A parent's foremost concern is to protect their child - present and future. Most financial planners recommend a term plan which covers the nominee (child) against the early death of the policy holder(parent), however, it ends there!

On the other hand a child insurance plan is a wholesome financial insurance product. It protects the child's present in case of the parent's sudden absence from their life by giving a lump-sum payment on demise of the policyholder, but the policy doesn't end there. Most child insurance plans come with a premium waiver option (else one can opt for the rider at a nominal charge), hence, the future premiums on the policy are waived and the insurer continues to invest the money on behalf of the policy holder. Thus, on maturity as planned by the policyholder the child gets the sum assured. Therefore, even in your absence your plan to create a corpus for your child for important milestones of their life like higher education, marriage etc. remains intact.

When?

Remember the old adage "Start early finish stronger", it surely hold true for investment in child insurance plans. It is advised to start investment in a child plan as early as possible, as an early starts gives you and your child an edge to reap more benefits over the longer investment horizon.

The main benefits are:

1. Life is unpredictable - Secure your child's future as early as possible

2. Lower premiums - Premiums are lower as they can be spread over the longer investment period to arrive at the desired corpus on maturity. If you invest at a much later stage, let say, when the child reaches his/her teens you would have to pay higher premiums to arrive at the desired corpus on maturity increasing your financial burden in the short term.

3. Higher sum assured - Start early to benefit from the power of compounding to help you build a larger corpus over a longer period. Thus, the child can receive higher death benefit and also higher corpus on maturity.

4. Invest in market linked child plans - Since the period of investment is longer you can look at more attractive insurance plans which offer equity investments i.e. capital protection and growth. Such child insurance plans are market linked plans and invest a part of the premium in equity over debt which yields higher returns over a longer period of time.