Parenthood is an exciting and enriching journey. It is a milestone life event for a couple. With inflation and the economic slowdown due to the Coronavirus (COVID-19) pandemic, it is essential that you plan your investments well so that you can secure your child’s future.
There are a plethora of investment options available in the market. It is advisable to do adequate research to invest your money in any financial product for your child’s bright future. As a parent, you should have a proper savings plan for your child’s monetary well-being in the long run. An unorganized approach will not prove beneficial, as you will need to cater to various aspects, such as your child’s education, travel wish list during school and college vacations, and extra-curricular activities, among other requirements.
As a parent, you are worried about providing your child with high-quality education. Fulfilling this objective requires a lot of finance, especially if your child wants to study abroad. Keeping rising lifestyle-related expenses in mind, it is imperative that you save and invest wisely for your child’s financial stability.
Unit-Linked Insurance Plan (ULIP) for children
ULIP is one of the most profitable financial products when it comes to investing for your child. If you are wondering about the Unit-Linked Insurance Plan meaning, then read on.
ULIP is a type of insurance plan that provides life cover and helps you in growing your wealth significantly. It is recommended that you start investing in ULIP for your little one within 60-90 days of his or her birth if you wish to build a large corpus. The power of compounding can multiply your investment and allow you to earn maximum returns. Here, you can invest in market-linked equity funds initially and then shift your investment to debt funds to safeguard the accumulated sum before maturity. Besides the flexibility of switching from one fund to another, you can opt for a premium waiver rider. Here, if something unfortunate happens with you, the insurer will waive off the future premiums and pay them until the maturity of the ULIP policy. Therefore, ULIP has become one of the most popular investment instruments for parents, as no other child-related investment plans offer such facilities.
Advantages of investing in a child-based ULIP
Here are a few plus points of putting your money in a child-based ULIP:
- Triple benefits
Such an investment offers triple benefits. Firstly, the insurer will bear all the future premiums of the ULIP in case of your untimely absence. Secondly, your family will receive money every month to take care of the education fees and other requirements of your child. Thirdly, in case something tragic happens with you, your family members will receive a lump sum from the insurer so that they can lead a financially independent life.
- Tax savings
Tax exemptions are one of the key offerings of ULIP. You can claim a deduction up to INR 1.5 lakh on the premium that you pay for the ULIP as per Section 80C of the Income Tax Act, 1961. Additionally, the death and maturity benefits are tax-free according to Section 10(10D) of the Act.
To sum it up
You have the option to choose from different child-based ULIPs. Do intensive research and consult your financial advisor for his expert opinion. Besides this, seek the help of a ULIP calculator to determine the premium that you will need to pay for a particular tenure to get the desired sum assured. As you are investing your hard-earned money for your child’s future, it is crucial to select the appropriate plan so that there are no financial obstacles. Invest in a ULIP investment plan that shield’s your child’s future.