Child Plan – Make Sure You Understand the Benefits

The comprehensive & judiciously done monetary planning exercise has got its own benefits compared to when it is done in a different manner. Why financial planning for a child must be different? With the child insurance plans, you have an option to ensure that your child’s future is secure, as the child plan is modified knowing the long term advantages for the children.

Advantages offered by the child plans

With the growing financial awareness & increasing inflation, many parents today are using child plan for protecting their children financial future. The child plans with the investment and protection offerings generally come with many short & long term advantages for the children. Some highly prominent benefits of the child plan will include below.

Get financial support for the child’s future

The child plan makes sure your kid financial future will be secure with the payouts on maturity. Money accumulated over the period of time will be used for their higher education and other financial requirements of the child.

Today doing MBA from the reputed college will cost between Rs. 15 to 20 Lakhs. When your child grows, the cost might escalate to 25 to 30 Lakhs. The child plan takes into account this inflation since they offer a benefit on the total premium paid on the policy tenure at maturity.

Pre-determined payouts

Most of the Kotak child plan in the market today provides periodic payouts as the prefixed percentage of sum assured. With the periodic payouts getting planned at different stages of the child’s life, the short term and medium term financial requirements are fulfilled with complete ease.

You do not have to worry about the premium payment in worst case of the premature death of the parent As the parent, you do not need to worry of the future premium payouts if you are not around at that time of the premium payment. In an unfortunate event of the demise of a parent, the child plan comes totally bundled with different features of the premium waiver and lump-sum death advantage offered to your surviving child at the maturity.

Flexibility to select the investment mix

The parents can select an investment mix for the child plan between the high-risk investments or lower risk investments. That depends on risk factor & financial needs, the parents may either select to regulate their investment mix on own or look for the automatic mode keeping the safety of their child’s corpus paramount.

The collateral choice for the higher education loan

If your child wants an education loan for the higher education, the child plan will be used as the collateral safety for your loan. Therefore, with the child plan, you don’t need to worry about offering the collateral security for the education loan.

Looking at child plan benefits at one glance

   The child plan is perfect for saving for the child’s future education and expenses such as marriage.

   The child plan makes sure the financial future of the child will be secured with the maturity benefits and Payouts.

   These plans provide period payouts very helpful to manage the child-related costs such as school and tuition fee.

   These plans offer the benefit of the waiver of premium, by doing away with the premium obligation in case of policyholder parent demise during the policy tenure. The child plan offers the lump sum payout and death benefit to your child on maturity.

   Child insurance plan is used as the collateral for the higher education loan.

   Child plans act as the income protector devise for the children who begin earning at a younger age such as talented actors and singers and others.

   The policyholder will choose the quantum of the investment in debt & equity for the ULIP child plans.

There are many long-term & short-term benefits to avail the child plan; some of them are given below:

Savings for the child’s Education

It is one most basic advantage offered by each child plan. With the minimum premium payment, one can redeem their returns as significant as ten times of the paid amount. The amount is enough to cover fees of the higher education, college and might be overseas education, which depends on the money that you invest in your plan.

Support Child When You Are Not There

You may not be totally prepared for any unfortunate event like death. In an event of the death of the parent during your child plan term, the insurer will provide the premium waiver. Therefore, beneficiary—being your child—won’t need to pay any remaining premium, and may receive a lump sum amount like promised at a time of buying this policy from Kotak mutual funds.

Income Protection for the child

Bright & talented kids, like junior actors, artists, and singers, generally tend to make substantial income at a young age. The child plan will act as the safe investment for protecting their income & grants them the benefit of capital appreciation over the long term.

Collateral for the Higher Education Loans

Higher education is costly. Suppose you are planning to avail the education loan for a child in the near future, you may use this child plan as the collateral. Besides educational loans, the child plan can be used as the collateral for many other child-related offerings and borrowings.

Support of Child in Illness

The plans also come with the provision of the partial withdrawals, which will allow you to withdraw the lump sum money from your yet-to-mature child policy. Suppose your kid has to be hospitalized because of some medical condition and accident, such payouts are quite useful to cover all your medical expenses. The pay-out may act as the add-on for the health insurance policy.

Besides all these benefits, the child plan is disciplined or one way to save and safeguard your children future. Thus, why not to purchase one now and make sure your child has a very bright future? The child plan can also be purchased for the child of 14 days old, and with the policy term that will vary from 15 to 25 years.