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POSTED BY ON July 30, 2012 7:50 pm COMMENTS (4)
Hi,
I have read few articles which espouse personalized child plans rather than ULIPS. I came across the ICICI Smart Kid plan.
Monthly, I pay 8000. which amounts 96,000 every year. I pay this premium for 20 years or so.
The sum assured is 42 lac.
In case of death, my dependents get 42 lac. And insurance company would continue to pay the premium in my absence and on maturity my daughter can get 42 lacs again.
Isn’t this attractive. 42 lac as death benefit and another 42 lac at maturity for my dependents? In case of survival on maturity 42 lac is payed out.
And if we opt for Term Insurance + other instruments, the dependents should be knowledgeable enough to know what they need to do with the money to do good investments. Smart kid plan shall pay the sum assured and my dependents can be at peace that the company is continuing the policy.
What is the communities take on this? Please suggest.
Thanks,
Prabhu
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we are having two kids.one 1and half year old & the other one month old.we are planning for our childrens future studies,marriage etc.we can invest 1 and half lakh per annum on this.can u plz suggest the best ways. i have seen suggestions regarding mutual funds,sips etc.i have no idea of them.can u plz suggest the ways that guarantee our future requirements.thank u.
Thanks Biraja and Banyan,
I get your point. Actually the fact that the lumpsum is got at once and not in parts struck me after reading your statement.
Banyan, I shall read through your article again and revert with clarifications. Meanwhile a question as of now:
I plan to have a house. The cost say, 60 lac. How do I cover this loan liability? Woudn’t the effective payout from term insurance be reduced to half if I were to cover the load from term plan?
Is it possible I can take both term plan and a kids plan?
Can not the dependents take the sum from term insurance for paying out the loan(which then effectively reduces the amount that dependents can invest thereafter) and the Smart Kid plan continue the policy for the remain term.
I am not sure if I worded the question effectively. But I shall have the discussion continue!
Regards,
Prabhu.S
Biraja,
I agree with your analysis. It is better to via your option rather than via any kids plan. There are no free lunches. Any kids plan would be more costlier to provide that comfort / convenience and add to poor returns. Creating your personalised plan is not difficult.. You can find a step by step process on how to do that at http://insight.banyanfa.com/can-you-design-our-own-customised-child-investment-plan/
Please feel free to ask further questions.
Regards
BanyanFA
Excellent!! analysis and worth to ask.
My opinion is go for 1crore of term plan, which would be around 20-40K per annum depending upon your age. Keep the rest amount (96k – 30K) invested in any good mutual fund monthly.
Benefits
**********
1. In case of death, your dependents/kid will get 1crore. (which is > 42+42 lakhs) and your depedent will get this immediately, no need to wait till maturity.
2. What ever money invested in Mutual fund till the death is a bonus and also is tax free after 1yr.