The day you start planning for children is also the day you need to start planning for their financial future. With inflation, financial liabilities and the unpredictability of life, careful planning is essential. While you may have thought about saving for specific goals for your child, such as funding their education or marriage, it is equally important to prepare for unexpected expenses. This can include their healthcare expenses and ensuring their financial security if you are not around.

Providing for your child is your prime duty as a parent and a child insurance plan can help you achieve this peace of mind.

How to choose the best child insurance plan?

Selecting the best child insurance plan requires thorough research and consideration of your income, lifestyle and future goals. Your child, or you, may have specific ambitions, such as studying abroad or pursuing an intensive, high-cost professional course. You may also have aspirations for their marriage. All of these factors will determine how much you need to save. Additionally, you must also consider their healthcare needs and the impact of inflation on all these expenses. The child insurance plan you select must be able to provide adequate returns that can fulfil your goals within the desired timeline and your income capacity.

Tips that will help you choose the best child insurance plan

Below are some tips for selecting the most suitable child insurance plan based on your specific needs and financial goals:

Explore plans with premium waiver benefits

It is crucial to prepare for a time when you may not be there to support your child. Despite your best intentions, life can be unpredictable, and your child’s future should not be left at risk. Investments and savings can provide this essential financial support in your absence. However, many plans require consistent premium payments to stay active. If payments stop, so does the coverage.

Fortunately, some child insurance plans offer a premium waiver benefit. So, if something were to happen to the parent, all future premiums would be waived off, and the policy would continue. This feature secures your child’s financial future, even if you are no longer able to contribute to the plan.

Select market-linked plans based on your risk tolerance

When investing for your child’s future, it is essential to understand the three primary asset classes - equity, debt and cash. Cash refers to liquid assets, debt involves fixed-income securities and equity represents stocks. Cash carries no risk but also offers minimal potential for growth, while debt has low risk and low potential for returns. Equity, on the other hand, carries higher risk but offers more potential for growth.

Investing in equity-linked plans can be beneficial for parents if you are preparing for long-term goals, such as education and marriage. Although these plans involve higher risk, this risk can be managed over the long term. These plans can potentially help to secure your child’s financial future. However, it is crucial to assess your risk appetite before making any investment decisions. Also, some market-linked insurance plans offer life cover^` that can financially protect your child’s future in case of any unfortunate event during the policy term.

Evaluate a basic Endowment Plan

You can consider an endowment plan if you prefer low-risk, assured returns from your investment. These plans are more conservative and are ideal for those seeking a stable investment that ensures steady returns for their child's future. In addition to providing financial growth, endowment plans also offer life coverage^`, which helps you create a safety net for your child in your absence.

Determine the right sum assured and coverage

The sum assured in a child insurance plan should ideally cover essential expenses such as your child's education, marriage, healthcare and other significant life events. It is also crucial to factor in emergencies and the impact of inflation.

When determining the right sum assured, consider your child’s future goals, lifestyle aspirations and external factors like inflation to ensure adequate coverage for their needs. You can use online child plan calculators or consult with the insurance advisor for more guidance on a suitable amount for your needs.

Review premium payment options

Child insurance plans offer various premium payment options, including monthly, semi-annual and annual payments. Some plans even allow you to make a single premium payment at the start of the policy. You can look for a plan that offers these options for better flexibility.

It is essential to choose a payment schedule that aligns with your financial situation. Based on your financial capacity, you can identify and implement a payment plan that is manageable over the long term. This will ensure you are not forced to discontinue the policy midway due to other financial constraints and priorities.

Apart from these tips, it is important to read the policy documents thoroughly and understand the terms and conditions to avoid any hassle during and after the policy purchase.

Conclusion

Planning for your child’s financial future may seem like a huge task, but it can be streamlined with the right child insurance plan. However, selecting a child plan requires careful research and evaluation of your child's future financial needs. You must look for a plan that offers the potential to grow your savings over time and tackle inflation while also providing premium payment flexibility. Additionally, features such as the waiver of premium can ensure you maintain the policy without financial strain, irrespective of what happens in the future.

Remember to make informed choices, and you will be able to secure a stable financial future for your child.