While life insurance plans offer a lot of benefits, their biggest purpose is to help secure the financial future of your loved ones in your absence. And when you have children, the responsibility of doing everything to help them achieve their goals becomes prominent. When choosing an insurance plan to secure your children's financial future, you may have come across child insurance plans. In today’s scenario, where the cost of education and cost of living, , is rising, parents worry about being adequately prepared1. To alleviate this issue insurance providers have developed a child insurance plan specifically for children.
When it comes to choosing the child insurance plan, you may feel overwhelmed as there is so much to think about and do. Here’s a step-by-step guide to how you can choose the appropriate child plan.
Steps for choosing a child insurance plan
Here are some simple yet practical steps that will help you understand how to choose child insurance:
1. Start planning - even before your baby is born
To make the proper use of the investments that you wish to do for your child, it is important that you start planning early on, even if it means before the child is born. When you start too late, you can easily miss the remarkable power of compounding.
2. Chalk out your needs and aspirations
When choosing child insurance it is essential that parents must evaluate the necessities of their child and inflation because all insurance plans are primarily aimed at the far future. The cost is increasing for everything including higher studies, skill development programs, coaching, and so forth. Choose a plan that can efficiently secure your child’s life financially and help them lead a bright path.
3. Comprehending the plan is imperative - Take the help of a professional if need be
It is crucial that you understand the concept of child insurance plan. Reading the policy carefully, clearing all the doubts with a professional insurance expert, and knowing about the charges, premium, sum assured, rider benefits, tenure, and maturity benefits, are important. They can help you choose the suitable insurance plan for your child.
4. Understand your capability to invest - Choose a suitable sum assured and premium paying frequency
Hence, considering your financial status and risk appetite is important. Your capability is determined based on your age, financial status, and other personal components. Hence, evaluate carefully, if you are capable to take up higher premiums you can opt for a plan with better coverage, however, avoid the temptation to go for coverage that you might not be able to afford in the long run.
5. Make sure to include suitable riders
To increase the coverage on your base plan, always include suitable riders/add-ons at nominal extra cost. One of such rider is the premium waiver benefit rider. Depending on the rider terms and conditions, it waives off all the remaining premiums in case of the parent’s death (in some cases disability) without impacting the life cover benefit. This way you secure your child’s financial future even if an unfortunate event occurs.
6. Try to opt for a flexible plan that you can customise as per your/ your child's changing needs
A child insurance plan has to be flexible because children's needs grow with time. After all, the lack of resources shouldn’t force you or your child to compromise with their dreams. That’s why always choose the suitable insurance plan for your child that allows you pay-outs when needed. Also, some child insurance plans give you the freedom to include add-ons/riders as per your child’s requirements.
7. Do market research before you invest - Compare plans, premiums, and companies
Always look for the appropriate possible plan. For that research thoroughly, compare it with various insurance providers, their distinct plans, maturity benefits, premium amounts, etc. This will help you figure out the suitable plan as per your budget with the coverage benefits. Make use of online tools to calculate the coverage and the premiums, read the reviews and ratings of a company, and make sure that you choose a reliable company.
Conclusion
Just like all parents, you also want nothing but the secured life for your child. You wish to give them a stable and safe future, however, the unpredictability of life can be scary. Therefore, giving your child the security of a child insurance plan is indeed worth considering. Make sure to keep the given steps in mind when thinking about how to choose a child insurance plan, and without any further ado, consider giving your child the financial future he/she deserves.
Source:
1https://www.ndtv.com/business/what-does-it-cost-to-educate-a-child-in-india-and-how-to-plan-for-it-3272408
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