Everything That You Need to Know About Buying Insurance for Grandchildren
November 26, 2019
As a grandparent, one of the best gifts that you can give your grandchild is life insurance. Check out this post to know some of the most important things you should know about insurance plans for children in India.
The birth of a grandchild is one of the happiest and proudest moments of a grandparent's life. In the future, your grandchild will look up to you as a role model. To set the right example, the gift you select for your grandchild should be something that could stand the test of time. Life insurance perfectly matches this requirement.
Apart from being a lifelong companion, life insurance plans can also help secure the financial life of your grandchild and also offer financial protection against their sudden demise. If a child insurance plan is what you are looking for, here are some of the most important things you should know about them:
1. Working of Insurance Plans for Children
Life insurance plans for children are of many different types in India. You can purchase a whole life insurance, Unit Linked Insurance Plan (ULIP), endowment plan, or guaranteed returns plan. Many of the insurance providers offer different variants of these popular types of insurance plans.
When it comes to purchasing life insurance for kids, most parents and grandparents prefer options like ULIP, as it helps generate regular returns while also providing life protection. The returns from such plans are market-linked, and in case of the demise of the policyholder within the policy tenure, the beneficiary of the policy will receive either a fixed death benefit or the entire ULIP investment.
2. Minimum Entry Age
The minimum entry age for life insurance plans in India varies between insurance providers and the type of policy you select. For instance, there are life insurance plans with a minimum entry age of 0 years. So, you can purchase such policies even for new-borns. Then there are savings and higher education plans that generally require your grandchild to be at least 18 years old. Such plans are mostly preferred by grandparents to help secure the financial and professional future of their grandchildren.
3. Policy Tenure and Premium
The policy tenure for a child insurance plan in India is generally 25 to 45 years. For insurance policies that are available for new-borns, the maturity age is generally 25 to 30 years. So, if you are purchasing one such plan for your recently born grandchild, it will mature by the time he/she is 25-30 years old.
Other types of insurance plans that mostly focus on long-term savings and higher education of children generally have higher tenures ranging from 30 years to 45 years and above.
4. Maximum Death Benefit
The death benefit offered by a life insurance policy abundantly relies on the income of the policyholder. As your grandchild does not earn any income, the death benefit will not be as high as the benefit offered to an adult who earns a regular income.
So, while you should definitely consider a reliable insurance provider that offers the highest death benefit, you should focus more on the additional features and benefits of the policy. For instance, there are many different types of life insurance plans that come with a host of add-on riders to increase the coverage amount. There are also plans with guaranteed additions, cashbacks, bonuses, and more.
Life Insurance: A gift of a lifetime
If you are planning to gift something valuable, practical and long-lasting to your grandchild, life insurance is definitely one of the best options. Get in touch with a reputable insurance provider to know more about the available plans and select one that you believe would be the best fit for your grandchild.
Make sure that you do understand the plan, its benefits, and limitations before purchasing to avoid any kind of errors in the future.
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