Over the course of life, you will have many long-term life goals. You may want to save up for the down payment on your dream home, or you may want to invest to meet your retirement goals. In addition to these goals, there is another set of key milestones that you will need to be prepared for. These revolve around your child’s future, like saving up for your child’s higher education, their wedding, and even for their own visions and dreams, like starting their own business.
To invest for securing your child’s future, you will need to consider long-term investments like a ULIP policy, which may generate long-term market linked returns. Unit Linked Insurance Plans come with a lock-in period of 5 years. Even given that, it is advisable to remain invested for the long term. ULIP returns in 10 years or more can be quite significant, making them one of the preferred choices to invest in for your children’s future.
A ULIP policy comes with many benefits. To learn more about how you can invest in ULIPs to give your children a financially secure future, let’s begin with the answer to the question: What is ULIP Policy??
What is a ULIP policy?
A Unit Linked Insurance Plan is an insurance cum investment option that gives policyholders two key benefits - investment and insurance. When policyholders buy a ULIP policy, they need to pay the insurer premiums periodically. The insurer offers the policyholder a life cover for a specific tenure. In addition to this, policyholders can also invest in equity funds, debt funds, or a mix of both.
Based on your investment goals and your tolerance for risk, you can choose the funds for your ULIP investment. In case of the policyholder’s demise during the tenure of the plan, the insurer pays the death benefits to the nominee. Alternatively, if the policyholder survives the tenure, they receive the maturity benefits or fund value as on date of the maturity of the ULIP policy. In order to meet long-term goals, you can chart out a financial plan and figure out how best to invest in the funds under your ULIP policy, so the ULIP returns in 10 years or more are sufficient to fulfill your life goals.
What is a child ULIP plan?
So, you have now seen the answer to the question: What is a ULIP policy? Now, it is time to take a closer look at what a child ULIP plan is. A child ULIP plan is simply a Unit Linked Insurance Plan that you invest in, so you can secure your child’s future financially. There are many milestones in your child’s life that you need to plan for. Their school education, their college education, their wedding and perhaps even their own dreams of starting a business from the ground up - these are all key milestones that can be achieved only with a good deal of financial planning.
With a child ULIP plan in place, you can plan your investments in such a way that you receive the benefits from the policy right around the time a major milestone in your child’s life is quickly approaching. There are many reasons to consider investing in a ULIP policy to secure your child’s life goals. Let us take a closer look at them in the following section.
Why invest in ULIP for your child?
Investing in a ULIP for your child can pay off in many ways. Here are some such benefits –
1. It helps protect your child’s life goals even if you’re not around
The thought of not being around to protect their child’s dreams and make them come true no doubt worries all parents. With a child ULIP plan, parents can ensure that even in the case of their unfortunate demise, their children’s life goals remain unaffected. With the lump sum benefits paid out on death, , there will be a strong financial safety net for the child even if the parent is not around.
2. You can meet the costs of your child’s education
The rising costs of education is another major worry among parents today. However, with a ULIP plan in place, parents can breathe a sigh of relief. By planning the investment smartly, you too can take advantage of this investment option and ensure that you have the returns from your ULIP to rely on when your child attains college-going age. This way, you can give them the best education possible with no compromises, whatsoever.
3. You could save yourself from falling into a debt trap
In the absence of an investment option like a ULIP policy, you may have to rely on loans and external financing to fund your children’s education or pay for their wedding costs. However, when you have an investment plan in place, you can ensure that you do not fall prey to this debt trap. One can refer to the history of the performance of ULIP funds to plan their life goals.
In addition to these benefits, there are other reasons to invest in a ULIP for your child’s future. It inculcates the habit of regular and disciplined savings, and ULIPs offer the benefits of power of compounding where your money grows over a period provided you stay invested for a long duration. Furthermore, you can also enjoy market-linked returns, and, with the fund switching option, you can rearrange your investments depending on the time horizon for your life goals and the market movements.
With a Unit Linked Insurance Plan, you can ensure that your children can go forth and live their dreams without any worries. As a parent, you can relax in the knowledge that you have a financial safety net in place, no matter what unexpected curve ball life throws your way.