Thursday, 29 October 2015
Choosing the Best Insurance Plan for Your Child
Parenting brings immense pleasure and joy to us. Along with
this it brings a sense of responsibility, which can sometimes seem scary. The
best way to avoid such scares is to plan for things which are predictable and
then deal with situations for which we are not prepared.
One situation that we can always prepare ourselves for is the
financial need of the children. Broadly speaking, the needs can be classified
as medical, educational and marriage. Once we prioritise the needs we must
allocate the required funds to meet these needs.
These can be met either by way
of investing in mutual funds or bank deposits in your name and making the child
the nominee or directly investing in the child’s name which will yield you such
sums that you need at the particular time.
While investing in children plans you must keep in mind two
important factors:
1. Inflation – You require the funds at a later date and
therefore must keep in mind the inflation at the time you require the money.
2. The exact time when you need the returns.
Having calculated these, you must analyse the plans that best
suit your needs. There are a few plans, features of which are discussed below.
You must analyse various plans and understand how they work before investing in
the plan. The child investment plans help you to build a corpus that may come
in handy for your children’s needs.
Different plans have different characteristics. You have to
analyse the features in detail and choose the policy with care. Some features
that could be considered for
comparison are listed below:
Self-funding of premiums:
Some of the insurance companies pay the premium from their
own funds in case the policy provider dies. This ensures that the maturity
amount reaches the child as intended.
Flexibility of the plan:
Some plans allow for partial withdrawals; these plans help in
case of urgent needs without disturbing the other planned expenses and income.
This flexibility to switch investments from one fund to another allows you to
capitalise on the market conditions. It also protects you from the volatilities
of the market.
Child
insurance plans are available in two flavours: traditional and unit-linked
(ULIPs). While they are very different in their working and features, both help
in creating the much need financial security. Unit linked plans (ULIPs) are
market linked and therefore come with an inherent risk. The traditional plans
suit the needs of those who are risk-averse.
Children plans have an added advantage over other plans as
they give the payouts to children even if the policyholder is not around. Most
of these plans are structured to give timely amounts for education needs,
marriage needs and sometimes even for the business ventures as seed capital.
Many of the top insurance and banking companies offer child
plans. Here is a comparison between them. Readers are wisely advised to check
the policy details and invest in the one that suits their needs.
In the ULIP category the following child plans are available:
Assessing your needs and future requirements, form an
essential part of buying a child plan. After careful consideration you may
choose to invest in any of the child plans that are available in the market. If
you have risk taking abilities then ULIP plans may work best for you. If you
have a conservative mind set then the tradition plans suit you best.
Wednesday, 28 October 2015
Child Plans
Child
plan secure future of your child as well as offer the financial security for
his education. Most child insurance plans are designed for education benefits.
Today
quality education requires huge amount, hence to meet this tremendous
educational fees these plans are the best option in front of every parent.
All
leading insurance providers offer this plans with attractive premium. These
insurance plans come with lot of benefits such as death benefits or critical
illness benefits.
If
proposer that means parent dies during the policy period, then remaining
premiums are waived and child will continuously get all benefits of the policy.
Some child plans offer medical insurance coverage with the plan for your child.
Hospital
and medicine expenses are covered under this medical coverage. You have lot of
options available for this plan such as sum assured, premium waiver benefit,
policy term and mode of premium payment. Every plan comes with its own
benefits.
Child
plans offers efficient and effective investment for your kid. Unfortunately
if the child dies when policy is in force, then the policy holder will get paid
premium back before commencement of risk and policy will terminate.
After beginning of risk period, the policy holder will get sum
assured or accumulated amount whichever is high. If every thing will work out
finely, then your child will get specified amount as per the policy.
Normally risk period starts after five year of policy for these
insurance plans. If you take the policy in early years of child, then premium
is very low. You can take this policy when your child attains the one year age
or even at the time of birth of the child. These Child
Plan policies pay periodic bonus amount also for unforeseen expenses
of the child.
You can systematically craft future of your kid with the help of
this policy. Premium also depends on coverage area and more coverage will cost
more premiums.
We will help you to find out best child
plans with maximum coverage at reasonable premium. You will get free quotes
from website of insurance companies. These quotes will help you to find out
best deal for your kid. We will help you to understand complicated terms of the
policy documents.
We have negotiated the best for you and you can apply through us
to avail the benefits of Child Plan. We will forward your
application to right insurance provider within no time. You can trust us for
our services and forget all your worries.
Tuesday, 27 October 2015
Friday, 23 October 2015
Child Life Insurance Plans in India
No joy can be greater than becoming a parent and to have
your child in your arms. However, this happiness comes with a new set of
responsibilities. Every parent strives towards providing their kids everything
they would need; starting from birth of the baby to his/her studies and
marriages to their eventual settlement.
The biggest dream of every parent is to provide a secure
life to their children. Every parent wants the best for their kids. Choose a
Child life insurance policy to ensure that their future is bright. Child plans
offer the much needed financial support to the children.
Child Life Insurance Plans assist in handling the expenses
for marriage and higher studies. This becomes more crucial if, due to some
unforeseen circumstances, the family loses its breadwinner. A child plan
secures his/her future under all the circumstances. Its helps you fulfill all
the demands of your children without any compromise. To get a secure future for
your child and a stress free life for yourself, all you are required to do is
to invest a small amount from your income. This will take care of all the major
expenses which you and your kid would face in the coming years.
Importance of a Child life insurance plan?
- A best child plan is needed to make certain that his/her future is secure. It is needed to aid them in leading a life of their choice by catering to the specific requirements and dreams of every child; to make certain that his/her needs are fulfilled at the right time.
- To help them in getting their choice of education as well as assist them in extracurricular interests.
- To ensure that they can choose a career of their interest, without worrying about the economic support.
- To make the dream of a perfect wedding come true; both for parents and their children.
How to select the most suitable Child plan?
If you are wondering on how to choose a suitable child
insurance plan, then have a look at these suggestions below.
- Understand the probable future needs of your child then choose the plan which can fulfill those specific requirements.
- Consider every angle of the risks and your capabilities to bear them.
- Do decide with careful evaluation that whether you want to reap all the benefits at once or at different stages.
- You can choose broadly from two variants: traditional plans and ULIPs.
Best time to choose Child Policy:
There is no specific time. You can decide on best
child plan insurance as soon you realize that it is needed. It can be on
the day when your baby is born or the day he/she goes to school for the first
time.
Things to be careful of:
When finalizing an insurance plan for child, make sure you
have a trusted appointee for the plan. In case of your unseen absence, the
appointee should be capable of taking care of your child in the best possible
way; till your child becomes capable of handling his/her responsibility
himself/herself.
Tuesday, 20 October 2015
Friday, 16 October 2015
Unit linked child plans: Should you buy?
Every parent wants the best for his/her child. It is every
parent’s wish that financial constraints do not come in way of his/her child’s
education or career. Hence, when you are approached with a specific investment
plan to provide for your child’s future education or wedding expenses, the
product becomes too irresistible to ignore.
The sales pitch is so strong that you start to feel guilty if
you choose not to invest in such a product. After all, the product has
everything. It has an element of insurance, offers attractive returns and if
the most unfortunate were to happen, the insurance company pays all the future
premiums on your behalf.
There are many child plans offered by various life insurance
companies. All such products have a similar structure although specifics might
vary a bit. Child plans come in two variants: Unit linked insurance plans
(ULIP) and Traditional (guaranteed payout) plans. Unit linked child plans
provide market linked returns.
Should every parent buy a child plans
for his/her child? Or are there better products available? Is a simple
combination of term insurance plan and mutual funds better than a child plan?
We have always maintained that you must buy those financial products that you
need to buy, not what the intermediary (agent/broker) wants you to buy.
Therefore, before you purchase any financial product, you must
understand all its costs and benefits and compare its performance against the
competing products. In this post, we shall focus on unit linked child plans and
do an objective assessment of the product features and performance and assess
whether such plans should be part of your portfolio. We shall discuss about
traditional child plans in a subsequent post.
Similarities between unit
linked child plans and regular ULIPs
Like regular ULIPs, unit linked child plans are insurance
cum investment products. A part of the premium goes towards life cover
(mortality charges) and other policy charges (premium allocation,
administration, fund management etc) and the remaining is invested in funds as
per policy holder’s discretion. Invested funds provide market linked returns.
If the policy holder survives the term of the policy, the fund value is paid to
the policy holder. Taxation benefits (entire premium counts under IT section
80C), liquidity restrictions (no withdrawals allowed for 5 years) and cap on
charges are same as regular ULIPs.
Unit linked child plans are, in fact, a variant of type II
ULIPs. Under type II ULIPs, in the event of death of the policy holder, the
insurance company pays the beneficiary both sum assured and fund value. Under
type I ULIPs, in the event of death of policy holder, the insurance company
pays only the higher of sum assured and fund value.
How unit linked child plans
differ from regular ULIPs?
Under regular ULIPs, both death benefit(sum assured) and the
accumulated fund value are paid to the beneficiary upon death of the policy
holder and the policy ceases upon payment of such benefits. Under a child plan,
only the sum assured is paid to the beneficiary upon demise of the policy
holder and only the risk cover ceases. The fund value is paid to the beneficiary
only at maturity of policy. The family of the policy holder need not pay any
further premiums to the insurance company. The insurance company will pay the
entire or part of all future premiums. These premiums, like other premium
installments, will get invested and the beneficiary will receive the
accumulated fund value at maturity.
Comparison with a combination
of term plans and mutual funds
We have already established that a combination of term
plan and mutual funds gives better performance than a regular ULIP plan in a previous post. Let’s see
how a unit linked child plans
fares against this combination. We will first do a qualitative assessment of
how various product features will impact product performance.
Unit Linked Child Plan as an
insurance product
Under a unit linked child plan, maximum sum assured is capped at
a certain multiple of annual premium. Sum assured allowed under the child plan
typically varies from 10 times annual premium to 40 times annual premium for
people with age less than 45 years at the beginning of the policy. This is a
limitation as your ability to pay premium restricts your life cover. However,
your child’s future needs do not depend upon your payment ability.
Unit Linked Child Plan as an
investment product
Under unit linked plans, policy holders have multiple fund
options (equity, balanced, debt, money market) etc for parking their investment
amounts. For comparison as an investment product (with mutual funds), you need
to compare the charges because charges eat into the amount that gets invested.
There is no reason to believe that the investment returns will be higher in a
particular product. Hence, the more funds that get allocated towards
investment, the more you get in terms of maturity benefits.
Tuesday, 13 October 2015
Infograph – Safeguard your Child’s Dreams
Bajaj Allianz
Life Insurance Child plans and policies offer security against constraints like
inflation and rising educational expenses.
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