The market is flooded with children plans. The goal of every parent is to give their kid the best education no one is ready to compromise when it comes to their children. Whatever we didn't get when we were child we need to give that to our kids that is the top priority.Education is getting costlier day by day. If we do a bit of number crunching the picture looks bit scary!
Here the companies selling the children plan has got a huge potential to do "emotional blackmailing" they use all marketing gimmicks to sell the product." If god forbid you die what will happen to your child future, how your dreams will come true" any parent hearing this will get scared. On the other side the agent is curiously waiting to close the sale and complete his target which will make him qualify for a fully paid trip to Thailand :) Then the conversation goes like this normally.
Agent : Sir, i hope you now understood how good is our product. Can you pay by cheque or cash (A typical sales closing question)
Parent : How much i need to pay? what is the minimum in your scheme??
Agent : Sir, i recommend you pay 50000 Rs p.a. so that you get a good life coverage and other benefits.
Parent : No no.. i already have many policies i can pay only 25000 p.a.
Agent : Ok sir lets do one thing, we will invest 25000 half yearly, you can give standing instruction to the bank so that you don't have to worry about paying premiums. Is that ok.
Parent : Ok, agreed, He signs the cheque and hand it over to the agent. Back of the mind he feels proud, investing a hefty amount for the kids future. Same time also bit concerned about the huge commitment he has made. Decided to put in extra effort in work and bring in more incentives and overtime pay so that all commitments can be met on time.
So far the story looks good. Have you experienced the same, i am sure few of you would have undergone the same experience. The agent might be your friend, a relative who is highly concerned about your well being. Now my request to all is if you have bought a policy just go and check out what is the current status of your investment. What all benefits is been disclosed in the policy document. If still you are happy kudos to the person who have sold the plan. Or else....
Important things you need to know
- The life assured is the parent . If something happens to the parent sum assured will be paid. Because the parent is the earning member, and insurance can compensate financial loss alone.
- If you don't have a sum assured (Death benefit) of at least 20 times of your annual income you are not safe.
- If you are not going to continue the plan for the entire term,You will loose most of the benefits.( unfortunately these plans are miss sold as 3 year plan).
- Most of the plans ( except single premium) if you have not paid premium for the first 3 years, the whole amount paid till date will be forfeited. No money will be paid back.
- Don't fall prey for fancy names. Children plans are normal endowment plans or ULIP with few ad on benefits.
Do post your valuable comments. The next article is about the viable investment options for children education planning.
