How to select Policies for children?

Concern parents are showing towards children is growing day by day. They are giving importance to financial security along with their education. That is why they are investing for them right from their birth. For this purpose they prefer the insurance plans. Owing to this attitude, the insurance companies are also introducing new attractive policies. We think twice about the purchase of toys or cloths for the children. Then what should be the care taken while selecting the policies taken for their needs. Choose the right one that suits your requirements among the various policies available in the market.

The things to be considered for this purpose are….

We can differentiate the children policies as risked and risk less. With the traditional policies profits can be taken after the scheduled time without risk. If you choose ULIPS, the recent popular policy there is no guarantee of income.

Traditional Policies

These are two types: Endowment and Money back.

Endowment policies are those which pay the whole amount after the scheduled time. Money back policies are those which give small amounts back at intervals. Endowment policies are scheduled for a period of 10, 15, 20…..These policies are planned to mature by the time the children grow to 18, 21 years. The working of the children money back policies is also different. In the general money back polices money can be redeemed back for every 3 or 5 years. But in children’s money back policy the redemption will start from the 18th year of the child so that it can be used for their Inter or degree studies.

So be clear about your goal while opting for traditional policy. Select the policy according to your idea as to take the money at a time or in installments.

ULIPS

Remember that there is no guarantee of income in these policies. There is more risk when compared with the traditional policies. There is a chance of withdrawing the money at any time after 3 years. But don’t use this facility and wait until you reach your goal. As ULIPS is a long termed Investment tool you can get more income if you wait. Funds like Debt, Equity and Balanced are available with ULIPS. If you go for a short term of 5 or 7 years then you can opt for equity fund (growth). If you opt for a high risk equity fund then in the last three years you can change into the debt policies and cut down the risk. If you don’t have adequate knowledge of changing the funds according to the market situations then the long term balanced funds will be the best option.

Premium Waiver Rider should not be ignored.

There are many riders available along with the children’s insurance policy. Don’t forget to take waiver of premium or payer benefit raider. There will be no danger of cancellation of the policy in case of any unforeseen incidents for the premium payer (father/ mother/ guardian). Moreover the policy will continue without the payment of balance premiums. Riders can be availed by paying some extra amount to the premium amount.