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When you and your partner are ready to bring a child into the world, there are plenty of things to think about, from the name you’ll give him or her to picking out just the right outfit for their hospital photo shoot.
One of the first things you might want to consider, however, is creating a child endowment and/or child money-back plan or investing in the best saving plan available, so that your child can have adequate educational and/or financial help once they grow up.
While there are plenty of reasons to do this, here are eight benefits of having your options in place.
Table of Contents
1) Ensuring your children will be financially secure
A common fear among parents is that their children will not be financially secure as adults in the event they die prematurely or are incapacitated.
A Child Endowment Plan, sometimes called a Child Income-Replacement Benefit (CIRB), is an insurance plan that helps provide financial security for your children should they become disabled or lose you before they reach adulthood.
2) Reducing your estate tax burden
When you die, taxes will likely be owed on your estate—and if your estate is big enough to surpass federal exemptions, there’s also a good chance you’ll owe state taxes too. If you want to minimize your tax burden after death, setting up an estate plan before death is key.
3) Providing for specific needs in case something happens to you
A savings plan is a type of life insurance that provides for specific needs that your children might have if something were to happen to you.
Any best saving plan available in the market can be set up so that the death benefit will automatically be paid to the beneficiary, such as your spouse or minor children when you die.
A child money-back saving plan is an investment account set up by parents for their children. It is designed to help teach kids about investing while providing them with some financial independence.
4) Giving your children financial freedom earlier in life
Giving your children financial freedom earlier in life is often an overlooked benefit of having a child endowment and child money-back plan.
The earlier that your children learn to be responsible for their finances, the better off they will be. The sooner that you start them on the path to being financially independent, the less likely it is that they will rely on you for help down the road.
5) Allowing your children to become self-sufficient earlier in life
The earlier your children are financially independent, the better. A child endowment and child money-back plan are examples of investment plans for child that can help your children become self-sufficient even if you’re not around to take care of them.
With this type of investment plan for the child, when you pass away or are unable to work for an extended period, the insurance company will provide monthly payments until your children reach a certain age.
6) Protecting against identity theft
Identity theft is the fastest-growing crime in the world. Every day, millions of people have their identities stolen by thieves who use this information to commit fraud or steal even more important assets like money.
The best way to protect your family against identity theft is to have an Identity Protection Endorsement that can help you restore your good name if you become a victim.
7) Eliminating probate fees after death
If you don’t have a will, probate fees can eat up most of your estate. A way to avoid this is by naming an executor who can administer the estate without court involvement.
But you still want to make sure everything goes according to your wishes, so it’s best to also create a living trust. This is essentially an agreement between yourself and your executor about what should happen with your assets after death.
The following insurance companies provide some of the best investment options for a child’s future because they provide enough coverage:
Canara HSBC Life Insurance provides life insurance products that help protect your family from financial loss in the event of your death or disability.
They offer coverage options to fit your needs and budget so that you can rest easy knowing that your loved ones will be taken care of if something happens to you. In addition to providing peace of mind, their policies also have some exciting benefits such as being tax-free when received as a beneficiary and no medical questions when applying for coverage!
Conclusion
A child endowment and child money-back plan can be one of the most important gifts you provide your children, particularly if they are still young and have a plethora of opportunities waiting for them.
