child policy, the return is linked to the market return on debt or equity, depending on the option chosen.
In a child policy, the life assured is the parent. The premium waiver rider is available invariably in all child policies, in which case the future premiums are waived in case of the demise of the life assured. It is advisable to separate insurance and investment. You can take a term policy with waiver of premium rider and invest in mutual funds to maximise benefit and return. The sum assured will depend on the future cost of need of the child— education, marriage, etc.
How do deductibles work in health insurance policy?
In an insurance policy, the deductible is the amount of expenses that must be paid out of one’s pocket. The balance is paid by the insurer in case of a claim. The policy becomes cheaper if deductibles are opted for. A company can also reduce the claim burden. For example, if the sum assured is R5 lakh with a deductible amount of R50,000 and the claim is R2 lakh, the company will pay a claim of R1.50 lakh only. Top-up policies are cheaper and are becoming popular due to deductibles.
The author is chief financial planner with Max Secure Financial Planners. Send your queries at firstname.lastname@example.org