Child Plan Calculator

Be it your child’s education or marriage, start to plan now and help your child get their future Life Goals Done.

A child plan calculator is a simple tool designed to provide parents with a fair idea of the amount that they would require to fulfil their children’s life goals. Every parents dream is to provide the best education to his/her child or to organize the biggest marriage party for their child. With the rising cost of essential items, it is critical to have substantial savings to fulfil children’s future requirements. A child plan calculator provides an estimate amount one needs to invest to accumulate enough wealth to take care of all the future needs of the child. Investing for the long term is the best way to generate sufficient wealth, but it is difficult to know if you are saving adequately or not. If the savings are not adequate, one may not be able to achieve long-cherished child goals. A child investment plan calculator solves the problem by calculating the estimated savings needed to fulfil children’s life goals. The child plan calculator takes into account the inflation before suggesting the monthly amount needed to accumulate the desired amount. Without considering the inflation, a child investment plan calculator will not be effective as savings lose value over time due to inflation and hence it becomes important to take into account the inflation rate. Hence, one can understate the estimated amount required to fulfil their children’s life goals by using a child plan calculator and plan accordingly.

Children are believed to be a gift of God. The future of every society depends on its children. To become responsible and productive members of society, children need to be groomed properly. Parents have to plan responsibly to ensure that children receive the best of the available education. Due to the gradual rise in the cost of products and services, it is important to plan for the major milestones in the life of your child. Child plans in India can help you ensure that you do not have to compromise with the life goals of your child due to paucity of funds.

Child plans are investment-cum-insurance plans that help you save and invest for the future needs of the child. Child plans in India are designed to make periodic payments or lump sum payments after a certain point of time. It is advisable to invest in child plans within a few years of the birth of the child. Early investment will ensure that the plan matures when your child is ready to start his/her higher education. Child plans can also be used to save for the marriage of the child as getting a child married requires substantial funds. There are various types of child plans in India. One can choose a child plan as per his/her future needs and the investment horizon. There are two broad categories of child plans in India - child ULIP plans and child savings plans.

The unit-linked child plans are investment-insurance plans that provide dual benefits of insurance as well as opportunity for wealth creation. Child ULIP plans offer market-linked returns on savings along with insurance cover. Child ULIP plans are beneficial on two fronts. It offers insurance cover to the child and spouse in the event of the unfortunate death of the insured. Secondly, the investment generates market-linked returns, which is paid at the end of the maturity period.

Benefits of child ULIP plans

Child ULIP plans provide a number of benefits -

• Flexibility: Child ULIP plans allow you to invest as per your risk profile. If you are risk-averse, you can opt for debt funds. On the other hand, if you have a relatively higher risk tolerance level, you can invest in equity-oriented funds.
• Tax-efficient: Child ULIP plans offer a number of tax benefits. The premiums paid for child ULIP plans up to Rs 1.5 lakh in a year are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. Additionally, any amount received through a child plan is tax-free under Section 10(10D) of the income tax Act, 1961. The above-mentioned deductions and exemptions are subject to provisions of the Act, as amended from time to time.
• Liquidity: Child ULIP plans have a lock-in period of five years. In the case of an emergency, the policyholder can choose to withdraw after the lock-in period. Though the lock-in period is of only five years, you should remain invested for the long-term for maximum gains.

These plans are akin to traditional insurance or endowment plans that provide an insurance cover along with a savings component. Child savings plans park the investor’s money in safe debt securities like government bonds and fixed deposits, depending on the product terms and conditions to let it grow at a steady pace. At the time of maturity, the guaranteed, as well as non-guaranteed returns are paid to the policyholder.

Benefits of child savings plan

• Stable returns: Child savings plans are non-linked products. Parents seeking stable returns that are not affected by market fluctuations prefer it.
• Insurance cover: Child insurance plans are essentially insurance products with savings components. It ensures that the family members do not face any difficulties even in the event of the policyholder’s demise.
• Tax benefits: The premiums paid for child savings plans are eligible for a tax deduction of up to Rs 1.5 lakh in a year under Section 80C of the Income Tax Act, 1961. The returns from a child savings plan are tax-free under Section 10 (10D) of the income tax Act, 1961. The above-mentioned deductions and exemptions are subject to provisions of the Act, as amended from time to time.

Bajaj Allianz Life’s Child Plan Calculator is a simple and easy-to-use online tool. No charges have to be paid to use the calculator.

Step 1: To use the child investment plan calculator, you will have to go to the ‘Child Plan Calculator’ page of bajajallianzlife.com and click on ‘start’.

Step 2: On the next page, you will be required to enter your child’s name and the amount you want to save to achieve the child’s goal. The calculator will provide the estimated amount to be invested regularly based on the amount needed at the end of the policy term.

Step 3: After you click on the ‘next’ button, the next page will ask for the time needed to accumulate the fund. The investment horizon is crucial as the longer one remains invested, the larger amount he/she can accumulate.

Step 4: Child plan calculators take into account the expected inflation rate before projecting the investment required to achieve the financial goal. The child plan calculator asks for the expected rate of inflation in the next step. One can choose a value between 3% and 8%.

Step 5: The last page asks for the expected rate of return. Choose the expected rate of return based on the type of plan. Child saving plans will offer a slightly lower rate than a child ULIP plan. One can choose a value between 6% and 15%. Clicking on the ‘next’ button will provide the monthly amount to be invested to accumulate the amount in a certain number of years.

A long-term financial goal cannot be achieved without proper planning. The higher the transparency of the investment, the easier it is to make a decision. The purpose of the child plan calculator is to make investing easier for parents. With the knowledge of the exact amount that needs to be invested, it is easier for parents to plan for the future along with taking care of the family’s current needs. There are multiple types of child calculators designed to serve different purposes. Many people require child investment plans to save for their child’s education. The universal child calculators are designed to provide the monthly outgo for a specific amount needed at a future date. Child education planner is a type of child calculator that takes into account the age of the child along with the current cost of education and inflation to provide the amount to be invested at regular intervals. The education planner also takes into consideration the rate of return for providing the investment projection.

Children have different goals, which require customised plans. Bajaj Allianz Life offers a number of child insurance plans to suit the needs of a wide variety of parents. Child insurance plans from Bajaj Allianz Life can be bought online as well as offline. The plans have been designed to provide differentiated investment solutions to fulfil the goals of every child.