their child. If you are amongst the parents who have only heard of the policy and would want to know how it works before investing, read on.
What are child insurance plans?
Child plans are the usual life insurance policies that cover the specific financial needs of your child. This is why you need to preplan before you invest in this product as you can avail the sum assured at maturity of the policy. Ensure the maturity of the plan coincides with the time when you’ll need the money.
This plan helps you to systematically save money for your child’s goal over a period of time. The money is invested to grow over the years of policy. At maturity the insured is paid a lump-sum amount. The policy also offers death benefit.
A child plan can be bought on the life of the parent or the child.
How does it work?
Apart from being a regular investment plan for your child, child plans most importantly give you the assurance that if the parent meets with an unfortunate event then your child’s need would be handled by the policy. So in case of the sudden demise of the parent the policy hands over the lump sum amount to the child.
In some plans, the company continues to pay the premium towards the plan until maturity after the demise of the parent. The lump- sum amount is handed over at maturity. This ensures constant cover for your child. Also, a certain percentage is paid to ensure his education is not hampered. This unique facility of the policy is called Waiver of Premium.
Mostly on the maturity of the plan a guaranteed lump-sum is paid out. This means that you can avail the sum assured at either maturity or in case of the death of the parent. But in some childplans you can availregular payouts. This means that you can avail the sum paid in installments around the time you need it the most. This could include situations like graduation, further studies, marriage etc.
This is how child planshelp you make sure that the future of your child is well secured even in your absence.
How do child insurance plans work