Importance of Child Insurance Policy | Shriram Wealth Architecture

Investing in a child insurance plan might not seem like a good idea because a child does not have financial value (there is no insurable interest) nor are there any liabilities or dependents. However, there is a misconception that the child’s life is to be insured. The truth is that in a child plan, the parent is the life assured while the child is the nominee!

A child plan is a popular financial vehicle to build a corpus for your child. It takes into account the various milestones in your child’s future for which a substantial amount of money might be needed.

A proper financial plan ensures financial support at every milestone of your child's life. Child insurance plans are specially structured to meet a child's financial needs. Hence, to help your child fulfil all their life goals, it’s advisable that you invest in a child plan.

However, before you opt for a child insurance, you need to understand the full scope of such insurance policies. 

Importance Of Having a Child Insurance Plan

Following are some reasons that justify the importance of purchasing a child life insurance plan:

1. Funding Child’s Education: Child plans can help you invest your money and grow your corpus to fund your child’s higher education. Higher education abroad can be very expensive, with the help of child life insurance plans you can create a corpus and provide for your child’s education. You can fund your child’s higher education with the help of maturity benefit that shall be provided to you at the time of plan maturity, child life insurance also allows partial withdrawals, so you withdraw some amount during the policy term if required. 
2. Financial Security for your Child: Child life insurance plans help you provide financial security for your child. In case of your unforeseen demise during the policy tenure, the death benefit shall be provided to the child, in case the child is a minor then the death benefit shall be provided to the appointee. The sum assured on the demise of the parent can ensure the financial security of the child in their parent’s absence.
3. Partial Withdrawals: Child life insurance plan allows partial withdrawals, which help you to fund your child’s extracurricular activities such as singing, dancing, gym etc. This way you can nurture your child’s talent. You can withdraw a certain amount before the maturity of the child life insurance plan.

Conclusion

Child life insurance plans can help you create a financially stable future for your child, this type of plan can help you fund your child’s education, extracurricular activities, medical emergencies. This child insurance plan can be very helpful in case of an unforeseen demise of the parent because it provides financial support to the child in case of an unfortunate demise of the parent during the policy term. A parent must buy a child life insurance plan to provide for their child’s expenses.

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