APRIL is the month when children after crossing one milestone move to the next.
This is also the time when most parents for the first time realise that their child is growing up and may be faster than their rate of planning for the child's future. Though multiple new career opportunities have emerged, competition at the same time has also increased manifold. It is not uncommon to find a father spending sleepless nights thinking how his beloved son or daughter would cope in this competitive world.
This is the time for self actualisation and realisation to plan for your child.
And this is why child insurance plans have been gaining in importance.
The awareness about child insurance has risen substantially over the past few years. Max New York Life Insurance conducted an extensive ethnographic consumer study, which showed that the child insurance segment had an awareness level of 99 per cent, present ownership of just 16 per cent with 12 per cent intending to purchase a plan. What explains the rising interest in these insurance products within this segment and why life insurance when there are a number of financial instruments available in the market today?
The most common explanation is the need to provide for children's education and facilitate their subsequent smooth transition to the professional field. Life insurance is probably the only financial product available to address and facilitate multiple parent-child needs, let us look how.
Higher education, marriage, financial security of our children are some of the most important milestones that we all save for. However, with rising cost of living in today's world, simple saving instruments would not be enough to meet the aspirations for one's children.
Child plans facilitate planning for children's needs and most importantly provide financial protection. In case of unfortunate event of death of the parent the beneficiary is entitled to receive guaranteed sum assured immediately. In addition there are plans today, which will continue to operate the unit account until maturity of the policy. All future premiums in such cases are paid by the company on behalf of the life insured until policy maturity thereby ensuring that the purpose for which the policy was originally purchased is accomplished.
Life insurance plans are also the only financial instruments that provide multiple fund options in just one instrument, allowing one to choose as per their risk profile. These plans also allow partial withdrawal facilities to help enhance your child talent.
Regular systematic investments in such a product help enhance savings over the long term and provide guaranteed commitment to the child's educational goals, professional career and overall financial well being. Statistics support this argument as well.
How should a parent go about planning finances for his child? The best way to build up a healthy corpus over the long-term is by starting investments early.
Investing smaller portions of the savings at regular intervals goes a long way in building a healthy corpus.
Parents also benefit from the compounding effect (the interest keeps getting added up to the principal), which increases over time.
In short, the following points should be kept in mind while purchasing a child insurance plan--time frame for building a corpus, which includes age at which the fund would be required and amount required to build the desired corpus, and the cost implications of education.
As a parent, you wish to provide the best to your child. A child insurance plan helps meet this objective and holds the key to securing a child's future. In depth research of insurance products and careful assessment of future needs remain important tools to enable you as a parent to get the ideal plan for your child.
