Your child needs two kinds of financial protection primarily. One is for his education and career-building. Another is for his other financial needs in your absence. Therefore, it’s a good idea to buy a child education policy and a term insurance plan to meet both the respective needs of your kid. Let’s learn more about these plans and why you should opt for them.
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Child Education Plan
What Is It?
A child policy helps meet your kid’s financial requirements during your lifetime and after your death. Being a beneficiary, your child gets the maturity amount in regular/flexible payouts or a lump sum. This kind of policy can help finance the higher education of your children and other milestones and also take care of their financial needs when you are no longer there to provide for them.
Why Should You Opt for It?
A child policy can offer the following benefits:
- Easy finances for higher education: You can choose a suitable investment tenure for the plan in a way that it matures right before when your child pursues higher studies.
- Protection against untoward situations: This kind of plan also offers a life cover. That is, your child will get a death benefit upon your death. Insurance riders like those for critical illnesses and accidental death are also available if you choose a bit higher premium.
- Protection for your child’s future: The plan can also secure your child’s future and financially make him ready to confront any uncertainties.
Besides these benefits, the capital and the returns can be completely enjoyed without any tax deductions.
Term Insurance Plan
What Is It?
A term insurance plan is a simple kind of life insurance. It offers a high cover amount at a very nominal premium and is one of the cheapest forms of life insurance. If you die during the policy tenure, your beneficiary will receive a death benefit. However, no benefit is received if you survive the tenure. If you make your child the beneficiary, he/she can receive the cash benefit after your demise. This can be an additional financial backup to that offered by child insurance.
Why Should You Opt for It?
A term insurance plan offers financial protection not only for your child but your whole family in the event of your unfortunate death. This can help your loved ones meet their daily expenses hassle-free and achieve their long-term financial goals as well. Plus there are optional covers like those of an accidental death or critical illnesses. All these are great reasons to buy a term plan while you get to pay affordable premiums.
Moreover, the premiums you pay can qualify for a tax deduction of up to ₹1,50,000 according to Section 80C of the Income Tax Act. The tax benefits are even extended to the death benefit received by the beneficiary.
Keeping in mind the above benefits of a child policy and a term insurance plan, consider whether you need to invest in one of them or both. In either case, make sure to choose a renowned insurance company in India.
