What is Life Insurance for Children?
Life insurance for children is a legal contract between the policyholder and the insurance provider. This life insurance plan comes with a dual benefit of insurance and investment. In other words, one part of the premium you pay is used for insurance, and you can use the remaining part for investing in market-related options such as stocks, shares, bonds, etc., for wealth generation.
Let us now understand the benefits of investing in life insurance for children.
1. Financial Security
One of the key benefits of investing in life insurance for children is that it provides financial security to your child. In case you come across an unforeseen event, such as the untimely demise of the breadwinner, your children might have to face financial struggles while continuing their life. Life insurance for children will ensure that your child is financially secure and can continue with his or her life without any hassles.
2. Wealth Creation
In today's time, relying on our hard-earned money for the present and future is not enough. Due to the rising cost of living and inflation rates, it isn't easy to manage our current expenses and future financial requirements as well. Investing in life insurance for children provides you with the benefit of wealth creation. With this, you can invest in market-related options, such as stocks, equity, bond, etc., for wealth creation.
3. Tax Benefits
Another key benefit of investing in life insurance for children is tax benefits. You can claim up to Rs. 1.5 lakhs of tax benefits under Section 80C of the Income Tax Act, 1961. However, these laws are subject to change from time to time.
4. Facility to Partially Withdraw
There might come up a financial emergency wherein you will require some amount of money immediately, such as school fees for your child or if your child gets diagnosed with a medical condition. Life insurance for children provides you with a facility to partially withdraw a certain amount of money after your policy completes the lock-in period.
You now know what life insurance for children is, its importance and its benefits. Investing in life insurance for children will ensure that you and your family have peace of mind and do not have to face any financial struggles in the coming years.