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=

Looking to invest for your child? 7 best options that can secure their future

It is significant for parents to invest in best options to meet children's educational expenses and secure their future.

For parents, children are the world. They can do anything to give the best to them and when it comes to their education, saving becomes the top priority. The rapid rise in education costs is well known. As per Assocham, the cost of education has risen over 150 per cent in the last 10 years. According to Ankit Choradia, research analyst, Karvy Stock Broking, this trend is expected to continue, which makes it even more important to consider your child’s future as ‘invest on priority’.

Every parent wants his/her child to get the best possible education without any financial hurdle. For this, it becomes significant for parents to invest in best options to meet their educational expenses and secure their future.

If you are looking for some investment options for your child’s future than this article is for you. With the help of experts, Financial Express Online has identified seven top child investment plans.

1) Sukanya Samriddhi Scheme

It is a Government of India initiative to encourage saving for girl child. It can be opened from the time of birth till your daughter attains 10 years of age. Minimum of Rs 1,000 and maximum of Rs 1.5 lakh can be invested every year. Deposits can be made for 14 years and maturity period of the account would be 21 years from the date of opening the account. The interest rate is an attractive 9.2 per cent per annum which is subject to change. Like PPF, it is a EEE product and tax exemptions can be claimed under section 80C. Partial withdrawals are also allowed after the child attains 18 years of age.

EEE stands for exempt, exempt, exempt which implies, tax exemptions upon investment, interest received and maturity.

2) Invest in Gold (Long Term)

Gold acts as a hedge against equity and during volatile times. Gold ensures your risks in the financial markets are hedged. Anil Rego, chief executive officer and founder, Right Horizons, said, “Investments in gold should be either through ETF, gold mutual funds or E Gold. It is advisable to avoid physical investments in gold in order to reduce the risk of storage and the cost associated with the physical holding. Also the prices of the paper gold is derived based on the current gold prices in the market and hence it is as similar to buying or investing in a Gold fund.”

Choradia said, “Without gold, a portfolio is never complete for an Indian consumer. It has always been the favourite investment option. Events like marriage can be called as mini festivals of gold. If gold is such an unavoidable metal, why not start saving for it right away! We believe the best way to do it is through Gold ETFs. It will help you avoid the hassle of storing physical gold but keeps giving you the appreciation in the price rise. However, make sure this investment does not exceed 10-15 per cent of your overall portfolio or only as much as you would need for the goal.”

3) Risk cover to protect future goals

You should also take proper term insurance cover for yourself to secure your child against any unforeseen event. Though these things do happen, but the probability or chances of happening such events would be low or cannot be quantified. Rego said, “It is advisable to have a risk cover in order to reduce or avoid the financial impact on the lives of your dependant in cased of happening of unforeseen events. Thus one should make sure that the future costs related to your child’s requirement are adequately covered in this insurance. Three important expenses to be noted while going for a cover 1) Education 2)Marriage 3) living expenses till they become adult.”

Child Investment Plans

4) Equity Mutual Funds

This ranks right up there in terms of priority. There are two reasons for this – longer time frame (10-15 years) and the mode of investment available (SIP). According to Choradia , a monthly SIP of Rs 5,000 in equity mutual funds for 18 years can fetch you Rs 33 lakh, assuming a return of 12 per cent per annum. Even considering an inflation of 6 per annum, this amount would more than suffice. However, the key here is not the amount invested but the time given. Power of compounding has always been understated. Equity funds have a history of generating 12-15 per cent per annum returns. And SIP, of course, is considered to be one of the best ways to average your cost over the long term.

5) PPF

It is one of the favourite investment options of a lot of experts. The primary reason for recommending this is the impeccable EEE feature. Moreover, the tenure or maturity period of this product i.e. 15 years is so very apt in terms of investment for child’s education or marriage. Another feature of this product is the flexibility in terms of investment.

You can invest as low as Rs 500 every year and also as and when you want. However, there is an investment upper limit of Rs 1.5 lakh for this account. Account(s) can also be opened in the name of your child and it is possible to invest in oneself through one’s own account, which will double the investment limit.

6) Chose debt instruments for short term needs

Though major needs like higher education and marriage are long term based, there are many recurring needs in short to medium term like – school fees, uniform expenses, clothing and medical requirement etc. which cannot be taken care by investing in equities considering the risk and volatility in the short term. “One can choose to invest in debt avenues like – short term funds, income funds, bond funds (with lower maturity), fixed deposit in order to avoid market risk. Though returns from these short term funds may be in the range of 6 per cent to 8 per cent, however risk too is low or moderate,” said Rego.

7) Miscellaneous: One should also invest money in building your child’s skill sets. It can be art, sports, digital media or anything which reaps good benefits for your child in the future. Also teach your child the concepts of money and encourage him to save money for his own goals. This will help him realise the value of money.

Source: http://www.financialexpress.com/article/personal-finance/best-investment-options-plans-schemes-for-children/173755/

Some important parameters for building a child plan

Every parent in India likes to save and invest for their kids' secure future. Most parents start saving for their child right from the day he or she is born. A good initiate by parents, the earlier one starts planning lighter will be the financial load once the plan gets laid out over the years.

But due to the ever increasing complexities with loads of investment products available in the markets investors often tend to stay confused and might also choose a wrong child investment plan which might not even meet the child’s future goals. In India it’s a herd mentality that child planning has to be approached with debt funds such as PPF, fixed deposit and traditional insurance policies which tend to give low yields. Due to the low yields there is a possibility that investor might financially lag behind into their goal because of the poor choice of child investment plan. However, such is not the case. With market filled with good aggressive and equity funds options, a proper planning and research will help you extract high returns in the long term phase of your child plan. Therefore, choosing the right child investment plan that will not only fulfill his or her present needs but will also secure their future goals of higher studies, extracurricular activities, career choices etc. is the most crucial part of any investment.

The article discusses about some important parameters to be considered for designing the best child investment plan.

Building a strategy

A target is more likely to be achieved if there is a strategy devised for it. Therefore, when it comes to saving and investing for children you should never overlook this important aspect. The ideal way to start is think the time horizon for child investment plan. A child planning is more kind of future focused decision which would be after finishing school, their higher studies, extracurricular activities, hobbies, choice & preferences, job or business and finally the commencement of new married life. So you need to take a slightly longer time frame in mind for planning which could be anywhere around 15-20 years. This means it is a long term investment which gives the advantage of taking more risks for gaining high returns. 

Once you figure out the time frame, shortlist the expenses that you have to save for like child education, hobbies, or marriage. It is advisable sit and understand your child’s dream, their hobbies, likes and dislikes and then probably start estimating the expense on desired higher education and wedding expenses by adjusting today's costs for inflation. Once you have a direction on time horizon and quantum of amount required you can launch hunt for the best investment option for child's future needs.

Today, the biggest concern of parents is gaining high returns. So here are some points considered for best results of your child investment plan.

Returns

A long term child investment plans should ideally give good returns well above inflation as you have sufficient time to experiment in hand. So, even if there might be fluctuations, when you average the returns the capital would have been protected.

Tax

Long Term investments build-in a good corpus which tends to be bulky enough for higher liabilities. So you need to choose investment options that minimize tax liability or best eliminate it.

Discipline

A child investment plan is a serious effort to build secure future for your child. A financial part of your child's education and marriage are goals which are long term and needs disciplined investment. It is advisable the investment plan should at best be automatic, so there is no worry of missing payments because of issues like forgotten, out of station, lack of time or stuck up with some other work etc.

Charges Applicable

Lastly it’s important to curb the charges of your child investment plan. Since the investment would be recurring in nature you would have to bear the recurring costs on child plans. If the charges are high they would eat up most of your returns so it’s better to monitor the administrative charges, process charges, fund managing & switching charges, mortality charges while drafting your child plan.

Expert Opinion

It takes good effort to make smart financial decisions for securing the future of children. Educate yourself well on various child investment plans through online research, visiting the financial firms and talking to agents. And if you are not very confident about investment decisions you wish to make, consult a financial expert. Prevention is better than cure.

Source: (https://childplan.wordpress.com/2016/01/07/some-important-parameters-for-building-a-child-plan/)

An investment plan to secure your child’s future

Every parent wishes to give best of the opportunities, education facilities, career building options for their children. Taking into consideration the rising inflation costs, advance lifestyle measures, hefty tuition fees etc., this seems to be an impossible task with the stipulated source of income that you earn every month. For this, you need to do a systematic planning or draft a well-balanced child investment plan that will not only cater his or her present needs but will also take care of future goals, right till he or she settles down in life.

To work upon a plan, firstly you need to think about some elements. Think about the time horizon. How many years do you have for the goal to realize? For child’s future needs if there are 5 or more years to go, it is a long term investment. Longer the investment horizon, more risk your investment can afford.  Secondly it is necessary to plan what expenses you want to save for. You might plan to save for your child's education, career prospects or marriage. Lastly, parents should sit down and draw up estimated expense on desired higher education, career prospects or marriage expense etc. by adjusting inflation.

The article gives insight on some of the child investment plans that can help you fulfill the dreams of your child and ensure financial security for him or her.

Child Insurance Plan

Child insurance plans are one of the best tools to manage your child’s future financial needs in the modern day times.  Experts say it’s a long-term child investment plan that helps you slowly build the corpus with your current savings and ensure that you don’t hold back on your child’s future. These insurance plans take complete care of your child’s needs at regular interval for their education and future purpose. Besides, the biggest benefit of this plan is if anything unfortunate happens to the policyholder, the company waives of the premium of the remainder of the policy and provides lump-sum amount or money at fixed intervals for your child’s future financial security known as “wavier of premium” benefit.

Secured measures 

Debt Mutual Funds

One of the safest ways, it helps grow money evenly balanced and there would be little downside comparing to direct investing in stocks and equities.

Balance Funds

Another good option would be balance funds under which 70% of the amount is invested in fixed income securities while the remaining is played around in the stocks to get the desired returns.

ULIP plans

A low risk investor, who doesn’t believe in stock markets dependent investment scheme, can look for ULIP schemes which has low allocation and less ULIP charges.

Traditional Ways:

Traditional plans like investment in gold, white gold etc. also prove to be good option for child investment plan as it offers fair annualized returns. So take a call on gold ETF or physical gold and go ahead for it.

Bank Fixed deposits is another safe option that gives guaranteed returns within couple of years which also justifies as one of best child investment plan for your child’s financial security.

For every parent end number of security is insufficient for its children. But in the end, everyone has to take a call depending upon their income sources, child’s present ability and future dreams. While secured or traditional plans offer fair returns, a child insurance plan assure you that there will be no surprise roadblocks down the road ahead for betterment of your child’s future. It can surely make your child’s dreams turn into reality being one of the best Child Investment Plans of modern times.

Source: (http://childinvestmentplans.over-blog.com/2016/01/an-investment-plan-to-secure-your-child-s-future.html)

Is your child’s future financially secure?

An arrival of your new bundle of joy in the world brings lot of enthusiasm in life. When it comes to give ultimate bliss, you ensure no one messes around with your child’s happiness not even the future uncertainties and problems in life. You intend to give your child the best of everything and to attain this objective, you start investing in various investment vehicle to produce the desired saving for child to meet his or her future requirements.

Once you attain your parenthood you understand your responsibilities towards children. All goals such as buying a home or a car can be postponed or even compromised if we do not have the required funds. However, we don’t compromise or postpone our child's saving plan for his or her sound future.

But mere thinking is not enough, you have to practically implement a strategy to build the desired saving for child over the years so that you can fulfill his or her needs from time to time as and when required. This way it will help them to pursue good education, shape up their careers, choose job or business opportunities and finally marry and settle off in their lives. While building the saving plan few things that you should consider would be calculating the amount of fund needed for the child future, number of years for which cash flow is needed, and how far away we are from achieving that goal today. Planning ahead and making investments towards child's future security at an early stage are the critical success factors in realizing this goal.

It is advisable you should consider and evaluate the needs of your children before preparing any financial plan. After evaluating this, start achieving the needs-based objectives. There can be some expenses which may arise in future so you should forecast them as well.

While markets are flooded with loads of child plans often parents stay confused in all this and couldn’t come to consensus to make a right choice for their children.

The article guides through two unique options available to build a sound child future ahead.

Child insurance plans are one of the best modern day tools to build the desired saving for child over the period of time. When you pay the premium for the plan, part of the premium amount goes towards paying for the life cover and the remaining part is invested in various instruments either debt or equities. Parents starts investing in the child plan right from the time a child is born and can withdraw the savings once the child reaches adulthood or in exceptional cases if the parent were to meet with an unfortunate event child insurance plan is able to provide a life cover for the financial needs of your children and lump-sum money is paid out to the child as well. It will continue till maturity after the death of the parent and all the future premiums will be paid out by the insurance company! This unique feature is called Waiver of Premium.

Systematic Investment Plan (SIP)

Amidst diversified portfolios, an individual can invest through monthly systematic investment plan (SIPs). With the help of a financial advisor, one can select right SIPs based on risk appetite and investment horizon.

Today, many parents opt for the child insurance plan because of the fact that it brings a disciplined effort to build the financial security around their children. Moreover, it assures to take complete care of their children if anything unfortunate incidents happen to them. A lump-sum amount or fixed periodic payments to meet desired goals and wavier of premium features surely grabs the attention of customers to avail this unique product for the betterment of their child. In order to have adequate insurance risk coverage, parents should include the expected future cost of child's education as well (a major expense) in their total insurance calculation. 

Today, markets are flooded with finance companies which assure lot of unwanted things in the path of child financial security. It is important to understand these products precisely before hawking for them blindly. Before making any decision, evaluate the characteristics and viability of these products. Take help from an expert financial planner for creating a sensible saving for child financial security and sound future.