The rising cost of education is troubling Indian parents. More than 60% of the respondents in an online survey by ET Wealth listed this as their biggest worry. This was followed by lack of knowledge, not saving enough and starting too late.
We hadn't included the biggest worry-the risk of their own untimely death-as a choice. We should have. According to the National Crime Records Bureau statistics, an Indian dies in an accident every 90 seconds.
We hadn't included the biggest worry-the risk of their own untimely death-as a choice. We should have. According to the National Crime Records Bureau statistics, an Indian dies in an accident every 90 seconds.
It's a terrifying thought for any parent-leaving his family without adequate means to lead a comfortable life. The only way to get over this worry is to take a sizeable life insurance cover. Financial planners swear by term plans, arguing that these policies are the best way to cover the risk of early death. They certainly are because they offer a high cover at a low cost and give out a lump-sum amount to the nominee if the policyholder dies. But the policy ends right there.
On the other hand, a child insurance plan offers a lump-sum payment on the death of the policyholder, but the policy does not end. All future premiums are waived and the insurance company continues investing this money on behalf of the policyholder.
The child gets the money at specified intervals as planned under the policy. In this way, the parent ensures that his child's needs are taken care of even if he is not around.
Almost all life insurance firms have child plans in their portfolio of offerings. Some of these are market-linked policies, which allow policyholders to invest in equities and debt, while others are traditional plans, which invest only in debt. In case of a life insurance policy, the premium paid for a child plan is eligible for tax deduction under Section 80C, while any income from the plan is tax-free under Section 10 (10D).
Critics of child plans argue that these policies come at a very high cost compared to a simple term plan. They say that instead of allocating a huge sum as premium to a child plan, a parent can buy a term plan of the same amount for himself and invest the balance money in mutual funds. On maturity, he will have a bigger corpus
The child gets the money at specified intervals as planned under the policy. In this way, the parent ensures that his child's needs are taken care of even if he is not around.
Almost all life insurance firms have child plans in their portfolio of offerings. Some of these are market-linked policies, which allow policyholders to invest in equities and debt, while others are traditional plans, which invest only in debt. In case of a life insurance policy, the premium paid for a child plan is eligible for tax deduction under Section 80C, while any income from the plan is tax-free under Section 10 (10D).
Critics of child plans argue that these policies come at a very high cost compared to a simple term plan. They say that instead of allocating a huge sum as premium to a child plan, a parent can buy a term plan of the same amount for himself and invest the balance money in mutual funds. On maturity, he will have a bigger corpus
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