How to choose the right child plan?

Knowing a child plan and its function

When it comes to protecting the future of the child, no parent wants to settle for less. Creating a solid financial backup for his/her education, higher studies, marriage, or other life goals is only to ensure that none of their dreams remain unfulfilled, even in life's unfortunate circumstances. A child plan^[1] may fit the bill here. A combination of ann insurance and market-linked investment opportunity, these policies are designed to secure the future and life goals of the child financially^[1]. A part of its premium acts as the life cover for you, while the other part is invested in market-linked funds to fetch returns. The uniqueness of these plans is that they can remain active even after paying a death benefit in the event of the unforeseen. The remaining premiums are then waived off by the insurer , and plans benefits acontinues subject to policy T&C maturity benefit is paid when the policy expires. Hence, the child plan not only safeguards at the time of crisis but can also take care of the future needs when your little one grows up.

Let us now focus on choosing the right child plan.
 

How to choose a child plan?

There are choices aplenty in the market when it comes to picking a child plan. But to trace the one that fits you best, knowing how to choose the right child plan is crucial. Here’s a guide.
 

Identify the Exact Goals^[2]:

Proper planning can help you to make the most of your investments. Thus, it’s always wise to figure out what you need the money for and how much would be sufficient. Hence, among the steps to choose a child plan, the first and foremost can be chalking out the areas or goals for which you need to build the corpus. For instance, it can be for overseas higher education of your child, his/her marriage, or setting up his/her business. Once you know the exact goals, its easier to figure out how much fund is needed and which child plan would work best.
 

Look for the waiver of premium^[2]:

The chosen child plan, may help you more if it has the waiver of premium benefit. Under this feature, the plan continues to be in force despite paying a death benefit in the event of the policyholder parent’s demise. Here the remaining premiums are waived off by the insurer and plan benefits continue subject to terms and conditions of the plan, and the maturity benefit is paid in due course, at the end of the policy term or you can choose to avail premium benefits in chosen intervalsm. So, while choosing the right child plan, pick one with a waiver of premium option.
 

Do your Research Well^[2]:

One of the important steps to choose the right child plan is thorough research. It's always helpful to know in detail about the policy you plan to purchase, its features, benefits, and the charges involved. So, while you take your pick, a proper reading of the brochure or research on the internet could be a good bet.
 

Match your capabilities^[3]:

Most child plans are designed to benefit children when they turn into an adult legally. If you start early Cchild plans are usually of a longer policy term , designed to fetch you the best of returns. But that implies,but you’ll have to keep paying the premiums for a long time as well. On the contrary, if you choose a child plan later, you might have to pay higher premiums to build your desired corpus. So, to choose the right child plan, you may check your affordability and pick the one that fits the bill.
 

Consider the inflation^[3]:

Child plans are designed to fund the future needs of your child. The way prices are rising constantly, it might be beneficial to trace the probable inflation rate and take it into account while estimating the desired maturity value.

Knowing beforehand how to choose the child plan won’t cost you. Rather, it can help you take the right pick. The rest will fall into place.