As parents, we strive to provide the best to our children. We endeavour to give them more than we had so that they do not need to deal with the same hardships as us. Life is uncertain and things can change with a snap of the fingers. To combat the uncertainty, a foolproof plan needs to be set in place. Financial planning proves to be incredibly beneficial in the long run, for you and your children. One such addition to a financial plan for your child’s future is investing in a life insurance policy.
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Need for Financial Planning
Various life events need to be taken into consideration when it comes to laying out a smart financial plan for your child. These events can be for your child education plan, wedding, medical emergencies, buying a house, etc. Financial planning provides a structure to your finances and pushes you to create a path for you to walk on to achieve your financial goals. When it comes to making a child plan, it needs to place their present and future needs at the forefront.
Want to read more in Hindi? Checkout: नोबेल पुरस्कार की हक़दार हुईं दो वैज्ञानिक महिलाएं
What Does Life Insurance Include?
A life insurance policy is a contract between an insurance company and policyholder. It guarantees a sum assured will be paid to the beneficiaries on the death of the insured or on the maturity of the life insurance term. There are various kinds of life insurance plans available and you can choose the one that suits yours and your child’s needs best. For instance, there is something known as term insurance that provides coverage for a certain period (term). If the insured dies during the term specified in the policy, the benefit will be paid. Another option to consider for a child plan is ULIP. Unit-linked Insurance Plan (ULIP) is a dual benefit option where an investor gets the insurance and investment under a single integrated plan. There is also a particular life insurance child plan that is designed keeping children in mind.
Life Insurance Child Plan
Child plans are insurance cum investment plans that help parents create a corpus to secure their childrens’ present and future. On maturity, these plans pay a lump sum amount which can be utilised for different purposes such as paying your child’s college fees, marriage expenses, etc. A child plan enables the policyholder to secure their child’s future while simultaneously building up an investment corpus. In case of a child insurance plan, the parent is the policy owner while the child is the beneficiary.
Benefits of Getting a Life Insurance
Financial Stability & Security
Investing in a life insurance plan is a great way to ensure your money is being saved and put aside for future purposes. It takes away the stress of dealing with unexpected financial troubles. Your child does not have to start from scratch if you have started investing early on in life.
If the insured is the breadwinner of the family and happens to pass away, the insurance money will act as an income replacement. You can opt for the amount to be paid as a lump sum or break it down in installments. Either way, it does not hamper with your child’s present or future.
A life insurance child plan is designed in such a manner that the child is financially protected at every stage in life. Most child insurance plans offer a maturity period associated with the child’s important ages, such as 18, 21 or 24.
A life insurance child plan is a vital inclusion in your financial plan. It ensures your child’s present and future financial needs are well-taken care of and if ever an emergency occurs, there is a safety net to fall back on.
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