Child Insurance Plan – A Need / Requirement

To live a comfortable life, it is required to take a significant life insurance cover. In this article I am going to describe the benefits of child insurance plan as children are very special for their parents.

Term plans cover the risk of early death and provide a high cover at a low cost. It gives a lump-sum amount to the nominee if the policyholder dies but the policy ends after death.

Whereas a child insurance plan offers a lump-sum amount on the death of the policyholder and policy does not end at that time. Main feature of this plan is waiver of premium. By selecting this plan all future premiums are waived and money is invested by insurance company on behalf of the policyholder. As the result, child gets the money at particular intervals as planned under the policy taken. In this way parents live a comfortable life by ensuring that his child will not face any difficulty even when they will not around him/her.

Mortality charges are higher for child plans as compared to a normal ULIP Plans. Child Plans gives both the insured amount and also the fund value to the nominee after the death of a policyholder.

Types of Child Insurance Plan

Child plans are available in both traditional and Unit Linked Investment plans (ULIP).

  • Money is invested in debt instruments under Traditional child insurance plan. It provides guaranteed maturity returns to your child when he needs the financial support.
  • In ULIP Plan, money is invested in both Share and debt market instruments. It contains higher risk but it also keeps the capacity to give higher return.

We can say that premium charged by an insurance company for a child plan is always higher than the premium charged for the term plan but the waiver feature of the child plan gives a tension free life to the parents. So, must take a child insurance plan for your baby to secure his/her future from all types of difficulties.