Child Insurance Plan Exclusion
Although child insurance plans provide comprehensive coverage against life and illnesses threats, there are a few instances where the plans do not offer coverage. These include injuries or loss of life under certain situations as mentioned below.
Alcohol and Drug Abuse
In case the policy owner dies due to intoxication of banned and illegal substances such as drugs or consumption of alcohol, the nominee does not receive insurance benefits.
Self-Inflicted Injuries or Suicide
If the policyholder commits or attempts suicide, the nominee does not get any insurance benefit.
Involvement in Risky and Adventurous Sports
If the policyholder gets injured or dies due to involvement in risky and life-threatening sports like sky diving, rock climbing, scuba diving, paragliding, etc., the insurer won’t pay any insurance benefit.
Involvement in Criminal Activities
The policyholder’s demise due to involvement in criminal activities leads to the rejection of a child insurance policy claim.
Eventualities due to War or Related Situations
The child insurance plan does not cover injuries and loss of life due to war or war-like situations including nuclear attacks and accidents.
How Much Should You Invest in Child Investment Plan?
‘How much should I invest in a child plan’ is one of the most common questions appearing in the minds of the majority of parents. However, by outlining your financial requirements and forecasting the funds required to cover the education expenses of your child, you can determine the amount to be invested for fulfilling your child’s higher education fees.
For instance, let’s assume that the current cost of higher education in the UAE is around AED 75,000, and would be AED 225,000 after 20 years. In this case, you can invest a minimum of AED 500 per month for the next 5 years, which can fulfil the requirement to a great extent after compounding due to the interest. Based on its performance, you can increase or decrease the investment amount.
Things to Consider When Investing in a Child Investment Plan?
You should consider a few factors to accurately plan your investment in a child education plan. With the right plan and goal in mind, you can conveniently maximise your profits in a child investment plan. Here are the factors you need to consider when investing in a child plan.
Begin Investing Early
Whichever plan you invest in, it is always advisable to start your investment as early as possible. The same applies to a child investment plan, as investing early helps you generate a bigger corpus for your child’s higher studies. Most child insurance plans start paying off once your child attains the age of 18 years. Moreover, early investment provides higher benefits while also allowing you to enjoy the growth of wealth through the power of compounding.
Factor in Economic Variables
It's critical to recognise that your child's savings and investments will only be utilised in the coming years. When settling on a suitable sum assured, a number of economic considerations must be considered. Inflation, rising education costs, and rising healthcare costs are among the economic issues one should take into account, as this will lead to sufficient funds for the child’s higher education.
Special Attention to Terms and Conditions
It is always crucial to go through the child investment plan terms and conditions. You must properly scrutinise the policy documents to prevent any confusion at the later stages or at the time of payout. Additionally, the terms and conditions also help you in selecting the best child insurance plan suiting your child’s needs. You can compare various investment options as well as life insurance plans on our website to find the right policy for your child’s higher education.
Choose the Premium Waiver Benefit
As already mentioned, in case of the policy owner's demise during the policy tenure, the insurer offers a premium waiver to reduce financial liabilities from the dependent child. Choosing a plan that offers a premium waiver provides you higher security and peace of mind regarding your loved ones’ safety even if you are not around to support them.
Opt for Policies Allowing Partial Withdrawals
Policies allowing partial withdrawals help you tackle emergencies during urgent financial needs, which ensures that your child’s future education is not compromised.
Choice of Fund
It is important to understand your requirements, financial capabilities, and education inflation before choosing a child investment plan. If you want a better return on your investment, you can choose ULIPs or endowment plans or even invest in equities until you generate enough income. You can later transfer your funds to safer investment options. Ultimately, the choice of funds is crucial to avoid any losses and generate considerable returns.
Child Plans Frequently Asked Questions