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What is a Child’s Plan?

Child plan is an insurance cum insurance plan which serves two purposes – firstly secures your child’s future and also finance the various turning points in your child’s life such as education, marriage or disaster.

Usually, parents now are planning well for their children, both husband and wife are working these days and they get very less time to think and to compare various insurance plans available in the market. Investing in the right plans, usually has huge benefits. Nowadays, the agents who deal with the insurance plans also cheat people with wrong promises for their self-benefit. Some agents make people opt for wrong plans which will have fewer benefits to customers and they end up paying huge premiums.

Below are some best child plans which you can go through and opt the right one for your kid.   

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  1. Consider investing in additional term insurance plans and balance savings:

This is not to consider taking a term insurance plan in your child’s name but taking an additional term insurance plan in your name for protecting your child’s future. For example, if you think you need Rs 20,00,000/- for your child for education or for marriage after 20 years you can take an additional term insurance on your name and start saving for said amount which may have a premium of Rs. 5000/- per month for a period of 20 years when your child is born. Your savings can be invested in a bank account or fixed deposit or mutual fund. In a case of the death of the parent, the child’s future is still secured.

  1. Mutual funds through SIP’s
  • A good way of saving money for your child’s future education or marriage.
  • You can consider investing in large cap funds or balanced mutual funds which have very low risk.
  • 1000 per month invested in the mutual fund will yield you Rs. 2.5 lakhs after 10 years with annual interest 13%. This is the power of SIP in mutual funds
  1. Recurring Deposits (RD):
  • A low-risk investment cum insurance option for your child for your child’s bright future.
  • Since the interest rate is at peaks now, one can lock recurring deposits at the specific rate and create the best plan for your children.
  • If you deposit Rs. 1000/- per month in recurring deposit you get Rs 2 lakhs in ten years at 9% interest and Rs 2.8 lakhs in 15 years.
  1. Invest in PPF:
  • It is the best way to lock your money for the long term of 15 years, which can serve as good money for your child’s future.
  • You can invest Rs.1,00,000/- maximum per annum in a PF account for a period of 15 years with interest rate @8.75% you can get a return yield of Rs. 31.30 lakhs at the end of 15 years which is totally tax-free.
  1. Invest in NSC:
  • This is the one of the greatest proven investment plans for your child’s education.
  • Start investing in NSC certificates for every year of Rs.1,00,000/- for 10 years, which is tax-free from the 11th year you will be free from spending on your child’s education. Your child would get Rs. 2.34 lakhs per annum from 11th years onwards for ten years for his or her child’s education.
  1. Invest in ULIP:
  • If you are a low-risk investor, who does not believe in stock exchange market dependent investment schemes, you can look for a ULIP scheme which has low allocation and fewer ULIP charges.
  • You can get 4 to 6% annualized income in this scheme don’t refer to agents who promise more returns to you than the bank deposit schemes you may be trapped.
  • An Investment for your child’s future in this option should be your last option when compared to other child plans.
  • When you refer any plan in any company, please read the instructions, terms and conditions carefully.

 

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Ojaswita Pandey
Ojaswita is a Content Writer at Paisa Matters a Financial Advisory and an MBA in Finance. She reflects traits of personality including ambition, and quality of generosity and thoughtfulness. She is motivated by her interest for learning and succeeding as she strives to become an outstanding and successful woman in the society of present age. Her definite goal of becoming a wealth manager for banks becomes her lifetime achievement besides living with a motto of “Live and let Live”.

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