Endowment Plans that Work for Young Parents Saving for Their Child’s Future 

Parenthood is not only a matter of enjoyment it is also a serious matter of great responsibility. As a parent, you must ensure that your child’s future is maintained comprehensively and expansively. Moreover, you cannot avoid considering unprecedented challenges that your child may have to face, unfortunately. Considering all these factors, we can infer that as a young parent, endowment plans will cater to your requirements well under such circumstances.

Endowment plans are an ideal solution for a child.

Similar to ULIPs, endowment insurance is an advanced life insurance plan currently available on the market that offers double benefits. The policyholder enjoys the benefits of both investment and life insurance. Here, the policyholder receives the investment returns as maturity proceeds and death benefits in the case of any unfortunate event.

In the case of an endowment policy, either the policyholder or the designated nominee receives a lumpsum either after a pre-determined policy term or after the unfortunate demise of the policyholder, considering the circumstances.

Therefore, it is one of the safest investment options, to keep your hard-earned finances safe and maintain a reliable financial portfolio.

What is a child endowment plan?

Like any standard endowment plan, a child endowment policy is also a life insurance offering double benefits of both savings and investment along with certain additional advantages. Here, the policyholder gets the freedom to choose the optimum amount of sum assured according to their financial targets.

In the unfortunate event of the death of a parent and when the concerned child attains a specific age in adulthood, this policy offers a guaranteed payout. Apart from these, you are also eligible to receive special bonuses at regular intervals.

All these exclusive features, make child endowment plans ideal, especially for young parents. The earlier it is purchased, the premiums become comparatively lower but the coverage span remains unaltered. So, it is beneficial to start this investment at the earliest to enjoy optimum coverage at the best price with the assurance of maximum fund growth.

Features of Child Endowment Plans

Depending on the nature of the chosen policy and the insurance company, the features of child endowment plans may vary. However, certain standard features include:

1. Minimum age: The minimum age limit for owning this plan is usually 91 days.
2. Maximum age: Depending on the plan regulations, the optimum age criteria for holding a child endowment plan ranges between 13 years and 15 years.
3. Minimum sum assured: As per the standard norms, the minimum sum assured limit is INR 1 lakh.
4. Maximum sum assured: The optimum sum assured limit stands at INR 1 crore. However, it may vary depending on the policy terms and the policy maintained by the insurance provider.

Reasons for investing in child endowment plans

By now, it is evident that the benefits of child endowment policies are far-fetched and multiple. Therefore, some of the highlighting aspects of investing in child endowment plans include the following:

1. Ensuring financial security:
   The chief objective of an endowment policy is to ensure offering financial security to the family, especially during challenging circumstances. Through this investment, the parents can rest assured that the financial future of their beloved offspring is secure enough to pursue their future goals and continue their studies uninterruptedly.
2. Disciplined investing:
   An endowment policy encourages disciplined investing and saving a fixed amount at regular intervals through regular premium payments. In this context, we must mention “what are endowment plan premiums?”. It is the amount that you need to pay regularly to keep the policy active.
3. Long-term goals:
   Parents usually have long-term plans for their children like higher education, marriage, etc. The maturity benefit of an endowment policy is enough to earmark such targets.
4. Benefits:
   Endowment plans offer tax benefits u/s 80C of the IT Act. The premiums paid towards these plans qualify for tax deductions, thereby reducing the total tax liability. Moreover, the maturity benefits are also tax-free, making it a very tax-efficient investment tool.
5. Inflation protection:
   In the case of long-term investments, inflation is a major factor as it can erode the value of the accumulated money over time. However, an endowment investment is inflation-proof. This implies that the plan proceeds to retain its exclusive purchasing power.
6. Guaranteed returns:
   Multiple endowment products offer assured returns on both the maturity benefits and the premiums paid, allowing optimum financial security despite uncertainties.

The right time for investment

In the case of a standard endowment, the late 20s or early 30s is the ideal age for investment. However, in the case of a child endowment plan, it is best to start it as soon as the child is born. The earlier you start it, the more the maturity proceeds will be enhanced. The 3 principal aspects of investing in endowment plans include:

1. Financial security: Endowment investments ensure the essential financial security of your beloved family members.
2. Financial targets: You can easily attain your desired financial targets by utilising the endowment maturity proceeds.
3. Savings: Endowment investments ensure savings cultivation, which is essential to fulfilling long-term investment targets.

Conclusion

We have aptly highlighted the importance of child endowment plan investments, allowing dual benefits of both savings and investments. It encourages disciplined savings, allowing you to fulfil long-term goals, and giving your child a secure financial future.