Importance of an Insurance Policy for Children

As a parent, one of the most important things you can do is to make sure that your children are protected financially. Raising your kids with the vision of a better and more secure future is a parent’s top priority. It is possible with a child insurance plan that covers the uncertainties of life.

The policy helps provide for your child’s future if something happens to you before they become adults. Some benefits of child plans include:

Securing Future

You never know what might happen tomorrow. But with a child insurance plan, you can rest assured that your child’s financial needs will be taken care of if something happens to you. This plan covers their financial and basic needs like living, education, and medical care.

If you are the primary breadwinner in your family, your sudden demise would have a major financial impact on your loved ones. With a child insurance policy, your beneficiaries can use the maturity amount to make ends meet.

Child plans cover your kid’s future and fund their higher studies through a systematic investment. Your kids will get a corpus amount to achieve their goals and fulfil their dreams.

Emergency Fund for Kids

Sometimes money is the only saviour in the case of an emergency. Children’s insurance plans also provide a partial withdrawal facility, which can come in handy at such a time.

If your kid falls ill or is going through expensive treatment, the insurance company allows a partial withdrawal from your fund for their treatment. Such child plans provide relief to the insurer and their dependents.

Provides a Monthly Income Benefit

Some insurance policies also cover monthly expenses in extraordinary circumstances. If you are disabled and unable to work, the child insurance plan will provide a monthly income benefit to your beneficiary. This benefit can help cover their living expenses, such as groceries, utility bills, etc.

Premium Waiver Facility

Usually, premiums for insurance policies should be paid irrespective of the time frame you choose. But destiny may have different plans. In case you fall prey to a chronic illness or are disabled during this tenure, what will happen? Don’t worry.

An insurance policy for children offers a premium waiver facility to bring relief to your family in such times. With this facility, they will not have to pay any pending premiums on the policy. At the same time, the plan’s benefits will continue until the end of the policy’s tenure.

A College Education Fund

Higher education is expensive, whether your kid wants to study in India or abroad. You need huge funds for admission and other fees. The education plans can offer you a backup to fulfil these demands.

These child plans can provide a college education fund to help pay for tuition and other expenses. This will ensure that your child can finish their education, even if you are no longer there to support them financially.

Loan Collateral

Insurance policies for children can be used as collateral for loans as well. The most important reason for buying an insurance plan is to secure your child’s future. But if you have an emergency, you can use this policy as collateral to take a quick loan from any financial institution.

Tax Benefits

A child insurance plan also offers huge relief to the insurer with tax benefits under Section 80C of the Income Tax Act of 1961. The premium paid for these schemes is tax-free up to Rs 150,000.

Also, payments received after maturity are tax-free under Section 10(10D).

Savings Fund

Besides providing financial protection, an insurance policy also acts as a savings fund. If you invest in this plan systematically, you’ll get an impressive return at maturity.

Survival benefits can also help with your kid’s marriage or higher education or even fund their start-up business.

Peace of Mind

Finally, a child insurance plan can give you peace of mind. Knowing that you have a financial safety net for your children can help you sleep better at night. And if something does happen to you, your loved ones will be taken care of financially. It can also help pay for your child’s education or other expenses.

But life insurance isn’t the only benefit of getting this policy. It also becomes an investment component in your financial strategy, especially if you choose a ULIP child plan. Due to the rising inflation rate every year, these plans can help you invest in the equity market and reap the benefits of inflation-proof returns. They will bridge the gap between your investment objectives and tax-saving equity plans.

You can also leverage the investment component of a child insurance policy by investing in different options, including debt funds, liquid funds, or hybrid plans, depending on your risk appetite. With a diversified portfolio, you can face market volatility without losing your money. And if the returns aren’t what you expected, there’s always a chance to switch your policy to better funds or schemes.

Conclusion

As you can see, a child insurance policy has several benefits for your family’s future and financial objectives. However, you must select the right plan according to your income, age, health conditions, and goals. You should work with a certified professional to make the right choices.

If you want to buy insurance online that suits your needs, visit Piramal Finance for more information and talk to our life insurance agent about the different options available. Get the best advice regarding all financial products, such as insurance, EMI, and personal loans, from your well-wisher and financial expert, Piramal Finance.