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Being a parent, it is your primary responsibility to protect your child's future against any unforeseen mishaps. Investing in a child insurance plan is a positive first step towards empowering your child so that he or she may solely focus on their goals without any worries. A child insurance plan not only enables you to create a robust financial security net to protect your child's dreams, but it also provides you the benefits of long-term investments as well. Let us look closely at the various reasons which make child insurance plans; a must-have in your financial portfolio.
Long Term Savings
Child insurance plans offered by life insurance companies are essentially unit-linked insurance plans that provide both investment and insurance benefits. You can utilize a child's plan to maximize your savings to support your child's goals through various stages of life. With a child plan, therefore, you can build a corpus to support your child's primary and secondary education, higher studies, and marriage. At the same time, you can safeguard your savings against life's uncertainties with the in-built insurance coverage. Child insurance plans, thus, enable you to benefit from long-term savings that continue to increase exponentially throughout the policy tenure.
Supporting Your Child's Dreams
Raising a child in today's day and age can become increasingly difficult due to the escalating education costs and rate of inflation. From putting your child through a reputable primary school to send them off abroad for higher studies – you need a robust financial foundation. You can invest in a child insurance plan that matures as your child grows. This way, you can build-up ample savings that will serve as a cushion of protection for your child throughout their lives, even if something happens to you. In case of your unfortunate demise or a loss of income due to any reason, the child plan will support your child's education and, by extension, their future.
Tax Saving Benefits
Similar to other life insurance plans, child insurance plans provide comprehensive tax-saving benefits under Section 80C and 10(10D) of the Income Tax Act 1961. You can save taxes on both the premium paid and the maturity benefits received under the plan. Premium paid up to Rs 1.5 lakh in a given financial year is tax-deductible under Section 80C of the Act. At the same time, the insurance benefits received upon maturity are tax-exempt entirely under Section 10(10D). In other words, investing in a child plan will provide year-on-year tax savings throughout the investment tenure under the policy.