Lesser Known Facts about Child Insurance Plans

Child insurance plans are life insurance products designed with the financial needs of a child in mind. Thus, even when the child's parent may no longer be present, the child insurance plan may ensure the child receives financial support to live their life with dignity. However, many people may not have complete knowledge of child insurance plans. With an aim to raise awareness on the same, let’s look at some lesser-known facts about child insurance plans.

 

1. Child insurance covers the parent’s life

 

A lot of people may assume child insurance plans provide coverage for the child’s life. This assumption may often lead to them not considering these plans as a serious inclusion for their portfolio.

However, one of the lesser-known facts about child insurance plans is that they cover the life of the child’s parent. The main life insured in such a policy may be the parent, and in some cases, a guardian. The reason these plans are called child insurance plans may be because their main function is to secure the child’s financial future, with the help from the payout from policy, in case of demise of the insured parent.

 

2. Child insurance plans may be supplemented with riders

 

If you feel the default coverage of a child insurance plan may not be sufficient, you may increase its coverage with the help of riders, on payment of nominal additional premium. Some popular riders you may want to opt for include accidental disability and death rider, critical illness rider, family income benefit rider, waiver of premium rider, and so on.

For instance, if you opt for the family income benefit rider, your family may receive a regular payout if you were to go through an unfortunate event. Or, if you were to get diagnosed with a critical illness, the treatment for it may be taken care of by the pay-out provided under the rider.

These riders may help you and your family have steady financial support, regardless of the challenges life may bring. What’s more, this support may help your child continue their education and other pursuits without financial worries.

 

3. Child insurance plans offer various tenure and premium payment options

 

One of the things to know about child insurance plans is that they allow the policyholder to opt from different tenures and premium paying terms, just like other life insurance plans. Since each child’s need is different, the duration of the policy term may be different as well.

You may also get to select from different premium paying terms as per your budget and income-earning years.

 

4. Child insurance plans can provide financial support for different milestones of your child’s life

 

Many people may have the misconception that a child insurance plan may only help them provide for their children’s education. While that may be often the main goal of many parents, there may be other purposes of a child insurance plan, too. For instance, it may help them with financial support for an entrepreneurial venture. Or it may come in handy for your child’s wedding expenses etc.

When buying a child insurance plan, you may want to talk to your insurance agent and express the goals you may have planned for your child.

 

5. Child insurance plans have a savings component

 

Along with offering life insurance, one of the lesser-known facts about child insurance plans may be that they offer wealth accumulation features as well, depending upon the type of plan you choose. You may park your money into a child insurance plan and receive maturity benefits upon the maturity of the plan, depending on the terms and conditions of the plan.

If you were to pass away in an unfortunate manner, your child may receive the sum assured or the guaranteed maturity benefit, whichever may be higher. However, the plan may not end there. It may continue as a fully paid-up policy, until maturity, and may continue to accrue any applicable additions or bonuses. This may depend on the features provided by the policy and its terms and conditions.

As the points mentioned above may tell you, the features of a child insurance plan may be quite beneficial. It may not only help your child with fulfilling their goals but also provide you with a sense of financial well-being about the future of your little one.

Ensure to read the policy document thoroughly and ask your insurance agent regarding any other lesser-known facts about child insurance plans so you know what you may be signing up for.

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