As parents, we have great hopes, dreams and aspirations for our children. We want our children to become successful in life and have all the things they need and desire. Towards that end, we work hard every day to ensure that our children have access to top quality education in the best schools. However, our efforts may not always be enough since the cost of education is constantly rising. The rise in the cost of education will be incremental, as your child completes schooling and progresses through graduate and post-graduate courses. You may also have worries about how your child will face the world in case something unfortunate happens to you. If you are facing such questions, it would be wise to consider child plans (ULIP) to secure your child’s future.
Benefits of child investment plans
ULIP or Unit Linked Insurance Plan is an ideal option to secure your child’s future and their education. ULIPs are beneficial since they offer both protection (insurance) as well as market linked returns (investment). A part of the premium you pay is used to provide life cover and the rest is invested in equity or debt or both. With ULIP, you are saved from the hassle of taking a separate life insurance policy and investing your savings for your child’s education. ULIP covers both these needs through a single child investment plan, whichnaturally reduces the premium amount. There are various other benefits of child insurance plans, some of which are described below.
Start small: You don’t have to commit to paying large sums as premium for your child insurance plan. You can start small with just a few thousand rupees. Later, depending on your available budget, you can choose to gradually increase the premium amount. This way, you do not have to compromise your present to secure your child’s future.
Choose your investment portfolio: With ULIP, you will have the option to choose your investment portfolio, as per your risk appetite. For example, if you are looking for high risk, high return options, you can choose equity based funds. If you want to reduce the risks, you can choose debt funds or those that include a mix of equity and debt.
Switch from one fund to another: Depending on your needs, you can transfer your invested premiums from one fund to another. You can also choose where your premiums will be invested in the future. This flexibility allows you to find the perfect balance between risk and returns, in accordance with your existing and emerging needs.
Invest more through top-up premiums: Depending on your available budget, you can invest more through top-up premiums. This will be the amount that you pay in addition to the contractual basic premium. Top-up premiums will increase your investments as well as the Sum Assured mentioned in the policy. This is a good way to utilize any additional savings that you may have.
Withdraw funds: In the event of any emergency situation, you can withdraw a part of your investment. There is usually a lock-in period for ULIPs, but beyond that you can withdraw part of your investments to deal with any emergency situation.
Death benefit: In case of any unfortunate development, your child will have access to funds that can be used to support their education and other needs. Usually, different types of death benefits are available and you can choose the one that’s most appropriate for your specific needs. For Example, you can choose the option where the Sum Assured is paid immediately and your future premiums are waived off entirely. Another option is where your child will get an annual payout that’s equal to the annual premium you pay. One can also get a lump sum amount based on the NAV of the fund.
Full payment on maturity: If everything goes well, you will receive the entire investment at market rates on the date of maturity. The sum received can be used for your child’s higher education or for any other purpose.
Tax benefits: Premiums paid for child investment plans are eligible for tax deductionunder Section 80C. Payouts and returns received under ULIP are also eligible for tax benefits under Section 10(10D).
Designed for both protection and investment purposes, child investment plans are most appropriate for securing your child’s future. ULIPs are also a lot more affordable, as compared to standard lifeinsurance plans and investment options. If you want to secure the best education for your child, make sure you start investing in a ULIP.
About Aegon Life:
Aegon Life Insurance Company Limited launched its pan-India operations in July 2008 with a vision to be the most recommended new age life insurance Company. Aegon is one of the world’s leading financial services organizations (providing life insurance, pension plans, and asset management) and Bennett, Coleman & Company (India’s leading media conglomerate) have come together to launch Aegon Life Insurance. This joint venture adopts a local approach with the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions to customers and to prioritize their needs.