Child insurance plan: Know these features

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After the jolt of Covid-19 pandemic more and more people have felt the importance of life insurance. Now many young parents are buying policies at a very young age for their child. Generally, this type of insurance is specially designed to meet a child’s financial needs. There are various child insurance plans available in the market. Before you opt for child insurance, you need to know some of the unique features of such policies.

Long-term investment option

Child plans offer both short term investment plans and long-term investment options depending upon your requirements. An ideal investment plan for the child will offer long term investment options. The longer the investment plan, the higher the payout will be at maturity.

Goal protection

Another unique feature of a child insurance plan is goal protection. Under this feature, the insurer will provide financial help to achieve the goal like higher education, marriage of your child even in your absence. It provides life cover amount at death of insured. The investment continues in the scheme. The plan will mature on the due date and the nominee of the policy will get the amount if something untoward happens to the person insured.

Partial withdrawal

Many child life insurance plans come with the facility of partial withdrawals. In this facility, you can withdraw a certain amount from your fund value a few times during the plan tenure. One can get this facility only after your child turns 18.

Tax benefits

Child plans are life insurance policies. Thus, the premiums are eligible for tax benefits. Under section 80C of the Income Tax Act, 1961, you can claim deductions up to Rs. 1.5 lakh for your child insurance premiums.

Investment

Along with life cover, child insurance plans also provide an investment option.  You can spread your investments across equities, debt bonds, or hybrid funds, as per your risk-bearing capacity.