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Financial planning for your child’s future

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Parents these days get more and more ambitious with each passing year regarding the career of their child. They wish their child to excel in whatever career path they choose. But, you need to have funds to let your kid pursue higher education or to spend on any other such major activity. Your saving will not be sufficient after 10 years due to rapidly increasing inflation rate.

As you grow old, you might not have the same capability to earn the way you can do it now. You need to find out a financial instrument that can compound your savings and can help you finance your child’s education in later years of your life. You should plan keeping in mind the unfortunate events that might happen so that nothing would be able to hamper your child from pursuing his or her dreams. You need to start investing as early as possible as this way your investment will multiply and give you better returns.

What is Child Plan?

It is insurance cum investment plan that secures your child’s future financially by financing the major points of his or her life such as education and marriage. The best child plan protects the future of your child in case of your sudden death. The plan also builds a corpus that can be used over a time to finance the prime moments of his or her life.

Various Options to Invest Your Funds in-

1. Insurance-

There are various options available from which you can opt for the child plan that suits your requirements the most. You can do with savings for a defined phase of life; however insurance will help you cover all phases of your child’s life. You can choose other insurance options as well like term life insurance plan and investment insurance plan. Study various insurance plans and choose the one that is suitable to you.

For example, if your budget is low, you can choose term plan as it allows you to secure your family’s future at an affordable price. If you do not wish to mix insurance and investment, then term plan is the best for you. If you invest with a long term perspective, you can choose investment insurance plan which adjust your risk factor.

Child Insurance Plans Available in India

Child Plans Entry ageMaximum Maturity ageMinimum Annual PremiumMinimum Sum assured
Bajaj Allianz Young Assure18 – 50 years 60 yearsN/A10 times Annualized premium
Birla Sun Life Insurance Vision Star Plus18 – 55years75 yearsN/ARs. 1.00,000
Max Life Shiksha Life Super21 – 50 years65 yearsRs. 25000/-Rs. 50000/-
ICICI Pru Smart kid Assure plan20 – 60 years75 yearsRs. 15000/-

 

5times the annual premium
Aegon Life EduCare Advantage Insurance Plan20 – 60 years75 yearsN/ARs. 100000/-
MetLife Smart Child Plan18 – 55 yearsN/ARs. 18000/-10 times annual premium
Shriram New Shrividya Plan18 50 years70 yearsN/ARs. 100000/-
Bharti AXA Life Child Advantage Plan18 – 55 years65 yearsN/ARs. 25000/-
HDFC SL YoungStar Super Premium30 – 60 years75 yearsRs. 24000/-Subject to underwriting
Exide Life MeraAshirvaad Plan21 – 50 years65 yearsN/ARs. 3.5 Lakhs
SBI Life Smart champ Insurance Plan21 – 50 years70 yearsRs. 6000/-Rs. 1 lakhs
Edelweiss Tokio Life Edu Save Plan18 – 45 years60 yearsRs. 6968/-Rs.225000/-
Aviva Young Scholar Advantage Plan (Child Education Plan)21 – 45 years60 years10 – 25 years10 times the annual premium
Future Generali Assured Education Plan (Child Education Plan)21 – 50 years67 yearsMinimum : 17 years minus the age of the childN/A
MetLife College Plan (Child Education Plan)20 – 45 years69 years12 – 24 yearsRs. 2,12,040/-
SBI Life Smart Scholar (Child Education Plan)18 – 57 years65 Years8 – 25 years10/7 times the annual premium (regular pay) 1.25 times single premium (single pay)

2. Mutual Funds-

This does not provide life coverage, but provides the returns that are market linked. You can choose the mix of investment funds on the basis of your risk taking factor. You need to study the market trends carefully and be careful while investing as a wrong selection can make you lose your money.
These are for those people who do not have any professional knowledge of stock market for managing funds or do not have the time to track the financial market movement. Mutual funds are a diversified investment tool. You can expect the return of 12 to 18 per cent per annum if you buy mutual funds for a longer duration.

3. Public Provident Fund (PPF)-

Public Provident Fund is for those who wish to invest in secure as well as less inflation affected product. You need to keep the tenure of at least 15 years to reap benefits.

Conclusion-

You can invest in any financial product and allocate your funds as per your long term goals. Have an appropriate portfolio of funds by diversifying the products. Planning in advance is always effective whether you plan for your child or for your other needs. Manage your portfolio considering a high risk fund and one with moderate or low risk profile at the same time. Add funds that yield fixed returns and are not influenced by market. This way you can balance your portfolio and you can also tolerate if high risk profileis generating losses.

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