Some people think of higher education as a journey with several stops along the way rather than a final destination. The best child plan should cover each of these stages without raising your stress levels. Child Plan offers a range of choices to assist you meet your child’s future financial needs. In order to help you make a well-informed decision before purchasing one, we’ll go over some of the advantages of a child insurance plan in this piece.
Need For Partial Payouts in Child Plans
You can withdraw money from the accumulated fund with the best child plan without paying taxes or losing money on your investment. These kinds of child plans let you make numerous partial withdrawals while still making new investments. The Child plan also enables you to fund your child’s future educational aspirations and marriage-related desires simultaneously.
A child plan is a specially designed investment or insurance alternative to address a child’s financial needs. There are two parts to a child plan: investments and insurance.
The insurance component is intended to shield the child against unfavourable occurrences like the death of a parent by providing a set annual payout in the event that such an event occurs.
The financial needs of the child will be met by the investment component, which will accumulate funds through investments in a variety of instruments.
Withdrawals from the Child Plan
In the case of Child Plans, partial withdrawals are only permitted after the lock-in period has passed. There are a few withdrawal alternatives available to you when investing in Child Plans.
1. Retractions Before the 5-Year Lock-In
There is normally a 5-year lock-in term for every Child Plan. The monies collected can only be reclaimed when the Child Plan investment has been in existence for five years, regardless of whether the money is withdrawn in whole or in part by surrendering the policy or stopping to pay the premiums. The maturity amount will also be paid in one lump sum, and any further fees will be charged when the insurance is cancelled.
Since your Child Plan life cover will expire if you cancel before the lock-in period, you will need to get new life insurance online.
2. You Can Withdraw After A 5-Year Lock-In Term.
It is typically advised that you take partial withdrawals as opposed to full ones once your Child Plan has passed the lock-in period. Instead of cancelling your full policy, breaking your fixed deposits, or taking out loans, you may be able to overcome financial problems by making partial withdrawals. Depending on the policy terms and conditions offered by the company, withdrawals are subject to particular limits.
Important Factors To Take Into Account Before Terminating A Child Plan
- Recognise the conditions and details of the withdrawal.
- By paying your premium on time or in advance, you can keep your coverage from expiring.
- Partial withdrawals are only permitted after five years of regular premium payments.
- For a period of two years following the day the funds are partially withdrawn, the Sum Assured is reduced.
Conclusion
Paying the premiums on time is all that is required for someone to take partial withdrawals from a Child plan. The insurance will be cancelled and the policyholder will not be able to access the withdrawal benefits if the premiums are not paid on time. Therefore, to avoid having your child plan cancelled, be sure to make all of your prior payments before considering cancelling it.