Steps to Choose the Right Child Insurance Plan

Every parent wants the best for their child. From childhood days to education and career, you want to provide your child with everything they need to fulfil their dreams and live a secure future. However, the rising costs of living and education and the uncertainties of life make it a difficult task. This is where a child saving plan comes to your rescue.

The lingering thought of ensuring financial security to cover their medical, education, and marriage needs can be dealt with by getting a child protection plan. Not only do these savings insurance plans provide financial cover, but they also facilitate the fulfilment of milestones at different life stages.

You can find more than one best saving plan for a child in the market today! So, how do you pick the right one?

Here's a brief guide to help you choose a suitable child insurance plan:

• Identify and Prioritise the Financial Needs of Your Child
  Typically, a child's education, health and marriage are the three important goals that every parent wants to save up for. Out of all of these, education takes the front seat. Whether your child wants to go overseas for higher studies or take up a postgraduate degree within the country, you need to estimate the amount that is needed and the period over which the money needs to be accumulated. The same applies to your child's marriage. Make sure you factor in the inflation rate to get a realistic estimate.
  
  These numbers will enable you to identify the funds you need to save each year and the level of risk you are willing to take.
• Compare the Available Child Protection Plan
  Setting financial goals for your child's needs will help you narrow down the type of savings and protection plan to choose. Some of the best saving plan for a child falls into these two categories:
  • Conventional Endowment Plans
    Have a low-risk appetite? Don't want the unpredictability of financial markets to affect your savings? Then endowment plans are a great option. They offer a life cover and a savings component. You can accumulate funds to support life goals, including your child's education or marriage, and also secure their future. In case something happens to you, your child will be entitled to receive the sum assured.
  • Unit-Linked Insurance Plans for Children
    They are similar to other ULIPs, with the only difference being that the beneficiary will be your child. Since a part of the premium is invested in market-linked securities, a unit-linked child saving plan is a viable option if you are willing to take some risk. These plans offer good returns but are subject to market fluctuations. The best part is that you can spread your risk across different investment instruments to ensure better returns.
• Check if it Has a Life Cover and Offers Waiver of Premium
  To ensure your little dependent doesn't suffer financially in your absence, you want to make sure the child protection plan carries a life cover. With life being unpredictable, this ensures your child remains financially secure in case of your demise.
  
  You also want to be sure that they are not burdened with having to pay premiums when you are not around. Pick a policy that carries a waiver of premium or offers the same as a rider option. This way, your child doesn't have to pay for the policy on your death. Most insurance policies also come with other riders like accidental death benefit and critical illness. When saving for your child, these can be helpful.

Understanding your child's needs and following these steps will guide you in choosing the best saving plan for your child. Laying a strong financial foundation for your child early on helps build a secure future for them.