What is Child Protection Plan Benefits, Eligibility and more: Child protection plan is a good investment for parents as it provides complete coverage to the child. It covers children in case of death of parents and financial emergencies. Such plans ensure that your children do not have to struggle financially in the absence of an earning parent.
What is Child Protection Plan
Child Protection Plan provides financial security for the future of the children. Parents can create this cover of protection through child protection plans, which come with life cover, income benefit and market-linked returns on the parents.
One of the major benefits that most child insurance plans offer is the facility of premium waiver on the death of the parent. When the parent dies, the insurer pays all the remaining premiums for the policy. Keeps accumulating money through market returns till the end of the policy term.
Child Protection Plans Features
The key features of the best child protection plan are as follows:
- Providing coverage for the parents from the birth of the child till the age of 25 years.
- Choice of multiple fund options including high risk equity funds and low risk debt funds.
- Option to switch between funds if their market performance is low.
- Sum Assured on death of parent , waiver of premium, and fund value on maturity.
- Flexibility in choosing the policy term, premium paying term and high sum assured.
- Choice of investment strategy.
- Capital Guarantee means that the entire amount invested is returned at the end of the policy term.
Why should one buy a child protection plan?
Market linked returns
The cost of education continues to rise as the inflation scores. Your savings alone cannot add up to money for your child’s education, be it in India or abroad. To build a big fund, you need to take risks. If the market does well, you have a chance to grow your savings with the right child protection plan. Whatever amount you deposit, your child gets the entire amount on maturity.
Tax benefits along with savings
The premium paid for child protection plan is eligible for tax relief under section 80C and 10(10D) of the IT Act, 1961 of India. Hence, you are not only securing your child’s future but also saving.
Monthly income for children
There are also many child protection plans that come with regular income for a specified period. This money can take care of your child’s daily needs through their school or college tuition.
Death benefit on death of parent
With at least a life insurance cover, you can be sure that your children get paid the death benefit amount in case of your demise. This amount can be used for their education or to give wings to their dreams even when you are not around to support them.
Types Of Child Protection Plans
You can choose a child protection plan based on what future goals you want to fulfill. It could be education, marriage, wealth creation etc. Child protection plans come with life cover on either the child or the parent. The type of child protection plan to buy depends on your needs, budget, future plans, current savings etc.
How does a Child Protection Plan work?
The insured (parents in this case) decide an amount that the child will receive on their death or maturity of the policy. In return for this protection, insurers charge a premium amount that can be paid monthly, quarterly, half-yearly or annually. The insurer decides the premium amount based on your preferences, your age, child’s age, your future goals etc.
During the policy term, the insurer adds Bonuses and Loyalty Additions to the Base Sum Assured, thereby increasing your savings. At the end of the policy term, the child receives the maturity amount or the Final Fund Value (if any).
Now if the parent dies within this policy term, the beneficiary of the insured gets the death benefit amount along with accrued bonuses and additional returns. And the premiums to be paid in future are waived off but the policy continues till maturity.
The Bottom Line:
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