Financial planning for children is not as complex as parenting. Just some early, sensible planning with the right insurance products can ensure your kids have a guardian angel for the most vulnerable period of their lives. There are several ways of doing it – one is by buying children specific policies offered by most insurers. Parents can also provide for their children by buying adequate term insurance, by purchasing ULIPs with additional built-in benefits or even by buying traditional money-back policies that provide for regular return of money, if available with premium waiver benefit.
These different policies address some important needs of every responsible parent – providing a safety net to their children in the unfortunate eventuality of something happening to them and planning much in advance for the increasing financial needs of growing children.
Many parents sensibly opt for a high term insurance cover for themselves to provide for their families. However, children specific plans from insurance companies go much further. Not only do they provide the safety net of an insurance cover, they also help plan cash-flow needs. For instance, children will typically need more money once they step out of school to go for a college degree.
There are some prime considerations while buying policies for children. They need to provide for lump sum and staggered payouts to plan for such requirements in the future. Another important element is that there be a premium waiver benefit (PWB) i.e. if the parent is unable to pay all premiums due to an unfortunate premature eventuality, the payments are waived off and the benefits continue as it was intended to. Some parents may even choose a wealth creation ULIP for themselves with some additional kicker as the best way to provide a safety net for their children.
Listed below are five unique insurance policies that one look at while planning for a child’s future:
Plan with additional risk covers – LIC Jeevan Lakshya
Jeevan Lakshya is a with-profit, non-linked endowment insurance plan with integrated PWB that makes it an ideal choice for the protection of child’s future. Apart from generating guaranteed yearly benefits on death of life assured, it will also provide lump sum benefits at the time of unfortunate eventuality, if taken with term rider and accidental death rider.
Plan for regular returns – SBI Life Smart Champ Insurance
This is a traditional participating child insurance plan, it helps in securing your child’s educational needs in four equal annual instalments after your child turns 18 years of age.
Plan for wealth creation – HDFC Life Sampoorn Nivesh – Classic Waiver Benefit
This is an ULIP plan of HDFC Life Insurance company with integrated PWB, which apart from the goal to provide additional return through equity exposure, also provides loyalty additions to enhance fund value.
Plan with enhanced returns over time – Edelweiss Tokio Wealth Plus Rising Star
This is an ULIP plan of Edelweiss Tokio Life Insurance company with in-built PWB, in which some extra amount over and above the premium amount is added every year to boost the scope of return.
Plan for getting funds at important life events – Bajaj Allianz Young Assure
This is a traditional savings insurance plan that ensures dreams like education, marriage etc are fulfilled irrespective of any eventualities.