Child plans

Child plans

Financial steps to take before you have a child

There’s no greater happiness in the world than the arrival of a new baby. From the moment the child is born, it is difficult for new parents to take their eyes off their little bundle of joy. But a child is also one of the biggest responsibilities the world has ever known. Financial planning for your child is a very important part of this responsibility. This financial planning is built upon certain crucial steps that you need to take before you have a child. We have therefore enlisted 8 financial steps that you must take before you have a child.

1) Get health insurance

There is nothing more important than the health of your new born, and to look after that, both the mother and father should be physically and mentally healthy. Since medical care is quite expensive these days, it is advisable to buy a health insurance policy before you have a baby (if you haven’t bought one already). Check which insurance policies cover maternity benefits. Though no company explicitly offers maternity insurance, certain companies provide benefits like consultation fee cover. Take a policy that covers your baby as well.

2)    Lifestyle changes

Middle Class and Upper Middle Class couples of today are used to living a more than modest lifestyle; but a baby’s entry into their lives changes a lot of things. Your disposable income decreases considerably, and you can no more expect to splurge on certain indulgences the way you did earlier. It is therefore, necessary to start making certain lifestyle changes to cut down on expenses. These expense cuts depend on the kind of lifestyle you live. For example, spending less on clothes and accessories, fewer dinners outdoors, less partying etc.

3) Review insurance

Before you have a baby, you must also review your existing life insurance policies and in case you don’t have a policy, you must buy one immediately. If you have already got a life insurance policy, then you have to check with your agency to ask if they would allow enhancing the cover. If they do not provide this facility, you should buy a new policy soon.

4) Check maternity benefits/ leave provided by the employer

If you are an expecting mother, you need to check your employers’ maternity leave policy and other maternity benefits provided by the company. Most companies offer paid maternity leave for 3 to 6 months. Some companies also offer unpaid sabbatical up to a certain period. You also need to start saving other leaves like sick leave, paid leave, etc. to use for your pre-natal checkups during pregnancy.

5) Stem cell cover

Stem cells can treat various illnesses and lifestyle diseases, and new parents are often encouraged by stem cell banks and doctors to preserve their children’s stem cells. Preserving stem cells becomes important if your family has a history of certain diseases, like Leukaemia. Once you decide to go for it, there are other decisions to make like choosing the right stem cell bank and arranging the money required to meet the cost of preserving the cells, and deciding whether you want to make a onetime payment or opt for monthly installments.

6) Devise a long-term investment strategy

In this Child Plans Having a child is just the start of the biggest responsibility you could ever undertake. The one thing that will be your biggest concern apart from your child’s health is his or her education and career. You may not be unaware of the extremely high cost of education in the country, which includes quality primary education too. Before you have a child, you need to start finding ways to regularly invest small amounts that can be later used to fund your child’s education.

7) Start planning a will

Life is unpredictable and you would certainly not want your child to be left without someone to look after him or her if anything should happen to you.

Financial planning for your child does not have to be as daunting as it seems. With certain right steps (like the ones mentioned above), taken in time, it can happen very smoothly, thus, proving the adage- a stitch in time saves nine.

[Source: https://www.tomorrowmakers.com/articles/financial-planning/8-financial-steps-to-take-before-you-have-a-child]

Child Insurance Plans

Child Insurance Plans

How to plan your savings for your child’s higher education?

Your little one has got big dreams in his/her eyes and as parents; you have probably started saving up for him/her already. Whether your child Plan wants to be a doctor, a singer, an archaeologist or a chef; proper training will be required in today’s competitive world . There is no denying that education is of the utmost importance in building a career, the cost of which is sky rocketing each year. So how should you go about the task of saving for your child’s higher education? Here are a few tips:

Keep inflation in mind

The inflation rate of an economy is always fluctuating. Although it has been steadily falling in the recent past – the current rate being just 5.75% – it is entirely possible that the rate might shoot up in the next 5 years or more. So it is always better to account for inflation and set aside some extra money. Make sure you keep an eye out for the tax rate as well.

Save for a general course

At the young ages of 12-16, children go through phases of being attracted to many different careers. The same child who wants to be a scientist today might want to be an engineer tomorrow. Therefore it is not wise to decide your savings on their whims. Rather than trying to pinpoint a specific course for which to save, find out how much a general stream or particular field (academics, self-employment stream, specific profession etc.) costs and start saving accordingly keeping an average figure in mind.

Diversify your investments

Like they say, don’t put all your eggs in one basket, it isn’t practical to accumulate all your funds through any one type of instrument. . You can invest in insurance (savings plan), mutual funds, fixed deposits, hedge funds, debt funds, stocks and debentures. All of these will have different risks and returns involved. Another advantage of diversifying your investments is that the overall interest earned may be higher than that of a fixed deposit.

Look out for scholarships

It’s a fact that every year, a large portion of the scholarships offered worldwide go waste simply because people are not aware of their existence. Keep an eye out for all such scholarships through constant research. When it comes to availing a scholarship, an issue often faced by parents is that the required documentation is not ready. That’s why it is advisable to maintain your child’s documents from the very beginning.

Take up a Child Education Plan

The cost of education is rising each day. This makes it necessary to invest in savings plans that offer sufficient funds to meet the expenses at key educational milestones in your child’s life. The returns should be sufficient enough to take care of your child’s future needs even when you are not around. Several insurance companies offer Child Education Plans for this very reason.

Sooner or later, when your child has finally found the right career for him/her – one where he/she finds happiness and success – he/she will look back and thank you for planning for his/her future. We wish you all the best for your endeavors!

Sorces: http://igeniusblog.com/how-to-plan-your-savings-for-your-child%E2%80%99s-higher-education/

Make your own Child Plan

Planning to buy a child plan !!! how about making a customized child plan on your own. Trust me it’s so simple & in the process you will save upon a huge amount of money because you need not to pay charges such as premium allocation charges, fund management charges etc to the insurance company.

Let’s have a look at what a child plan offers to you:

1. Guaranteed amount when your child will be going to college & guaranteed amount on his/her marriage.

2. Insurance cover: In case of your demise your family will get a lump sum amount and all the premiums of your child plan will be waived off & policy will continue till maturity.

3. Some additional riders such as critical illness, accidental death etc.

Charges Involved - Off course all these riders & insurance is not free of cost. Let’s have a look at charges involved:

1. Insurance cost (Depends on the insurance cover)

2. Cost involved in Various riders

3. Premium allocation charges: Charges deducted by the insurance company for allocating your money in various funds. These charges are in range of 2-5%. Say you invested Rs. 1 lakh to the company, amount deducted in the name of premium allocation charges will be about Rs.2,000-5,000.

4. Fund Management Charges: 1.35% of fund value.

5. Service tax, annual maintenance cost etc.

Ask the following questions to your policy agent & trust me you will never get an appropriate answer from them: 

1. What is the return from this plan.

2. What are the charges involved.

Now let’s have a look at how you can make a child plan as per your need & requirement:

Step 1:

With the help of child education calculator, know how much you need to accumulate for your child higher education. You can also calculate how much you need to accumulate for his/her marriage.

Where To Invest:

Case 1: For guaranteed return (Low Risk – Low Return)

In the calculator Enter 8-8.5% in front of rate at which investment will be done. It’s recommended that you invest in Public Provident Fund. Currently rate of interest of PPF is 8.7% per annum.

You can also make partial withdrawal from your PPF account as and when money is required for your child higher education or for other essential needs in between. Have a look at how a PPF account works: Public Provident Fund

Case 2: For High Non Guaranteed return (High Risk – High Return)

In the calculator, enter 12-15% in front of rate at which investment will be done. It’s recommended that you invest in Equity based Mutual Funds per month in a systematic way. Invest in MF only if your time horizon is greater than 5 years.

Case 3: For Non Guaranteed return (Moderate Risk – High Return)

In the calculator, enter 10-12%  in front of rate at which investment will be done. Here investment will be done both in PPF & MF. This strategy should be adopted by persons who will be requiring the money at least 5-7 years from initial investment.

Step 2:

Purchase an Online Term Insurance: Term insurance is the best form of Life insurance in India. Here you pay to the insurance company a fixed amount each year & in case of your demise, your dependents will get the amount for which you are insured.

Now the big question is how much should be the insurance amount !!! Take an insurance equivalent to twice the current education expenses. Say current education expense is 15 lakh, so you need to take a life cover for 30 lakh approx. This amount will take care of all the financial needs of your child in case of your demise.

Say your age is 30 years and you need an insurance of 30 lakh for 15 years (time till which your child will enter into college life), you need to pay Rs.3,000 (approx) per annum to get a cover of Rs.30 lakh.

So what are you waiting for !!!! make a child plans as per your requirement & save around 4-7% per annum on premium paid by you.

Source: http://www.financialkundali.com/44#.Vrh2SBh97Dc&gsc.tab=