If you are evaluating various investments and saving schemes
to build a solid corpus to fund your growing child's higher education and other
important events of his life, search and compare child insurance plans. Giving
college education to children has become very difficult without proper planning
unless you are very rich. Child insurance plans promote systematic savings and
good returns on your investment. The insurance quotient of these plans makes
them an invincible product to cater child needs and fortifying his future.
These plans fall under the category of investment cum insurance plans. Unlike
other popular saving and investing schemes like Mutual funds, Public provident
fund (PPF), National savings scheme (NSC) etc the child insurance plans protect
the child from the financial hazards arising from untimely death of the
policyholder parent.
In the event of the unfortunate demise of the policy taking
parent the insurance company waives off the remaining premiums and continues
the policy. The company pays the sum assured to the child at the maturity of
the policy. To understand the plan better you may take assistance from a
qualified life insurance expert. Child insurance plans can be either
participating life insurance plans or non-participating life insurance plans.
In participating plans you are eligible to share the profits of the company in
proportion to the premium paid by you along with the sum assured. In
non-participating plans you get the guaranteed maturity benefit and death
benefit with no share in the profits.
Some people argue that why they should have child insurance
plan and start paying premiums now when there are options of education loans
available. They strengthen their argument by saying that at present they don't
know the potential of their child. Maybe when he grows up he won't go for
higher education or would have some other talent like entrepreneurship. To such
parents the answer would be, these plans help generating a good amount of
corpus and readies the child with a good amount of money that can be either
invested in studies or in some business or in any other important event like
marriage.
Education loans are a good option and are very popular but
they put a big burden of repayment on your child's shoulders right from the
starting of their careers. Such burden compels them to take a good employment
in order to be able to pay off the loans. In the pressure of such burden they
can't even think of taking up entrepreneurship as they can't afford the
gestation period. Moreover, in some cases their other life goals like getting
married or buying a house get delayed.
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