Every parent dreams of watching their child prosper. However, sometimes you need assistance for making your child’s future a better one.
A child plan is designed to secure your child’s future. This plan comes with a range of features to ensure a better return and protection that will help your child get a better chance at education.
Following is an overview of some of the many helpful and useful features of a Child Education Plan:
- Waiver of Premium Benefit
Waiver of Premium (WoP) is an essential feature of a child plan. This feature is applicable if the parent dies within a specified time. In such a situation, the sum assured will be paid to the nominee, while the premium due for the remaining policy term is paid by the insurer.
At the maturity of the plan, the child is eligible to receive the maturity amount as stated in the policy document.
- Partial Withdrawal
It is often observed that parents like to withdraw the fund value in multiple fragments whenever they require it. This feature is often chosen to fulfil the financial needs of the child at various stages. Many plans come with an alternative of partial liquidity after the child turns 18.
- Sum Assured
The sum assured in a child education plan is the amount that is paid in event of the untimely demise of the parent. The thumb rule states that the sum assured should not be less than at least 10 times your current income.
- Instants Financial Protection
In the case of the death of an earning parent, these plans pay a lump sum amount. This money is entirely tax-free and is usually adequate to pay off any immediate debts so that child education is not affected.
- Maturity Amount
You should select the maturity amount considering your child’s future, for which you can consult a financial advisor. Also, keep in mind the inflation rate along with interest rates and all other aspects. You can get the maturity amount as a lump sum or spread it over 5 years.
- Policy Term
When you realize that your child is old enough to make his/her own decisions, then it is the optimal time for the policy to mature. Select the policy term to meet the exact period. For instance, if one of your child’s age is 10 years, then select the policy term of 8 years.
- Premium Amount
This is subject to the sum assured and the amount of maturity benefit you choose. You may choose to pay the premium amount at regular intervals or for a specific period. Most of the life insurance companies provide options such as annually, semi-annually, quarterly, or monthly mode of payment. The amount of premium differs depending on the sum assured opted for in case of traditional plans.
- Loan Benefit
You can also get secured loans against a child education plan.
Giving your child the best possible education is every parents’ duty. So, make sure that you compare and analyse all the plans to avoid hampering your little one’s future.