As a parent, you want to give your child the best possible future. You want to ensure that your child has enough funds to pursue their dreams, whether it is higher education, marriage, or any other goal. You also want to protect your child from any financial hardship in case of an unfortunate event.
But how can you achieve these objectives? How can you save and invest for your child’s future while also securing their life?
One of the best ways to do so is by investing in a ULIP-based child plan. Let’s find out more!
What is ULIP and how does it work?
If you are thinking, about what is ULIP, it stands for Unit Linked Insurance Plan. It integrates both investment and insurance within a single scheme. By opting for a ULIP, a section of your premium is allocated to provide life coverage, while the remaining portion is invested in diverse funds based on your risk tolerance and return preferences. These funds encompass equity, debt, or a balanced mix, tailoring the plan to your specific financial goals.
The value of your ULIP investment depends on the performance of the underlying funds. You can track the funds’ performance through the Net Asset Value (NAV) of the units. Depending on the plan you choose, you can also switch between different funds per your changing needs and market conditions.
Why ULIPs are a good investment for your child’s future?
ULIP offers several benefits that make it a suitable investment option for your child’s future. Some of these benefits are:
- Long-term savings: ULIP helps you save for your child’s long-term goals, such as education, marriage, etc. You can choose a plan that matches your time horizon and goal amount. For example, if you want to save for your child’s higher education, you can opt for a plan that matures when your child turns 18 or 21. You can also increase your savings by opting for top-up premiums or loyalty additions.
- Cost-effective: ULIP is a cost-effective way of investing in your child’s future. You can enjoy the dual benefits of investment and insurance in one plan. You also get tax benefits on the premiums paid and the maturity proceeds received under Section 80C and Section 10(10D) of the Income Tax Act, respectively. Moreover, ULIP charges have become more transparent and competitive after introducing new regulations by the Insurance Regulatory and Development Authority of India (IRDAI).
- Financial security: ULIP provides financial security in case of an unfortunate event. In the case of your unfortunate demise during the policy term, your child will be provided with the sum assured as a one-time payment or in instalments, depending on the plan. This will help your child meet their immediate and future financial needs. Some ULIP-based child plans also offer a waiver of premium features, which means that the insurer will bear the future premium payments on your behalf, and your child will receive the maturity benefit as planned.
What are the features of ULIP-based child plans?
ULIP-based child plans are designed to cater to your child’s future needs. They offer various features that make them attractive and flexible. Some of these features are:
- Fund options: You can choose from various fund options, such as equity, debt, or hybrid, to suit your risk profile and return expectations. You can also diversify your portfolio by investing in multiple funds. For example, you can invest in a mix of equity and debt funds to balance your risk and reward.
- Fund switching: You can switch between different funds per your changing needs and market conditions. You can do this without any tax implications or exit load. For example, you can switch from equity to debt funds when the market is volatile or when your goal is near.
- Partial withdrawal: You can withdraw a part of your fund value after a certain lock-in period, usually five years, to meet any unforeseen expenses or emergencies. You can do this without affecting your life cover or surrendering your policy. For example, you can withdraw some money to pay for your child’s school fees or medical bills.
- Safety switch: You can protect your fund value from market fluctuations by switching to a safer fund, such as a debt fund when your goal is near. This will help you lock in your gains and avoid any loss. For example, you can switch to a debt fund when your child is about to start college.
ULIP investment is a comprehensive coverage option for your child’s future. It offers you the dual benefits of investment and insurance in one plan. It helps you save for your child’s long-term goals, such as education, marriage, etc., while also providing them financial security in case of an unfortunate event. It also offers you various features, such as fund options, fund switching, partial withdrawal, safety switch, etc., to suit your needs and preferences.
If you want to invest in a ULIP-based child plan, consider comparing different plans based on their charges, returns, benefits, etc. You should also check the ratings and reviews of the plans and their fund managers. You should also consult an expert to help you choose the best ULIP-based plan for your child if you feel you need assistance.
Don’t wait any longer. Invest in a ULIP-based child plan today and secure your child’s tomorrow.