Your Child is Dependent on You For His/Her Guaranteed Education !!!

By: Srikant Tapadiya

Children are completely dependent on their parents for their upbringing, both emotionally and financially. Sudden demise of the bread winner in the family (majority of the times, it is the father) may hamper all the plans carved for the future of child. Hence covering this risk is very essential.

One more reason why we should priorities this responsibility of bringing up the child is the time factor. Children need to get their desired proper education during their right age, it cannot be postponed like any other financial goal in case of emergency.

Hence protecting the risk related to children education should be the top most priority.

What is Child Insurance?

Child Insurance, logically means, the protection against financial losses in the event of sudden demise of the earning parent. Hence, through Child Insurance, the child future can be safeguarded. With this calculation, the earning parent should be covered through Child Insurance and not the child. So, if at all you are buying any Child Insurance plan, make sure that the parent is the life assured and not the child.

The benefits offered under standalone Child Insurance plans are unique –

• Waiver of Premium after the demise of the Life Assured, the earning parent ( this is unique feature of Child Insurance)

• Sum Assured would be paid to the Nominee (the child) in case of death of the life assured (earning parent) 

• Maturity benefits to the Nominee (the child) after the maturity of the policy.

Before you opt for any Child Insurance plan, make sure that you calculate the required amount for your child education and marriage in your absence (the value should be arrived at considering the inflation).

Inflation is the biggest invisible demon in the financial planning process. While planning for your child education and marriage too you need to consider the effects of inflation.

To summarize, before you take up any Child Insurance plan, make sure you arrive at the total amount needed for your child entire education and marriage expenses keeping inflation in mind and the value thus arrived should be the future value at present date. This much should be the cover related to Child Insurance.

Risk related to Child Education and Marriage can be protected through Term Plan, Endowment Plan, ULIP Plan and standalone Child Insurance Plan. It is better to go with Term Insurance plan to cover this risk. However, Child Insurance plans too offer attractive features.

Take advice of your Financial Advisor before you come to any conclusion.

However, do not forget that this risk needs to be covered on top most priority.