Let your child feel the true happiness of secured future?
Posted by Ritika Shah on August 6th, 2016
Arrival of a child in life brings lot of joy and enthusiasm. And when it comes to ensuring his or her happiness, you make sure no one messes around with your child’s happiness not even the future uncertainties. You intend to give your child the best of everything. To achieve this goal, you start investing in various instruments on your child's behalf. Well there are many ways to secure your child’s future such as savings, bonds, stock investments or mutual funds etc. but the one thing that insurance companies have introduced to capitalize the modern day parents' attention is “Child plans”. These plans have enticed many parents to invest on behalf of their children, under these dual-benefit plans.
These plans are specific insurance plans which help parents save for their child’s future expenses in a systematic manner. They are available in both Traditional and ULIP categories to suit the varied investment objective of the consumers. Nowadays, with the spiraling cost of higher education, people opt for ULIP child plans wherein a part of your premium goes for life cover and the remaining is invested in stock market. You can choose the type and ratio of the fund you wish to invest the money into such as Equity, debt or balance funds depending on your risk appetite and income.
In child insurance plans there are some products or policies with no upfront premium allocation charges and the total premium gets invested in the fund of choice, thus maximizing the scope for long-term returns. There is an additional flexibility to withdraw funds as per need via partial withdraw. It ensures that your child’s educational, extra-curricular and career requirements are met time to time. During unfortunate demise of the parents during the policy term, these plans provide an immediate guaranteed lump-sum amount to the child along with a fixed yearly income for the remaining duration of the policy. All the future premiums due in the policy are waived of by the insurer under “Wavier of Premium” feature (Rider) and ensure the investment continues even in the absence of parents.
Some of the features to consider while choosing child plans are as follows:
•Planning for your child’s future should be at the earliest, as the needs has to be catered time-to-time till your child stands on his or her own feet and starts earning bread and butter. This will help to consider the time and year those funds will be required for various events, and ensure that the policy’s maturity amount suffices to meet these future needs comfortably.
•Most plans fall short because individual fail to consider the inflation costs in future to meet child’s expectation. It is a crucial consideration while purchasing a child plan and deciding the amount of expenses. It is good to factor in a 6-7% inflation rate too.
•There should be flexibility of partial withdrawals in them. It helps to address any urgent needs without disturbing fund utilization and regular expenses. Besides, it also ensures that you have proper flexibility in switching funds as it allows you to leverage favorable market.
•Comparing investment redirection and free switches allowed in a year offers the freedom to plan finances in a more streamlined effort
Traditional plans focus on debt investments such as corporate bonds and government securities. While ULIPs offer dual benefit of insurance cover and market returns that will fulfill your child needs time-to-time. It is advisable to speak to a financial expert and then choose the fund allocation. Understand your risk profile as well. Lastly, since child plans are long-term policies you have ample time to experiment with equity funds, book profits and root them to debt oriented funds. So, take this suitable opportunity and invest in child plans now!
About the AuthorRitika Shah
Joined: July 7th, 2016
Articles Posted: 22
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