How To Secure Life Insurance Coverage For Your Child

People say that bringing a child into the world is one of the biggest challenges of life. Many would argue that raising and planning for the future of the child is far more challenging than that. As a parent, providing for the child’s dreams and future mean everything. Therefore it is critical to set up a system to build up enough financial reserves so that the child can receive a quality education and pave the way for the best career path in life. 

The best way to accomplish this is by setting up a life insurance policy for the child. This is important as it works as both, an investment and as a failsafe should anything unexpected or life-threatening happen to you, the parent. 

But with so many insurance companies and various different policies provided by each, there are some key factors that need to be considered before finalizing the correct child insurance policy. 

Identify and approximate the financial needs of your child 

The first step should be to identify the broad range of financial reserves that are needed according to the child’s aspirations.

Each child is unique. Their interests and passions become apparent from a very young age. These interests generally tend to shape their future and it provides parents with a rough idea to plan better for their goals. It is important to note that nurturing their interests and passions will incur a recurring cost that can continue for up to 15-20 years. This should go beyond including the cost of education, things like extra-curricular activities, travel, lodging and boarding (if planning for education abroad) etc. 

When and how to build to start planning

It is imperative to start saving and investing as early as possible. Even small amounts invested over a span of 10-15 years will yield a substantially large reserve. To begin, it is important to assess your income, saving patterns, evaluate current investments and assets, debts and liabilities, and your condition of health. 

Accordingly, once you are aware of the amount of financial reserves, calculate the amount of funds required to secure your child’s future. There are several child-focused wealth creation plans that allow you to start with small monthly investments that you can expand over a period of time. 

Advantages of having a child insurance plan

A child plan offers the dual advantage of insurance as well as investment. This helps ensure that your child’s financial future is secure even in your absence. By starting early you can reap long-term benefits like pay-outs during important milestones and maturity benefits. 

In the event of a premium paying parent’s passing, death benefits are paid to the nominee and the rest of the premium is waived off. There is no lapse in the policy and the child receives the full maturity amount at the end of the policy term.

It can be a great and valued gift for your children or grandchildren. In case you want to leave a financial legacy behind for your child or grandchild.

When planned correctly, child insurance plans help secure enough money for the child to have a financially secure and better tomorrow. Additionally, they offer financial peace of mind so that you can focus on the child’s growing up years and not worry about the finances. After all, nothing must come in the way of our children envisaging the future they deserve.

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