Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Buying child insurance not an impulse decision

By Soloman Subscribe to RSS | November 28th 2011 | Views:
loading
 
  



There is a bewildering range of choices available today in the child insurance plan market. There are terms bandied about – triple benefits, premium waiver and guaranteed benefits, to name a few.

Financial planning doesn’t come naturally to us and when we are bombarded with such jargons, our instinct is to procrastinate (which by the way comes naturally to us). So, what should parents do?

Well, let’s start with what got them to evaluate child insurance plans. Firstly, there is this sense of responsibility that sets in with new parents about giving the best to their child. Next, there is stronger awareness of the escalating costs of primary education, professional courses and key life events like wedding. Lastly, possibly for the first time, parents start thinking about their own mortality and what would happen to the child in the event of an untimely death. These factors prompt parents to search for a financial vehicle that can address these needs.

Child insurance plans are designed to serve these needs and, if chosen well, are a solid long-term vehicle to manage a child’s future. These plans inculcate a sense of discipline among parents to invest systematically over the long term. These investments can be made in funds that can earn returns that match the escalating costs of education. Finally, these plans have options that protect these future plans in the unfortunate event of death of the parents.

So, how should you choose an insurance plan for your child? Here are four simple tips:

• Start planning and invest for your child’s future as early as possible: Insurance companies offer plans with maturity benefits structured to coincide with the child attaining 18 years in age or ‘timed’ release of payouts at critical lifestages from 18 years onwards. These plans offer a long horizon to invest, which helps you systematically build a corpus. So, quantify your goals with a certified financial planner and choose a plan that encourages such long-term behaviour.

• Invest in plans that offer premium waiver benefit: Most child plans offer premium waiver benefit either as an option or as an essential feature in the main plan. What premium waiver does is this – in case of the death of the parent, the insurer waives off future premiums to be paid, while the insurer continues to fund the insurance policy till maturity. This makes sure that the maturity benefit that was set for a certain age remains intact as planned in addition to the death benefit paid.

• Choose a plan that offers a mix of investment options and adequate risk cover: Make sure you invest in a child plan, which offers a balanced mix of growth and debt funds and a risk cover option. Empirically, equities provide the best returns over the long run. Make sure that the insurance plan you choose offers you the right mix of capital protection and growth. Also, choose a plan that has the system transfer option to make sure your gains in the investment are protected. Lastly, take adequate risk cover (at least 20 times the annual premium) to ensure that the death benefit is a substantial lumpsum that can help your family in case of your demise.

• Read the product brochure and understand costs of the product: Insurers lay out the charges that the customer needs to pay for the policy clearly in the product brochure. Compare the products available in the market on their charges, the reputation of the insurer, repudiation rates (available on the websites), flexibility offered and their service quality perception.

Buying a child insurance plan is a significant step in securing your child’s future. I suggest you make it a high- involvement purchase by researching the products in the market, probing the insurance agent on features, charges and past performance. Satisfy yourself with evidence on every feature of the product. Do this and your child will think of you as smart parents 20 years from now. That should make it worth your while.

Soloman - About Author:
The writer Subrat Mohanty is a senior vice-president, strategy and product at HDFC Life Insurance India.
http://www.mydigitalfc.com/insurance/buying-child-insurance-not-impulse-decision-715

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/insurance-articles/buying-child-insurance-not-an-impulse-decision.htm

Related Insurance Articles Subscribe to RSS

Limitation of cheap classic car insurance
Published by Katiehomles on February 25th 2012 | Insurance
You bought a classic car and now you worry about worry its maintenance. The classic car insurance is...
 
Auto insurance at its best in Michigan
Published by Autoinsurances on March 6th 2012 | Insurance
It is illegal to drive uninsured vehicles on Michigan roads. Michigan is also regarded as the no-fa...
 
Don’t dare drive in Massachusetts without auto insurance
Published by Autoinsurances on January 14th 2012 | Insurance
It’s important to acquire auto insurance Massachusetts if you are intending to drive your automobi...
 
Commercial insurance: Perfect Plan designed for small businesses
Published by Andrew Edwards on April 2nd 2012 | Insurance
Consider the plan next time while starting a small business and don’t have sound knowledge of the ...
 
Private Hire Taxi Insurance will provide you best insurance
Published by Atif Saleem on December 10th 2011 | Insurance
If you have taxi driver and want to get batter taxi insurance with a driver, you can get information...
 
Georgia health insurance plan supports you during your bad time
Published by Ricky Martin on June 20th 2012 | Insurance
Whenever you are in trouble, you need some helping hand at that time. Those phases called bad times ...
 
A Different type of life insurance
Published by Jack Travis on December 9th 2011 | Insurance
Disadvantage of this type of life insurance is that it will be automatically terminated once the per...
 
What do self-employed people need to know about health insurance?
Published by Andrew Low on February 10th 2012 | Insurance
If you live in the UK and take out health insurance, it is unlikely that you will be able to offset ...
 
How to find cheaper van insurance quotes
Published by Robmarshall on April 17th 2012 | Insurance
No matter for what purpose you own a van whether for a commercial or personal use, an individual has...
 
Significance about the automobile insurance
Published by Shyam Singh on March 5th 2012 | Insurance
Renegotiate the automobile insurance handful of folks consider. But maybe it's completed each year. ...
 
Four steps to get the cheapest car insurance
Published by Jameshilton on January 12th 2012 | Insurance
Car insurance has been made mandatory by law. But with the rise in car insurance premium rates, it i...
 
Comparable New Mexico auto insurance rates requires a keen eye
Published by Alabamaauto Insurances on January 17th 2012 | Finance
New Mexico has many sources of information regarding the best auto insurance quotes which includes t...
 
Operational liability affairs unravel by commercial general liability insurance
Published by Andrew Edwards on March 21st 2012 | Insurance
Here we are going to make the decision on commercial level plans which are making it possible...
 
How to go about getting cheap van insurance
Published by Gregorypeck on March 20th 2012 | Insurance
There is no doubt that if you have a van, you need van insurance coverage. As you probably know, van...
 
Online health insurance quotes
Published by Lessardcasey on February 11th 2012 | Insurance
Comparing health insurance quotes to find the best deal for you can be done through HealthInsuranceQ...
 
To get insurance for your Vauxhall vehicle
Published by Ahmadgill on January 26th 2012 | Insurance
We can give you help to get Vauxhall Corsa Insurance and spread rates on getting insurance that is b...
 
Understanding professional indemnity insurance
Published by Sally McGill on June 18th 2012 | Finance
Personal indemnity offers an effective tool to counter certain claims that an individual or business...
 
Georgia health insurance plan is excellent option for your health cover
Published by on June 23rd 2012 | Insurance
Only getting health insurance policy is not important, getting the right one is more important, beca...
 
Business insurance guide for young capitalists
Published by Andrew Edwards on December 16th 2011 | Insurance
Starting up a business is not that big deal now, lots of options we have that will make it quite eas...
 
Say no to restriction imposed by cheap classic car insurance lenders
Published by Anneshirley on April 12th 2012 | Insurance
Classic car are the heritage cars, so if you own one then you are the lucky person on earth. It is a...