Ideally, start thinking about investing for your child’s needs when you start thinking about having a baby. The idea is to build a financial plan that acts as a ladder for your child’s needs. As your child is dependent on you, it is your responsibility to take care of him/her even if you are not around. Begin with an insurance policy. Opt for a term plan with a sum assured of at least 10-15 times your monthly income. This will act as security in case something unforeseen happens.
A traditional insurance plan will not work—the returns on endowment and money back plan ranges between 4% and 6% and don’t beat inflation. Once you have life insurance, take a closer look at the medical insurance cover. Go for a family floater health insurance policy and include your child in it.
As parents you wish the best for your children. This among other facilities and amenities includes providing world-class education so that they can achieve their career goals. This is easier said than done given the challenges and competition in the field of education today.
Apart from the challenges of education, which is for the child to grapple with, parents have their own hurdles to overcome i.e. sharply rising cost of education.
As a parent if you are not adequately geared to meet this particular challenge your child could well miss the bus on a solid degree regardless of his/her skill and aptitude.
Consider this – a 2-year MBA course at a premier management institution today would cost you nearly Rs 4 lakhs. At an inflation of rate of 10% for education, this amount would bloat to Rs 2,691,000 after 20 years when your child will sign up for the MBA course.
The good news is that help is at hand in the form of child insurance plans which are tailor-made to meet the future financial needs of your children. Childinsurance plans are available in both forms – unit-linked plans and traditional plans to suit individuals with varying risk profiles.
A sum invested regularly in the plan can help accumulate a corpus that will secure your child’s financial future. The amount of contribution will depend on how much you plan to save. Your financial contriver can be of assistance in chalking out an ideal financial plan for your child’s future.