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2. Be a Responsible Parent by
Choosing the Right Child
Insurance Plan
3. It has been observed that most parents start planning for
the child’s future quite late. Their focus on meeting the
rearing priorities usually leads to overlooking their financial
planning. To reap the benefits of financial investments, it is
always advisable to opt for financial planning for child’s
future during the child’s formative years (3-8 years) to
ensure ready sufficient funds when the child is ready to
embark on a career. Given the rising costs of school fees,
this is a significant moment of truth for today’s parents. The
earlier they start planning and investing, the longer is the
investment period and better the returns.
There is a bewildering range of choices available today in
child insurance plan market. So, what do parents do?
Parents must choose child insurance plans that are
designed to serve the sense of responsibility that sets in
new parents about giving the best to their child’s needs. If
chosen well, a child plan is a solid long-term vehicle to
4. These plans inculcate a sense of discipline among the
parents to invest systematically over the long-term. These
investments can be made in funds that can earn returns
that match the escalating costs of education. Finally, these
plans have options that protect the child’s future plans in
the unfortunate event of death of the parents.
So, how should you choose an insurance plan for your
child’s future? I will offer you four simple tips.
Start planning and invest for your child’s future as
early as possible : Insurance companies offer plans with
maturity benefits structured to coincide with the child
attaining 18 yrs or ‘timed’ release of payouts at critical life
stage from 18 yrs onwards. These plans offer a long
horizon to invest which helps you systematically build the
corpus. So, quantify your goals with a certified financial
planner and choose a plan that encourages such long-
5. Invest in plans that offer premium waiver benefit: Most
child plans offer premium waiver benefit either as an option
or as an essential feature in the main plan. What premium
waiver does is this – in case of the death of the parent, the
insurer waives off future premiums to be paid while the
insurer continues to fund the insurance policy till the
maturity. This makes sure that the maturity benefit that was
set for a certain age remains intact as planned in addition to
the death benefit paid.
Choose a plan that offers a mix of investment options
and adequate risk cover: Make sure you invest in a child
plan which offers a balanced mix of growth & debt funds and
option of risk cover. Empirically, equities give the best
returns in the long run. Make sure that insurance plan that
you choose offers you the right mix of capital protection and
growth. Also, choose a plan that has the system transfer
option to make sure your gains in the investment are
protected. Lastly, take adequate risk cover (atleast twenty
times the annual premium) to ensure that the death benefit is
a substantial lumpsum that can help your family in case of
6. Read the product brochure and understand the costs
of the product: Insurers lay out the charges that the
customer needs to pay for the policy clearly in the product
brochure. Compare the products available in the market
on their charges, the reputation of the insurer, claim
settlement ratios (available on the websites), flexibility
offered and their service quality perception.
Buying a Best Child Plan is a significant step in securing
your child’s future. I suggest you make it a high
involvement purchase by researching the products in the
market, probing the insurance agent on the features,
charges and past performance and satisfying yourself with
evidence on every aspect of the product. Do this and your
child will think of you as smart parents twenty years from
now. That should make it worth it.
Source: http://blog.hdfclife.com/best-child-insurance-
plan-532360
