What are child plans? What are the different types of child plans? How do they work?

What are child plans? What are the different types of child plans? How do they work?
Child plans are the investment for your children’s future financial requirements. It offers guaranteed lump sum money on maturity and ensures that kids get enough amount in case of parent’s demise. Bestowing children with the best life or a brighter future is every parent’s dream. Child plan helps to nurture and accomplish those dreams. It fulfills the financial requirements of the child to meet kid’s various needs.
Considering the future inflation, cut-throat competition and high demand with lesser opportunities, parents need to make a fair choice by selecting child plans for their kids. Graduation, masters or other specialization will be funded by child plan. Education in abroad doesn’t stand as an exception.
There are two types of child plans viz. Endowment Plans and Unit Linked Insurance Plans (ULIPs). In Endowment Plans, the premium money invests into debt instruments, the decision of which is at the discretion of the insurer. Returns are fixed by payable bonus on maturity wherein ULIPs are market linked plans; the return is finalized by the net value of the assets at the time of maturity. Policy period needs to be selected on child’s needs. One can either make one-time payment in case of availability of enough funds or can go for quarterly, half yearly or annual basis payment. Sum insured has to be 10 times of your current salary or income.
Child plans provide the facility of partial withdrawal to finance child’s financial requirements at different educational or career intervals. Partial withdrawal is one of the best options to fund the crucial moments of child’s life where parents choose to withdraw some amount before maturity. Child appointee plays the most important role in child plan. Child appointee should be trustworthy who willingly and genuinely takes the responsibility of the child. In case of any unwanted or unfortunate event; the claim and responsibilities are passed on to the appointee.
It has always been advised to compare different child plans online to get the best one suiting your child’s requirements.