Before opting for child insurance, you must consider various events for the child such as schooling, higher education, hobbies, sports, etc. and make provision for it.
There are several options available to you when choosing a children’s plan. Several insurance companies offer plans for children. However, note that some of these plans are market-linked policies that allow policyholders to invest in both debt securities and stocks. There are also traditional plans that invest the investors’ premium only in debt funds.
What is a Children’s Insurance Plan?
With a children’s plan, a child’s needs are taken care of even if the parents are not around. These plans provide guaranteed payments to fund the child’s education and hobbies so they can lead a comfortable life. Children’s plans are known to offer higher returns compared to traditional investment avenues such as PPFs or FDs. That said, choosing a suitable child diet is not easy.
Here are some things you should consider before buying a kids plan;
1. Starting early with these types of investments secures the child’s future from the start. These plans usually have a long-term horizon in which to invest, which helps investors build their wealth periodically. Therefore, according to experts, choose a plan that encourages long-term investment.
2. Choose a plan that suits your child’s needs and goals, as each child’s goals and ambitions are unique. That way, experts say, you’ll have the right financial planning in place to help your child achieve their dreams.
3. For investors with a high risk appetite, equity linked plans are the ideal option with a considerable duration of at least 10 years or more. this way your investment will grow, as long-term stocks tend to give good long-term returns. Also ensure that the children’s plan has a balanced mix of debt and growth funds as well as risk coverage.
4. For investors with low risk appetite, endowment plans could be opted for. If you don’t like to take risk on your investments, endowment plans will not only provide you with adequate coverage, but will also provide protection against volatile market conditions.