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The amount of child plan coverage needed may vary from person to person. There are many factors that affect this like socio-economic status of the family, income of the parents, number of children in the family, other insurance plans already purchased, etc. So before you buy a child plan for your son or daughters future, make sure you assess the requirements properly. A staggeringly large number of people buy insurance that is either too low or too high. Dont make that mistake and opt for the correct amount of child plan coverage.
Does the socio-economic status affect the coverage amount?
Of course it does! Parents raise their children in a particular way and this depends greatly on their socio-economic background. Children from very affluent families may go to the most expensive private schools and colleges. However children from lower middle class families may only go to government run schools and colleges that charge considerably less. As a result, to meet the various educational costs, the coverage amounts also vary.
How much child plan coverage to opt for if I have more than one child?
It is very obvious that the higher the number of children, the higher coverage you will require. A person who has only one child will require half the cover amount of a person who has two children. Of course the parents of an only child may want to create a large fund for her and so that fund may even exceed the fund created by a parent of two children. But on an average, you need to have a coverage amount that is sufficient to provide for the needs of all your children together.
How much child plan coverage to opt for if I already have a life insurance policy?
A life insurance policy and a child plan are completely different. A life insurance policy would terminate once you die, but a child plan would continue till the time you had originally wanted it to continue, even after your death. So a child plan is of utmost importance as it continues to cover your child even if you die suddenly. As a result, having a life insurance policy should not prevent you from buying a child plan. However, if you have a large life insurance plan, then you can have a smaller child plan simply because a portion of the life insurance money can be used for the childs future as well. But do not make the mistake on relying on that alone.
How to calculate how much child plan coverage to opt for?
For this, you need to keep the following in mind:
Age of the child – The younger she is, the more number of milestones she will have left in life and so you will have to plan for and cover all of them.
Specific goals – You need to see if you or your child has any specific goals like studying in a particular university, going abroad, starting a business, having a theme wedding, etc. If any such goals are present, you would need extra coverage.
Financial health of the family – If the financial situation of the family is not very strong with loans, etc to repay, you need to have appropriate child plan coverage. You must ensure that even if the familys finances get tested, the situation must not affect the child and her education in any way.
PNB MetLife Child Plans- FAQ