InvestorQ : What is a child plan? Who should take a child plan?
Deepali Khupte made post

What is a child plan? Who should take a child plan?

3 years ago

A child plan is a term used by insurance companies to sell life insurance for a child. These plans promise to safeguard the financial corpus payable by the plan, even if the parent (whose life is insured) suffers an untimely death.

A child plan is an insurance cum investment plan that serves two purposes:

- Securing a child’s future

- Financing the child’s education and marriage

Not only does a child plan protect the future of your child, it does so while building a corpus over a long term.

A child plan is usually taken on the life of any of the parent who has a minor child. The plan has a death benefit and a maturity benefit.

If the parent dies during the policy term, the death benefit is, usually, paid to the family for dealing with the financial loss. However, the plan does not terminate. The future premiums are then waived off and paid by the insurance company. After the stipulated tenure is over, the plan matures. Upon maturity, the promised maturity benefit is paid which can be used for the child's requirement.

Thus, child plans ensure that the maturity benefit would be paid as and when chosen by the parent even if the parent is not around.

Hence, anyone who is a parent and wishes for a bright future for his/her child even in their absence, should purchase a child’s plan. Having a corpus for your child’s future needs is essential and a child insurance plan helps you in creating such a corpus.