How to Financially Secure Your Child's Future

When we talk about the financial security of your child, there are two aspects that need to be considered, namely investments as well as insurance.

As your child grows older, there are a number of things you have to take care of such as arranging adequate funds for your child's primary as well as higher education, marriage and so on. These financial goals should be calculated with the help of a financial planner. This is why you need to start investing early.

Life is uncertain and you might not be around to provide financial help to  your child at various stages of his/her life. This is where insurance comes in.

To secure your child's future, you need a product that combines both, investment as well as insurance.

How Can a Child Plan Financially Secure the Future of Your Child?

Both, insurance as well as investment features are found in a child plan and there are some other benefits which make them an ideal choice to secure your child's future.

Here are the important features of a child plan:

·       Dual Purpose

As mentioned earlier, a child plans is not only an investment tool but an insurance product as well. As an investment vehicle, its function is to fulfil the monetary requirements at the important stages in the child's life.

·       Life Insured

Life insured is the person in whose name the insurance policy is taken. In the case of a child plan, the life insured is the parent and the child is the nominee. This payment that the nominee receives comes from the insurance component of the child plan.

·       Funding the child's monetary requirements

The investment component of the child plan gradually builds up a corpus so that funds can be withdrawn on a regular basis when the child needs money for higher education, marriage and so on.

·       Guaranteed Returns

The returns promised in the insurance docket (the official document which outlines the liabilities of the insurer as well as the life insured) are guaranteed and do not change whether the life insured is alive during the maturity of the child plan or not.

·       Focus on Child

When the parents of the child are certain that the returns from the child plan will be paid out as promised by the insurer, they can focus on the more important aspects of the child's development including extracurricular activities.

What Are the Key Advantages of a Child Plan?

A child plan has certain unique features which make it an excellent choice for financially securing your child's future. They are:

·       Life Assured and Insured

Life insurance covers the risks related only to death whereas life assurance covers both, insurance, as well as investment, which is found in a child plan. You can select a plan according to your needs.

·       Minimum Sum Assured

In a child plan, in some cases, the minimum sum assured is calculated in multiples of the premium paid and it could be 5, 7, or even 10 times the annual premium.

In other cases, the minimum sum assured is a fixed amount which is a minimum of Rs.1 lakh. Where this is not calculated according to the premium paid, there is a fixed amount paid which is a minimum of Rs.1 lakh.

·       Policy Term

The policy term in a child plan refers to the period for which the premiums must be paid. It varies from 5 years to 20 years. You should choose a term by taking your child's age into consideration.

·       Partial Withdrawals

An important advantage of a child plan is the partial withdrawal facility where you can withdraw money to fund the child's higher education and marriage without having to wait till the maturity of the policy.

·       Death Benefit

In case of premature death of the life insured, the child gets the death benefit as well as the maturity benefit when it is due.

·       Critical Illness Rider

This is an add-on feature in a child plan where extra premium has to be paid. It is a worthwhile investment as you can get a lump sum amount when the life insured is diagnosed with an illness.

·       Premium Waiver Benefit Rider

This is a very important feature of a child plan as on the death of the life insured, all future premiums are waived off but the benefits will still accrue to the nominee.

·       Maximum Sum Assured

The maximum sum assured of a child plan ranges from Rs.1 crore to no upper limit.

What Are the Best Money Back Policies in India?

A child plan which offers the above features is a traditional money back policy. You get a combination of both, insurance, as well as investments.

In the event of your demise, future premiums are waived off and your child gets the funds he/she requires for the important events in their life like higher education or marriage.

The regular payout made by the insurer is known as the survival benefit.

When it comes to selecting the best money back policy in India, you can choose from the following:

·       LIC Money Back Policy

This policy has a term of 20 years.

It is a traditional participating endowment plan meaning you will be entitled to bonuses that are declared by the insurer on maturity as well as money back at regular intervals.

The minimum and maximum age of entry are 13 and 50 years respectively.

The age for maturity is 70 years.

The minimum sum assured is Rs.1 lakh.

·       SBI Life Smart Money Back Gold

This plan has a saving cum investment option along with coverage for life.

There are four policy terms with the first option being 12 years, the second 15 years, the third 20 years, and the fourth 25 years.

For policy term 1 and 2, the minimum entry age is 15 years and for policy terms 3 and 4, the entry age is 14 years.

The maximum entry age for terms 1 and 2 are 55 years, for term 3 it is 50 years, and for term 4 it is 45 years.

The maturity age is between 27 and 70 years.

The minimum sum assured is Rs.75,000.

·       Bajaj Alliance Cash Assure

This traditional money back plan has 4 policy terms of 16, 20, 24, and 28 years.

The minimum and maximum entry ages are 0 and 54.

The maturity age is between 18 and 70 years.

The minimum sum assured is Rs.1 lakh.

Secure your child's future today

A child plan with money back features is an ideal choice if you want to financially secure your child's future.

The reason for this is that a child plan comprises both, insurance as well as investment options. Your child's financial requirements are adequately met whether you are there or not. The returns are guaranteed and the top insurers have the best claim settlement ratios, so you have complete peace of mind.

Select the plan of your choice and watch your child succeed in life.