How Does Child Insurance Plan Work?

how does child insurance plan work

Parents intend to offer the best of everything to their children. So, start investing good amount of money in different instruments on your child’s behalf. There are many insurance companies in India who have launched various child insurance plans online just to capitalize on the parents’ intentions.

This policy makes easier for parents to meet the financial requirements posed by vocational expenses, education costs and even marriage. Majority of people consider this plan as a secure source to raise fund which is generated for certain financial requirements which will arise at several milestones in the child’s future.

If unfortunate event occurs, then child insurance India comes to their rescue. Parents should evaluate the money based on personal financial policies of an individual.

Generally, child insurance is differentiated into two types namely, regular premium plan and single premium plan depends on the premium payment period.

Under regular premium plans, the yearly premium payments are done until the child turns 18 years old. After this period, insurance company in India pays back money in installments for around four years.

Usually, parents’ lives are insured under the plan. In case of parent’s demise before policy matures, then remaining premiums are waived off and insurer keeps the policy active till maturity. Child gets a sum assured after the parent’s death or can withdraw some amount as and when needed.

In single premium schemes, lump sum money is paid at the time of buying a policy. Each product which comes under child insurance India category has certain unique features.

Industry experts suggest buyers to select the best plan that fulfills your financial needs. But, do not forget to check child insurance age limit before finalizing a deal to avoid any kind conflicts in the future.

You can also take help of an expert financial planner to decide the inflation-adjusted amount which investors should have as the sum assured. It is advisable to start slow, but keep increasing the amount you invest every year. Also, child insurance gives tax benefits under Section 80(C) of the Income Tax Act.