Child insurance plans, ideal for your child?

When you pay the premium for this plan, part of the premium amount goes towards paying for the life cover. Remaining part of the premium is invested in various instruments either debt or equities. However this portion is quite small, as the insurance companies tend to deduct premium allocation charges upfront. These charges are meant to pay the distributor commissions. As a result, very small part of the premium gets invested during the initial years.

You have welcomed your new bundle of joy in this world with a lot of enthusiasm. You intend to give them the best of everything. In order to help you achieve this objective, you start investing in various instruments on your child’s behalf. To capitalize on the parents’ intentions about giving the best for their children, many insurance companies have introduced children’s plans.

These plans have enticed many parents to invest on behalf of their children, under the impression that their child’s future is secure. But is it true? Are they worth investing? Is this the best investment option for your child? Let’s take a look at what these plans are all about.

• What are children’s plans?: Children’s plans are insurance-cum-investment plans offered by insurance companies are similar to ULIPs. However the difference between a ULIP and a children’s plan is that the parent starts investing in the Best Child Insurance Plan right from the time the child is born and can withdraw the savings once the child reaches adulthood. Of course, some plans do allow intermediate withdrawals, at certain intervals.
• How much insurance do I get?: These plans do come with inbuilt insurance component in order ensure the sum payable to the child is insured against the premature death of the earning parent. The least life cover you have to select in these plans is: Sum Assured = Term * Annual premium / 2. But in most instances this sum assured is inadequately woeful. Experts recommend that it is necessary  to buy a life cover of minimum of 7-10 times the annual income of the earning parents. This is to ensure that in case if the earning parent meets untimely death, his/her spouse and the child are adequately provided for. So if you are relying only on the life cover provided by these plans, then remember you will always remain under insured.
• What about the investment?: When you pay the premium for this plan, part of the premium amount goes towards paying for the life cover. Remaining part of the premium is invested in various instruments either debt or equities. However this portion is quite small, as the insurance companies tend to deduct premium allocation charges upfront. These charges are meant to pay the distributor commissions. As a result, very small part of the premium gets invested during the initial years. Also if you opt for any features provided by the insurer like waiver of premium, switching option etc., the charges for the same are deducted from the amount invested. So the returns from these Chid plans tend to be very low in the initial years and if you stop the plan without completing the entire tenure, you might end up suffering loss.
• Disadvantage of the children’s plans: These plans do rate poorly both in terms of life cover and investment option. You can buy plain term insurance at lower premium that provides you with very high life cover. For investments, equity mutual funds are the best. You can invest the highest possible amount in these funds at very low fees. Also if the fund tends to perform poorly, you can stop your investment and switch over to another fund, without paying any penalty. This is not possible in case of children’s plans as there are heavy surrender charges applicable.
• Are they right for me?: One needs to evaluate if they are an ideal option. More often no they are not. While they do provide you with tax benefits, you can get the same tax benefits with a combination of term insurance and mutual funds. Also, term insurance + mutual fund combination beats the children’s plans on the fronts of costs and returns. So it is better to give these plans a miss and instead go for term plan and mutual fund.

[Source: https://childplan.wordpress.com/2015/10/09/child-insurance-plans-ideal-for-your-child/]

Plan early for your children’s education expenses

With the cost of schooling soaring every year, parents should put in place concrete savings and investment plans well ahead

“Education costs money, but then so does ignorance.”

These words have a greater meaning today. The high cost of child education may come as a big negative surprise for those who do not plan early. Be it annual school admission fees, monthly tuition fees or expenditure on transport and extra-curricular activities, the costs are soaring every year.

Mounting cost of education in recent years has eaten up a large chunk of household budgets. So it is in the interest of every parent to look ahead and plan carefully for the cost of education of their children.

Even if you have planned for your children’s higher studies by buying insurance plans and mutual fund schemes, planning for their primary and secondary education is equally important. The costs would rise further if you decide to send your children to private schools. The job only gets tougher for single earning parents.

Planning is only half the job done. To understand the gravity of the situation, let some numbers do the talking. The inflation in the cost of child education plans is rising at 12 per cent compared with a 7-8 per cent spurt in the overall inflation (though overall inflation has dropped to around 5 per cent in the past few months).

A survey by a leading industry body showed 65 per cent of parents spend more than half of their take-home pay on their children’s education as well as on co-curricular activities, putting significant pressure on family budgets. The figure shows the growing share of education costs on a family budget.

According to the survey, parents’ annual spend on items and activities integral to school curriculum like fees, transport, books, uniform, stationery, building fund, educational trips, extra tuitions and extra-curricular activities of a single child has gone up from Rs 35,000 in 2005 to over Rs 94,000 in 2011.

The government provides income-tax relief on monthly tuition fees paid under Section 80C of the income-tax act, which has since been raised from Rs 1,00,000 to Rs 1,50,000, but Section 80C also covers several other investment instruments within the same limit. Considering the rising cost of education and higher tax breaks provided overseas, there is scope for additional tax break.

Abhinav Gulecha, founder of Soham Financial Planners, a Sebi-registered investment adviser, said: “There is scope for an additional tax break, but in the last budget the government provided additional tax breaks on medical expenditure and personal accident insurance, which are priority areas.”

“Income-tax benefit can also be claimed on the tuition fees paid in a play school by submitting receipts. Companies also allow employees to structure their salaries where Rs 100 per child per month can be claimed as income-tax benefit under Section 10 of the I-T act. Thus, one can claim additional I-T exemption of Rs 2,400 on two children,” Gulecha said.

Even without tax break, saving for child education is the need of the hour. “It is critical to invest in high-growth financial instruments so that your portfolio’s rate of return is more than the rate inflation,” Gulecha added.

Can taking exposure to equities be a solution? Experts are divided on taking 100 per cent exposure to equities to build a corpus for your child’s education.

They feel it is important to plan early, possibly even before starting a family. After marriage, a couple should set aside a corpus for children’s education, which can be put into bank fixed deposits, if they are below the 10 per cent income-tax slab.

If they are in the 30 per cent tax bracket, they should invest in liquid mutual funds, where there is no exit load and the amount can be withdrawn whenever required.

For parents who haven’t planned an education corpus, there is still some time and a few options. There is a three-year period before a child goes to a play school. This time, financial planners say, can be utilised well to plan a corpus that can provide regular cash flow. However, bear in mind that this is the time for other expenses as well.

While people tend to put money together for major life goals like buying a car or a home, children’s education tends to take a back seat. One should keep a separate reserve for children’s education purposes.

“Many parents paying school fees wish they had started a savings plan when their children were born. The earlier a savings plan is started, the less is contribution needed for such a saving plan,” says a financial planner.

A longer timeframe for investment also allows investors to take on more risk and maximise returns. One should keep a monthly deposit plan, but needs to review it as costs are rising at a fast pace. Experts say one may need beef up this fund regularly after every 2-3 years after taking the rate of inflation into account.

[Source: https://childplan.wordpress.com/2015/08/13/plan-early-for-your-childrens-education-expenses/]

Buy Child Insurance – First Step towards Successful Parenting

Investing and saving enough for a child’s future is considered the most important financial goal by parents in India. Your bundle of joy brings a lot of responsibility for new parents and if they buy online child insurance plan, their children can have a financially safe future.

Child insurance plan can help parents to save adequate money for a child’s future goals such as education and marriage. These insurance products are made in such a way that they fulfill the financial needs of your children when requirement arises.

Parents should know that such plans help them save money regularly over a period of time. The amount is invested to increase over a period of times and then, insurance companies in India payout lump sum money at the time of maturity.

In fact, insurers also offer death coverage. In simple words, child insurance plans can be bought on the life of any of the parent and you can make the child as the beneficiary. Incase parents met with an unfortunate event, and then child best insurance plan will take care of a child’s needs.

The best part about this child insurance plan is that it will continue till maturity after the parent’s demise and all the remaining future premiums will be waived off by the insurance company in India. This is one of the unique child insurance benefits and generally known as ‘waiver of premium’.  At maturity, a guaranteed lump sum amount is paid out.

Based on a policy type, the payment happens at two stages, once on the parent’s demise and another is on maturity. In Indian insurance market, there are some plans which will offer payouts at regular intervals. The idea behind this feature is to make funds available when child requires it most, be it for education or marriage. Parents can buy child insurance education cover to fulfill the dream of their children’s education.

While buying child best insurance plan, first select the term period based on when your child needs the financial support and then, calculate the amount. People can also take help of a financial planner to decide the life coverage amount. Compare different child insurance policies before finalizing the one.

[source: http://blog.policyboss.com/child-insurance-plans/buy-child-insurance-first-step-towards-successful-parenting/]

Long-Term Financial Needs Demand Child Insurance Investment

Parents always start the financial strategy for the future of their children as early as possible and insurance experts suggest parents to buy child insurance plan online to avail several child insurance benefits of financial investments.

This insurance type works in policyholder’s favor during their child’s formative years. If parents start planning and investing early, then the investment period is longer and better the returns.

Child’s birthday is the best occasion to start investing in a child plan. Early investment in child insurance is the best way to start building a financial corpus for child so that he or she can achieve his or her dream without feeling any financial burden.

Even if parents are not around them, children can still fulfill their dream without anybody’s support. Sometimes, parents buy online child best insurance plan on their child’s birthdays and this occasion will recollect them to pay premium year by year.

Now a days, a wide range of insurance policies are available in the market. If customer selects well, a child plan is a huge benefit to successfully handle the future of children’s different milestones. Also, these investments can be done in funds which can earn good returns that match the increasing educational costs. In fact, such policies have options which secure future plans of a child during unfortunate events of death of the parents.

Insurers offer policies along with various maturity Saving for Child insurance benefits designed to coincide with the child attaining 18 years of age or ‘timed’ release of payouts at a critical life stage from 18 years onwards. Child insurance education plan offers fund for a child’ education purpose, including tuition fees, school and/or college fees etc.

Choose a policy that provides premium waiver benefit, some policies have this feature as an option or main feature in the main policy document. In case of parent’s demise, the insurer waives off future premiums to be paid while the insurer continues to fund the policy till the expiry date.

It ensures that the maturity benefit that was decided for a specific age remains intact as set in addition to the death benefit paid. It is advisable to select a policy which gives a benefit of risk cover and investment. Child insurance plan offers a combination of risk cover and balanced mix of debt fund and growth.

[Source: https://childplan.wordpress.com/2015/08/04/22/]

Buy Online Child Insurance to Make Your Child’s Future Bright

Each parent works hard to give bright future to his or her child. Today, fulfilling their daily needs is not enough. Parents try and make each wish of their children come true. It is imperative for young parents to start thinking about their children’s future today.

Online child insurance offers nothing but the best for children, be it education or marriage. If you really want to make all these things happen when the actual time comes, then all you have to do is to plan now.

If you start planning early for your child’s future, then you have more time for investments in hand. Due to longer investment period, a financial corpus gets a chance to grow more.

Parents should list the goal which needs to achieved, then buy a suitable investment plan online to attain those goals. Higher education and marriage are two most expensive money drainers which parents have to best child plan well in advance.

Generally, around 45 percent parents invest their hard earned money in public provident fund and fixed deposits. The interest on PPF account balance is annually compounded and then credited to the customer’s account at the year end. Hence, it offers good returns in the long terms and a great tool for long term investment.

Interests on such accounts are linked to government bond yields. Buying online child insurance is a great way to plan child’s education and marriage because this long term investment tool is best utilized in a 15-20 years.

Online insurance calculator will help buyers to calculate the financial corpus required to fund child’s education and marriage when they cross the appropriate age.

Young parents are more worried about child’s education and hence, insurance companies in India offer trusted financial products which fund children’s education and marriage after a certain period of time.

[source: https://childplan.wordpress.com/2015/07/29/buy-online-child-insurance-to-make-your-childs-future-bright/]          

Why Child Insurance is Necessary?

Children are the main reason behind parent’s existence. Parents always want to give the best possible foundation to their children and work hard to offer for child care, education and imparting the correct values to make sure that children become responsible as well as productive eventually.

To fulfill this parent’s dream, child requires appreciation of the expenses involved and an effective financial plan which is started as early as possible. Education is the most crucial expenses which parents need to plan for.

We all know that the education cost is growing more than the rate of inflation for the past 7 years. Hence, parents need to be careful while handling these expenses. Considering the long-term goals of their children, ensure that you invest in the right financial tool.

Generally, it is observed that parents delay financial planning to a later stage and prefer to invest for short-term periods. There are various instances where parents sacrifice other vital investment goals like retirement planning because of weak long-term planning. Therefore, industry experts suggest parents to start early and follow a disciplined approach to saving for the long term.

Buying online child insurance is the best decision to fulfill the long-term requirements of a parent and has an edge over other financial products, owing to a wide range of benefits it gives. Child plans allow parents to start investing early especially after being blessed with a child. It motivates disciplined long-term savings.

It is true that parents often fail to work for the consequences of demise of the provider. The major benefit of child insurance online is that it generates a continuous cycle of fund creation in case of sudden demise of the parent.

On policyholder’s death, the insurer continues investing money on behalf of the insured person because of the waiver of premium benefit. This feature helps to protect the child’s future and also help a child in meeting the parent’s dreams.

Child insurance India is affordable and based on individual risk appetites. Customers can select between unit linked and traditional insurance plans. A unit linked child insurance policy allows  investment in both equity and debt markets.

Traditional child insurance offers guaranteed maturity benefits and invest funds mainly in self-instruments and risk-free government securities. Those who have low-risk appetite and not literate financially can opt for traditional policies. Customers who are ready to take the risk related with these equity markets can buy unit linked plans.

[Sourcce: http://blog.policyboss.com/insurance/child-insurance-plans/]

Management Punditz: Child Plan: Is that REALLY worth for your kids?

Child Plan