Saturday, 16 August 2014

Top 10 Tips To Buy Child Insurance Plans

Parenting brings joy, but comes with a lot of responsibility as well. It is always wise to plan your children’s medical, education, and marriage expenses in advance to prevent any chaos in future.
You might already have an insurance plan for yourself, but it is important to secure your child's future with specific child insurance plans. Your children will get the returns when they grow, and the funds can be used for education and other expenses.

Child Insurance policy is both insurance and investment. It serves two purposes:
1.    Financially secures the child’s future
2.    Provides finance in various stages of your child’s life – like going abroad for higher studies, starting a business, or getting married.

Child plans give you a head start on savings, right from your child’s birth until they are able to withdraw the returns when they reach adulthood.

Here are the main parameters to consider while buying a child plan:

1.  While investing in a child insurance plan, consider the following two main factors:
•    Funds will be used only in the future. So, make a note of inflation and price rise at that time.
•    The precise time periods when you would want the returns.

2.  The premium amount will more or less depend on the assured sum and maturity amount preferred by you.
3.   Consider the premium payment mode:
•    If you have the funds, then you could consider going for a single one shot premium or one-time payment
•    For easy payment facility, you could pay regular premium on quarterly, half-yearly, and annual basis
4.  The rule of thumb is that the assured sum must be at least 10 times your current salary or income.
5.  The policy term you choose must be according to the financial needs of your child at various stages of his life. For example, education plan must mature when your child completes schooling and is ready to step into college. If you are planning to get returns for your child's marriage expenses, then you have to choose term of around 20 to 22 years.
6.  Calculate the total assured amount that you will need when the plan matures and then invest accordingly. Take into account your affordability to pay the premium, inflation rate, current liabilities, and other financial factors. On maturity, the amount can be obtained as a periodic payment (every five years) or as a complete settlement (single payment).
7.  Always opt for a child plan that has the provision for waiver of premium. This stipulation enables the plan to continue, even if the policy buyer dies. The child will be covered even if the parent becomes disabled and cannot pay the premiums. However, the waiver applies only till the child reaches a particular age and when they are capable to pay their own premiums.
8.  Some parents choose to withdraw a part of the maturity amount earlier, instead of opting for a single payment of the total amount. This feature of ‘partial withdrawal’ will help to meet the child’s financial needs at crucial moments.
9.  It is vital to select a trustworthy appointee for the child plan. The appointee must be capable of taking your child’s responsibility in your absence. In case of an unfortunate event, the claim and child’s responsibility is passed on to the appointee. Choose an appropriate person who will truly care for the well-being of your child.
10.   There are many several child plans to suit your needs and budget. Compare quotes from various insurance providers before buying an insurance plan.
Hope these tips were helpful to choose right plans for your child. Buy a plan now and secure your child’s future. For more information about insurance,

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