How to Choose the Best Child Investment Plan?

A child investment plan is one of the safest ways to secure the future of your kids as it is a combination of investment and life insurance. It protects the financial future of your child in case something unfortunate like death or disability happens to you during the coverage term. Parents have realized that an investment plan can safeguard their children’s future by taking care of their education expenses and other financial needs.

Since several insurers are offering the best investment plans for children, people are often confused about how to choose the best child plan. On this page, we will talk about a few crucial points that will help you make a well-informed decision while selecting the best child plan.

Factors to Remember When Choosing the Best Child Plan

We have talked about the important factors to keep in mind when selecting the best investment plan for your children below. Please check.

Calculation of Approximate Costs and Your Future Goals

Due to the rising inflation, the prices will rise immensely when your child grows up in the distant future. To deal with this, you should calculate the approximate costs for the future considering the inflation and rising expenses on education. It will help you get an estimate of the future requirements of funds. To choose the best child plan, you should know a particular amount, investment horizon (time in your hand to get the desired returns) and future goals so that you can plan the investment accordingly.

Invest as Early as Possible

One of the crucial aspects of a child investment plan is to start it early to enjoy the benefit of compounding. The early investment would help you secure your child’s future in an assuring way. Investment Plans for children usually provide the maturity payout when your child reaches the age of 18. So, if you start early, you get a longer investment horizon which means more time to build a corpus.

On the other hand, if you invest when your child is close to attaining maturity, you might get insufficient maturity payout to deal with the higher education expenses and other important things such as marriage, etc.

Understand the Key Features of Different Child Plans and Compare Accordingly

Another essential thing to ensure when selecting the best child plan is to closely look at the several exciting features of the plan – Sum insured options, plan options, policy term, premium payment term, premium payment frequency, partial withdrawal facility, loyalty additions, premium amount, discount on premiums, loan against the policy, etc. Understanding these features in detail will help you choose the right plan as per your needs and future goals.

Analyze Your Risk Appetite and Choose Plan Accordingly

Child plans mainly come in two forms – Unit-linked Insurance Plans (ULIPs) and Endowment Plans. In ULIPs, insurance companies invest a portion of your premium in equity and debt funds to give you market-linked returns whereas endowment plans act as a safe investment by offering fixed returns.

So, it is crucial to analyze your risk appetite and investment horizon before selecting the best child plan. You can choose equity-linked Plans if you have a high-risk appetite and a longer investment period (at least ten years) else choose traditional endowment plans. You should also check if your plan offers a systematic transfer plan so that you can protect your investments by shifting your portfolio from equity to debt anytime.

Whether a Plan Offers Premium Waiver Benefit or Not

When choosing a suitable child plan, you should check if your plan offers a premium waiver benefit either as an inbuilt feature or add-on. With the premium waiver benefit, the insurer waives off the future premium payment if the policyholder (parents) dies during the policy term. With this benefit, the plan will continue and your child will get all the benefits even if you are not around.

Multiple Rider Options To Boost Your Coverage

Several child plans offer a wide range of rider options that you can choose by paying an additional premium. Some of them are Accidental Death Benefit Rider, Accidental Permanent Total/ Partial Disability Benefit Rider, Critical Illness Benefit Rider, Hospi Cash Benefit and Family Income Benefit Rider. When selecting a plan, you can enhance your overall coverage with these rider options.