The journey of life is filled with memorable events like buying a house, getting married; having children and watching them grow to be confident young men and women. However, each of these events require a lot of hard work and planning.
Finances play a huge role in ensuring that the goals and dreams of your loved ones come to fruition. Parents always endeavor to give their children an opportunity or a platform to be able to spread their wings and fly as high as they can. These wings are the wings of education and skills and they need the fuel of carefully planned finances.
There are many investment options available today – equities, mutual funds, fixed deposits, etc. However, the new age online Unit Linked Insurance Plans (ULIPs) help you achieve your goals effectively while offering an additional benefit of an insurance cover.
Why New Age ULIPs?
It’s a long term goal linked product best suited for long term financial goals.
A ULIP is an insurance and investment plan rolled into one.
ULIPs offer options for high, medium and low risk investments.
You can switch between funds if you feel that the performance of your investment is not as expected.
The new-age online ULIPs have really low charges making them cost-effective as compared to the other investment options.
There are many tax benefits of investing in ULIPs.
Why do I need a Child Plan?
One word answer – inflation. Costs are increasing every year, especially costs of higher education. If you have children or planning to have an offspring, then it is imperative that you take into consideration the estimated costs of education when your children grow up. How much should you invest? What should be the asset allocation? Should you take more risk or have a balanced approach? The answers to these questions can determine the returns that you can expect.
Let’s say that your child is one year old. Now, the current course fee for an engineering course is Rs. 6 lakh. 16 years later, when he/she decides to opt for an engineering course the fee would be around Rs. 15 lakhs (assuming a 6 percent inflation rate). How much do you think you would need to save every month to be able to cover these costs in the future? If we take an average return of 12% offered by ULIPs, then you need to save around Rs. 2500 – 2700 per month for the engineering course.
Waiver of Premium Benefit
Have you ever thought who will take care of your child’ education expenses if you are not around? Have you saved enough for that unwanted scenario? If not, it’s time to think now. In a regular insurance plan, on the demise of the insured (parent), the sum assured is transferred to the beneficiary that needs to be reinvested and managed to meet future needs of the child.
On the other hand, some of the ULIPs have an added advantage in the form of waiver of premium benefit. In case of income loss due to permanent total disability, critical illness or death of the parent, future premiums will be waived off and policy continues to work. This can be more cleared from an example; Bajaj Allianz Future Gain, offers a rider for waiver of premium. For Example: Mr. X is 35 years old and bought Bajaj Allianz Future Gain for a policy term of 25 years. At the end of 15 years of policy term, he meets with an accident and has permanent total disability. In that scenario, all his future premiums will be waived off and policy will continue with all benefits till the end of policy term. The company will add premium to the portfolio till the policy term. And the child will get the maturity amount at the end of policy term. Moreover, the funds are five- star rated to help grow the investment in the long run to meet financial goal.
If your child desires to become a doctor or an astronaut, then you should be financially prepared to support the costs of higher education. A child ULIP can help you achieve that effectively. The new age ULIPs, with the convenience of investing in multiple asset classes, low charges and the option of switching funds make them a good investment option for securing your child’s future education. Start a Child Plan today!
- By Santosh Agarwal-Associate Director and Cluster Head- Life Insurance, Policybazaar.com...