Introduction
Yes, a child can be covered under two child protection plan insurance.
Can you limit your love and affection for the child? Obviously no!
You, as a parent, will rarely feel that you have done too much for your children. However, as a caregiver, you will always wish to do more.
You and only you can give love and care to your child in abundance. When you can buy more than one toy for your child, purchasing a child protection plan insurance is more than fair. Though some of you may feel that insurance is an expense, the wise will know that it is money spent for a significant intent. Saving money for a child’s quality education or dream wedding, for that matter, may take a lot of sacrifices. Despite your determination, you may not always be capable of cutting down on your cost of living. That’s why you have different investment options and insurance policies to save money for your children.
Well, every financial product has its own advantage and yield. So you have to explore that to suit your needs.
If you are looking for alternatives to save money for your child’s bright future, you must find a child protection plan? Down here, you can read why owning an insurance policy is better.
- What is a child protection plan?
- Can a child be covered by two insurance policies?
- Why do you need a child insurance protection plan?
- Tips to know before buying a child protection plan life insurance.
- Conclusion
Table of Content
What is a Child Protection Plan?
A child protection plan is an investment cum insurance policy that offers financial safety for your child’s future goals. Simple?
If not, then know that it is a life insurance policy that allows you to save money for your child. The funds will help the child attain their future aspirations like higher education or dream destination wedding.
Who doesn’t want to save money for the child, but not all can set money aside. It is because the monthly expenses are high enough to spare some money. This is where the insurance plan plays the best. Though it comes with a cost, you can fetch higher returns with the investment feature of the plan.
The benefit of return from the insurance policy is higher than what you can generally save for your child. Hence, the cost incurred in buying the child protection plan is worth it.
Reading on a child insurance protection plan, you must know the exact purpose of owning a policy. But before that, you must understand whether having two insurance policies help?
Can a child be covered by two insurance?
Yes, the child can be covered under two insurances. Not necessarily; both the insurance plans are purchased at the same time. But each policy will pay as per the conditions specified.
Suppose Rajesh had 2 sons, Ankit and Mohit. He lived with a family of 6 (dependent parents, wife, along with 2 sons). The monthly expenses for the family were 70% of his monthly salary of Rs.70,000/-. These expenditures include fees, electricity bills, loan EMIs, etc. Rajesh thought that he wouldn’t be able to save enough for his son’s education out of the remaining amount. His colleague mentioned that he had purchased a child protection plan to save money one day. Rajesh bought the individual child plan for both his sons on the same lines.
Everything went fine for a few years. But with the education inflation of 10-12% in India, Rajesh found that all the money saved over the years will be less. This pushed him to buy another child insurance policy for his sons.
As soon as Ankit entered his graduation years, he requested his father Rajesh for a masters degree. Ankit wanted to specialize in data science. Rajesh was always happy to motivate his children for further education. He immediately purchased another child insurance plan. With two insurance plans, Rajesh felt that he would meet the child’s education requirements.
If you also wish that your child gets the best education without compromising quality, you must invest in a child protection plan.
Why do you need a child protection insurance plan?
A child insurance protection plan is a dedicated insurance policy that helps you save money for your child’s future goals.
Rajesh bought two insurance policies for his child’s future education because the insurance plan will help him:
- Financially Secure the child in his absence: The child insurance protection plan is a child-specific financial product that helps you save for your child’s education or marriage. Apart from the lump sum payment, the child insurance plan also provides periodic payments. These help to cover the crucial milestones in a child’s life.
The insurance plan will pay either on a specific period when it is required. For example, the child insurance plan continues the benefit even if the policyholder passes away. In such a case, all the future premiums will be waived off.
- Build Financial Corpus for child’s future: Both the insurance plans will pay in a lump sum on maturity/ at the end of the policy term. The money you saved over the years is invested in market funds. These funds can be equity, debt, and combined funds that help you generate returns over the investment you made. After years of premium payment and investment, you happen to build a considerable corpus of money. The amount of money can be used to fund your child’s education or marriage, as the need be.
- Tax benefit: The child insurance plan provides you tax benefits also. Though the prime intent of buying the insurance policy is not to seek tax deductions. But all the premium paid for the procedure is eligible for tax deductions under Section 80C of the Income Tax Act, 1961. The maturity amount received at the end of the policy term is tax exempted under Section 10(10D).
Other than these benefits, understand that you can increase the scope of a basic child insurance plan with riders.
Riders are additional covers that improve the coverage for you. For example, under a child insurance plan, you can choose rider covers like accidental death benefit rider, critical illness rider, hospital care rider, surgical care rider, waiver of premium rider, etc.
When buying or investing your money in two types of child insurance, you must keep a few tips in mind.
Tips to know before buying a child protection plan life insurance.
Here are a few tips to know before buying a child protection life insurance plan:
- Buy the plan at an early age
Buying a child insurance plan at an early age has its own benefits. It gives you ample time to save for your child’s future. Ultimately, you save more to support essential milestones in your child’s life. The savings cum investment component of the plan enables you to get high returns.
Any investment needs time to grow. The longer you are invested, the higher returns you will get. It will be supportive if you buy a child insurance plan at the time of their birth. You will have a good 18 to 20 years to collect the money for your child’s education.
- Choose the sufficient sum assured.
While you choose the sum assured under the child insurance plan, consider the education inflation rate. Understand that the cost of education will grow by manifolds in the future with inflation. For example, if the cost of an MBA degree at the present time is Rs.12 lakhs, you will need Rs.32 lakhs approximately for the same course, 10 years from now. So it has an effect on education inflation considered 10-12%.
- Look for benefits offered.
Explore what the benefits offered under the child protection plan are. Next, you must find out how and when the plan will help you. For example, besides building a vast corpus, the child plan will help your child even in your absence. This is a significant benefit because your child will never have to compromise on education.
- Evaluate the terms and conditions
Before buying the child plan, you must evaluate the terms and conditions. First, explore the conditions in which the claim/benefits will be payable. Along with the benefits, you should also analyze the exclusions (conditions in which the claim is not payable).
Conclusion:
Buying a child insurance protection plan is essential. But more than this, having an adequate cover also holds relevance. If one cover does not provide enough coverage, you must buy another child plan. You can buy both the child insurance policies either from one insurance or from separate.
The intent of both insurance policies will be to secure your child’s future dreams and goals. With a child plan, you can better collect a considerable fund. All the money can be received either at a specific period or at the policy’s maturity. You can buy the insurance policy online from here.
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