Child Insurance Plan for NRI Parents: Secure Your Child’s Future from Anywhere in the World
NRIs are citizens of India who are temporarily living in India, having a valid government-issued Indian passport. Also, Indian citizens who reside abroad on a Visa for employment or business purposes are also known as NRIs. They are allowed to make investments in India, i.e. in both insurance & investment plans. The investment plans for NRIs include Mutual Funds, Retirement Plans, NPS, ULIPs, Real Estate, equity, etc. Also, some plans offer tax-free investment options, which help increase wealth.
A Child Insurance Plan helps secure the financial future of your child & meet rising educational expenses. Parents always put their efforts hard to offer their children with the best possible to fulfill their dreams. Though many of them are dependent on scholarships, savings, or even the Children Education Allowance, that is still not enough. A part of the premium is allocated towards investments, which can be used to build a corpus for their education, marriage, etc. Another part of the premium is allocated towards insurance, which ensures the financial security of a child in case of the sudden demise of the parent.
How to Select the Best Child Insurance Plan?
Provided are the factors that should be considered to choose an appropriate child insurance plan by NRI:
● Coverage & Benefits
Evaluate the coverage offered to the parents, & benefits offered in terms of waiver of premium, amount of payouts, etc. A good plan is such which offers both investment & protection, & providing enough maturity benefit that will be enough to meet the future costs.
● Flexibility
Check the plan you are willing to apply for, whether it is flexible in terms of premiums payment frequency, i.e. monthly, quarterly, annually, or in lump sum. Additionally, you should also check whether it provides an option to choose between increasing, decreasing, term plans, or to pay top-up premiums, or allows to switch between the funds.
● Returns on Investment
Consider the returns on investment made while selecting your child insurance plan. If you want to opt for a long term investment plan, money back or ULIP can be a good option. These plans offer dual benefits of insurance & investments. For individuals who are reluctant to accept risks, guaranteed return or endowment plans are best suited.
● Claim Settlement Ratio
It is a ratio of the number of claims an insurance company receives in a year to the number of claims it settles. The higher the claim settlement ratio, the higher the company’s ability to settle claims.
● Tax Implications
Most of the child insurance plans are eligible for a tax deduction on the premium amount paid u/s 80C together with exemption on the maturity benefits received. Review the plan to be opted for these benefits.
Types of Child Insurance Plans for NRI
Provided are the different Child Insurance Plans available for NRI:
● Child Education Plans
A Child Education plan is an investment type designed specifically for parents to meet their children’s future educational expenses. These plans offer dual benefits of insurance & investment, providing guaranteed payouts or market-linked returns. These plans include educational expenses, such as book costs, admission charges, & tuition fees, if any. This plan ensures access to higher education without any intervention or compromises due to financial constraints.
● Child Term Insurance Plans
It offers life insurance coverage to the parents, where in case of their sudden demise their child will get the financial assistance. As this is a pure protection plan, it does not include receipt of any maturity benefits, this is the reason the premium amount is also quite nominal. These plans are simple-to-understand easy to manage, & best suits those looking for financial security & not wealth creation.
● Child Money-Back Plans
Under this plan, a certain amount or percentage of the sum assured is paid back to the policyholder at a regular interval. If the policyholder survives throughout the policy tenure, he/ she will get the remaining amount of the sum assured. &, if the policyholder dies during the policy tenure, the full amount of the sum assured is paid back to the nominee, irrespective of the fact that the survival benefits have already been paid.
● Child based ULIPs (Unit Linked Insurance Plans)
When it comes to securing your child’s future, a ULIP-based child plan is considered to be a great option, as it helps secure your child’s financial future. It helps meet future financial obligations, such as a child’s higher education, a child’s marriage, etc. The premium amount paid is diverted towards the funds opted for, & the remaining amount is allocated towards life insurance. This plan also offers an option to switch between the funds & your changing requirements.
● Child Endowment Plans
A Child endowment plan is a type of life insurance coverage that helps parents plan their child’s future. This plan allows parents to save funds to cover the expenses that would be incurred in the future, such as a child’s education, marriage, or any other expenses. According to this plan, the maturity benefit will be paid to the child on the occurrence of certain events. Here, a part of their contribution is diverted towards life insurance coverage, ensuring financial security to the family members & partly gets accumulated towards savings.
Conclusion
Being a parent is always a blessing but it comes with an added responsibility to secure the financial future of your child. NRI’s also should buy a child plan to ensure the smooth financial journey of their child, ensuring disciplined savings to meet milestones like, education, marriage, etc. Additionally these plans offer taxation benefits with flexibility in premium payment options & worldwide coverage. It is always advised to start as soon as possible, by comparing the plans, reviewing them, remaining invested, always helps to build a strong financial structure.
