A child insurance plan is essentially a dual benefit financial instrument – one which offers both insurance and investment benefits under one policy. Thus, a child plan not just offers a life cover but also provides you the benefit of maximizing your savings through investment returns. As your child matures, he or she might want to pursue their dreams of higher studies abroad, which in turn, can cost you a fortune. With a child education plan, however, you can plan your finances in a way that you have an abundant amount of money at your disposal when the time comes. In other words, a child education plan can help shape and support your child's future by providing you long-term investment opportunities to maximize your savings. Here are the different features of child education plans that make them a worthwhile investment –
1. Flexible Premium Payment
You have the ease of paying the premiums for child education plans as a lump-sum at the time of buying the policy or periodically for a specified term. Most insurance companies also provide options to pay the premiums on a monthly, quarterly, half-yearly, or annual basis. The amount of premium payable varies with the sum assured and the expected returns.
2. High Sum Assured
Child education plans provide comprehensive life cover benefits in the form of a significant sum assured, along with maturity benefits. The sum assured for the life insurance cover is paid to your family in case of your untimely demise within the policy tenure. It is advisable that the selected sum assured must be at least ten times your annual income.
3. Extended Policy Tenure
The policy tenure of a child education plan may usually vary between 5 years and 30 years. You can select the policy tenure to extend from the birth of your child to a pre-defined age.
4. Significant Maturity Benefits
The amount received upon maturity of the plan is one of the most crucial features of a child education plan. Child education plans are purchased with a specific goal in mind, and the quantum of the maturity amount helps determine whether it is enough to support your child's future requirements. While choosing the maturity amount, it is prudent that you consider factors such as inflation and interest rates to make sure that your investments are aligned with your requirements.
5. Choice of Funds
A portion of the premium paid against a child education policy is invested in market-linked assets. As the policyholder, you have the flexibility to choose between different fund options with varying risk profiles and rates of returns. Based on your financial goals, thus, you can choose between a variety of equity, debt, or money market-based fund options.
6. Rider Benefits
Child education plans also provide the ease of enhancing your financial protection with a variety of riders. These riders are essentially add-ons that provide additional benefits over and above the base policy benefits. Typically, child education plans offer rider options in the form of the premium waiver option, critical illness cover, and accidental death cover.