4 Reasons Why It Is Essential to Have a Child Money Back Plan

4 Reasons Why It Is Essential to Have a Child Money Back Plan

A child money back plan is both an investment as a well as an insurance plan that is designed to offer children a stable future. It also offers survival benefit payouts at regular investments which helps in meeting the expenses of growing children. The money back plan is designed in a way that your child doesn’t face any financial problems. As a parent, it’s the wisest decision you can make for your child, as investing in a child money back plan will prevent any financial strains as your children grow up and helps provides a financial cover to meet rising expenses.

What’s the Significance of a Child Money Back Plan?

It is a conventional money back plan that helps meet a child’s expenses like education, higher studies, marriage, etc. It’s a combination plan that is both an insurance as well as a regular payout plan, making it a wise investment option that secures your child’s future.

  • Money back plans offer the benefit of both a life insurance as a regular income plan for the policyholder helping take care of your child’s expenses.
  • Provides a guaranteed return on investment.
  • Policyholders get regular payouts adding to overall wealth.

Features of a Child policy plan

The importance of child insurance cannot be overstated in today’s times when we are surrounded by threats to our life. Securing your child’s life for a future where you may not be able to provide for them is a crucial financial choice. Let’s look at some features of a child money back plan that make it suitable for this purpose and more:

Guaranteed Returns 

Money back plans gives guaranteed returns to the policyholder as they are eligible to receive survival benefits at the end of the policy term should they be alive at the time; however, in the event of an untimely demise of the policyholder, the nominee is still entitled for the entire sum insured in addition to any bonuses accrued throughout the lifecycle of the policy.

Income during the policy term

You get a steady income throughout the policy every few years helping you create a second source of income. You can use these funds to take care your child’s expenses or spend them on taking them out for a vacation or buying them the latest consoles, or whatever your heart desires.

Additional Riders Can be Added

You can increase the sum insured by adding riders to the policy. The riders are beneficial because they offer payouts in case of medical conditions, critical illness, accidents or any other benefits that may be a part of the riders you opt in for.

Bonus Amounts

You also get to benefit from bonuses. Every year incentives are calculated as a percentage of the sum insured and it’s accumulated as a bonus. Should the policy mature, or the policyholder passes away; the bonus that’s been accrued on the money back policy is paid out to the nominee.

How to Choose a Child Money Back Plan?

When choosing a money back plan, you need to look at a few basic series of questions: Your financial objectives; the amount of money you can invest in the plan; how long you plan on investing, and the payouts you expect from the child money back plan.

Moreover, when you do decide to invest, make sure that you find out the percentage of the sum insured you are entitled to receive as regular payouts in instalments. This amount has to be adequate enough to meet your rising expenditures.

What are the benefits of a Child Money Back Plan?

  1. Guaranteed Vesting Benefit- Get a guaranteed income in regular instalment payouts that you can use to fund the growing needs of your child.
  2. Maturity Benefit: Get the dual benefit of the sum insured along with declared benefits accrued over time. However, keep in mind that the latter component is dependent on the company’s performance.
  3. Tax Benefits- Child money back plans provide you with tax benefits. Investing in such a plan will quality you for tax deductions under section 80C of the income tax act, 1961.

Get a child money back plan early on to get maximum benefits out of the plan. It’s best to buy a money back plan while your kid is still young and buy a plan that gives payouts that are good enough to meet future expenses. It’s the smartest investment you can make for your child’s future, so it’s wise start early on.

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