Benefits of Child Insurance Plan

Benefits of Child Insurance Plan

If you are a parent, then there is no doubt that you worry about your child’s future. There are several things to consider in the life of a growing child. Education, health, possible accidents, and security are some of the things that you worry about for your child as a parent. Several conventional methods like fixed deposits, asset accumulation, savings schemes, etc., can save money for your child. Here, we will discuss what is a child insurance plan and the benefits of child insurance plan.

Usually, people only go for insurance policies that give accidental and life covers. They don’t count a child Insurance plan as a reliable means of savings due to prevailing confusion over what it provides. There are several added benefits and security to a child insurance plan. But before discussing the benefits of child insurance plans, we must know about child insurance plans. Let us first understand what a child insurance plan is.

Child Insurance Plan

A child insurance plan, in simple words, is a security for all the expected and unexpected stages in the life of a child. You anticipate things that will require capital like higher education, savings for the future, marriage, and living expenses. One should also be aware of the unanticipated incidents like accidents, ailments, or even loss of life. One thing common about all these things is that they require money. And that too in a large amount.

Accumulating such large capitals at previously known stages may be possible. But gathering money for an unknown circumstance at short notice might not be possible. To avoid the troubles of having to arrange large amounts of money over a short span, many people look forward to a child insurance plan. In short, a Child Insurance Plan is the way to secure the future of your child financially. Let us now find out about the benefits of Child Insurance Plans.

The Benefits of a Child Insurance Plan

There are several benefits to acquiring a child insurance plan for your child. These benefits also include financial support and the subsequent emotional reassurance obtained from it. The following section briefly discusses some of the most popular benefits of a Child Insurance Plans.

Sudden Demise of Guardians

Child insurance policies also have clauses that protect the child after the demise of the earning guardian. It will ensure that there is no economic burden on other non-earning members or on the child itself. Most insurance agencies will waiver the remaining premiums or refund the capital invested along with some benefits.

Tax Benefits

Child insurance plans come with tax benefits. The amount you pay as premiums are not considered while paying taxes. And the money obtained at the maturity of the insurance policy is also not considered during taxation. So, you can enjoy the full benefit of all the capital and returns without any tax deductions. However, all tax benefits are as per provisions of Income tax Act, 1961, and subject to amendment from time to time.

No Loss to Principal Investment

A lot of investments are subject to depreciation. Their value or condition may depreciate, causing loss of Principal Investment. But an Insurance Plan safeguards your capital from such loss. All savings insurance policies guarantee a capital return with incremental interests and perks.

Educational Support

Most child insurance plans include supports for child education plans. Otherwise, you can even get a specific Child Education Plan from insurance agencies that focus primarily on the child’s future educational expenses. The best child education plan will include the costs of high school or college tuition fees, hostel & mess fees, books & stationery fees, maintenance fees, convenience fees, and costs of electronics tools for education. If your child is young, a Child Plan for education will reduce your financial liability for their higher education.

Achieving Future Goals

The best child plans give maturity benefits when the child turns 17 or 18 or the age of college education. Not all children will choose to go for higher education in the future. Some may have other plans and ventures in mind for a stable source of income. So even if the child doesn’t choose education, the returns from a child education plan can be useful here. Also, some children may get other financial aids and scholarships for higher education. On such occasions, too, the returns can be useful for some other family or individual purposes.

Developing A Savings Mindset

Like most insurance and investment policies, child insurance plans develop a mindset more inclined towards savings rather than spending. This savings mentality in you can also inspire your child to develop a similar mentality from a young age. One of the best child plan methods is to educate your kid from the very beginning regarding financial behaviours.

Loan Collateral

Several banking companies provide an option to use an insurance plan as collateral for a loan. As insurance plans accumulate capital, showing them as security or collateral to get a loan is possible.

Advantages of a Matured Policy

The insurer gets back all the capital and returns on successful termination of the insurance policy known as maturity. There are also different benefits to a policy whose premium payments are always on time.

Advantages of a Partially Matured Policy

Apart from the maturity benefits of an insurance plan, there are also some benefits for partially matured policies. If some need arises, insurance providers allow the customer to withdraw all, or part of the invested amount. However, there may be some deductions for terminating the policy mid-way.

Cover for Serious illnesses

Apart from education, child insurance plans also mainly focus on health coverage. Health coverage will include treatment costs for included illnesses, accidents, dental coverage, operation & implant costs, and psychological support, in accordance with the terms of the coverage. These child insurance plans will provide security during unexpected events.

To Conclude

Now you know about all the benefits of the child insurance plan. When a family is facing unexpected adversities, insurance will give them the financial security to face it. Which, in turn, will provide emotional support, at least to some extent. So, don’t wait for something bad to happen and ensure your child’s future today with a Child Insurance Plan.

Disclaimer:

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale

Consult with your financial advisor before making any decisions on insurance purchase.

Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time

Suggested Plans

Bharti AXA Life Guaranteed Income Pro

  • A Non-Linked, Non-Participating Individual Life Insurance Savings Plan
  • 4 Income options to choose
  • Guaranteed 10% Addition of Annualised Premium (as per the terms and conditions of the policy)
  • Get all your premiums back at the end of the payout period under Long Term Income and Deferred Income variants
  • Flexibility to choose premium payment term or policy term

Bharti AXA Life Super Series

  • A non-linked non-participating individual life insurance savings plan
  • Range of investment duration and returns
  • Guaranteed money back benefits (provided policy is in force and all due premiums have been paid)
  • Income tax benefits (as prevailing tax laws in India that are subject to changes)

Bharti AXA Life Shining Stars

  • Non-linked, non-participating limited pay endowment Life Insurance plan
  • Designed to take care of the financial needs of your child.
  • Flexibility to opt between 2 Maturity Payout Options
  • Flexibility in Policy Term/Premium Payment Terms
  • A great short-term investment option for a child insurance policy.

FAQs

How can I save money for my child’s future?

There are several savings and investment schemes to save money for your child’s future. While such schemes can have higher return rates, they might come under taxation, and taxes are deductible. An insurance plan is the most popular means to save money for your child’s future because the returns are exemptible from tax. Please note that tax benefits are as per provisions of Income Tax Act, 1961, and subject to amendments from time to time.

Is child education plan good?

Child education plans are mostly provided by banking and government agencies. Through these, you can invest money for the child’s future educational expenses. Thus, removing the burden of providing a large sum at a time during higher studies. So, yes. Child education plans are good.

How do I choose an insurance plan for my child?

To choose the best insurance plan for your child, you must first look at the risk elements. Some of the other things to look for in an Insurance Plan for a child are add-on covers, tax benefits, premium amount, rate of returns, etc. Also, the sooner you start an insurance plan for your child, the better it is, because an early insurance plan will ensure maximum benefits.

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