Child insurance plans are specially designed for growing child so as to meet their increasing costs of education and other financial requirements. It provides risk cover related to the life of child throughout the policy term and during extended term, that is seven years after the expiry of the policy term. As the education cost is growing rapidly, it is essential to have a child insurance plan for the better future of your child. This is the plan that will help you provide your child the best education and ensures the cash flows even at the crucial stage of your child’s life.
It is better to start early, while planning for your child’s needs, this way you will have a wider scope to meet financial requirements of your child’s education and marriage. As a parent, you need to have an idea how much money will be needed, and when it will be needed, on the basis of future plans for your child. Understand various financial products, to opt for the right investment option to meet every financial goal set for your children’s better future.
Tips to remember
• Start your financial planning as early as possible to secure your child’s future. Child plans mostly offer maturity benefits, the payouts are released from 18 years onward. It provides a wide scope to invest, allowing you to build a corpus. Choose a plan that allows long term investment.
• You need to understand that in child plan, the funds will be utilized in future only. So, it is the time to estimate the inflation and rising cost of education. This way you can invest wisely and build a good corpus. Also, know when you need to get the returns.
• Invest in a child plan that offers premium wavier benefit. This allows the child plan to continue even in the case of demise of policy holder. The child will be covered with all benefits, even if something happens with parents. The maturity benefits agreed upon will remain same as planned for the policy term.
• The premium amount will depend on the assured sum and the maturity amount decided by the policy holder.
• It is beneficial to know the different premium payment modes. You can also opt for one-time payment. Or you can pay premium half-yearly or quarterly.
• Invest in a plan that is a proper blend of growth and debt funds. And also a balanced mix of capital protection and growth.
• Decide a plan having system transfer option to assure that your profits under the plan ae well protected. Take proper risk cover option to ensure the death benefit is a considerable lump sum, which can help your child and your family.
• The policy term you choose should be aligned to the financial requirements of your child at different stage of his or her life.
• Consider the total sum assured that would be needed at the time when the plan matures and invest accordingly.
• There are various child plans available that suit your budget and needs. Compare the plans available before purchasing them. Choose the best plan according to your requirements.
Ways to invest your money
Teach your child about managing their finances at an early age, and the same should be in the case of stocks. Even though the stock market is volatile, equities can help you meet your financial goals in the long term. Invest a part of your child’s pocket money in shares on his behalf. This will build a portfolio for your child.
2. Fixed Deposits:
FDs generally offer a higher rate of interest to investors in comparison to traditional savings bank account. It is easy and quick to open a FD account. You can open a FD account for your child which will build the habit of saving in them. FDs also assure returns on your investment.
3. ULIPs or Endowment Plans:
ULIPs are an effective low-cost investment option. Some of them are even cheaper than mutual funds. It provides risk cover along with options to invest in various investment options like stocks, bonds or mutual funds.
4. Mutual Funds:
These are simple to understand and offer a great choice for investors with limited knowledge, time and money. Mutual Funds buy and sell securities in large volumes, which allow investors to reap benefits from low trading cost. On a regular basis, an individual can start with a minimum of Rs. 500 in SIP.
5. Life Insurance Plan:
You can name your family members as beneficiaries in your insurance plan. This will help your child have a strong financial future and serves their monetary needs, as and when required. A life cover protects your family in case of any mishap. This helps you pay any immediate expenses, like, medical bills, home loan EMIs etc.
It is wise to be financially prepared, as life is not certain and this can provide support to your child. Keep various factors in your mind while planning, monthly investment amount, maturity dates, consulting a financial expert etc. Invest regularly, monitor your investment and achieve your financial goals.