Which is the best plan for child future?

POSTED BY jenish.shah ON December 24, 2011 10:47 am COMMENTS (6)

Hi Team,

I am just blessed with baby girl couple of months back.
I would like to understand which investment policy I should opt for so that my child’s future would be safe.
I am basically looking for some portion as life cover and other one as incremental returns so that my child should not face any problem for education or even much higher studies.

Thanks,
Jenish

6 replies on this article “Which is the best plan for child future?”

  1. Narayan says:

    Good time to re-evaluate your own life insurance needs first. Start investing regularly in a large-cap fund through SIPs. The insurance will create a buffer for the child’s future needs if something were to happen to you. The investment on the other hand will create wealth over the long run while you are around. Move to debt instruments as you approach the years closer to your financial goals, you have time on hand at present and a higher equity allocation will work favourably.
    Narayan

  2. Dear Siva, I already added PPF (actually it was a typo error from me PPH) as the debt part of portfolio. Please check the real returns generated by traditional child plans & compare it with Term plans + PPF combo @ 8% rate of interest.

    Thanks

    Ashal

  3. Dear Sir,

    Why not to chose traditional child policies ( not ULIPS)?
    Anyway he has to allocate, some portion to debt and some portion to Equity Catergory.
    In debt Category, Tradition Policy will be better which also covers insurance with riders.

    Please let me know whether my view is correct.
    Thank You
    R Siva Prasad

    1. Insurance and Investment are like Drinking and Driving – never mix them!

      Traditional plans invest in debt and provide so little life coverage. I assume you must be around 30 years of age – give and take a couple of years. For about 30,000 premium per annum you will get a princely life coverage of ~ 6 lacs. WIll this amount be suffiient if you are not available for your family from today? No way. It wont even be worth for 1 year expenses assuming someone has at least 1 EMI (Home/Car).

      However instead of such a traditional plan take a term plan. For ~10,000 per year, at your age and income levels you get a coverage for about 1 crore which is anyways much better than traditional plans. If you take the remaining 20,000 and just put it in PPF you will come out far far ahead of the traditional plan. If you invest in a PPF + MF combo your returns will be even more.

      Just try the money-back plan return calculator for gauging your long term return. You will see for yourself why traditional plans are plainly BAD.
      http://justgrowmymoney.wordpress.com/downloads/

  4. Dear Jenish, First of all congratulations for the baby girl.

    Please cover yourself adequately with a term plan. Invest your hard earned money in simple products like PPH & MFs.

    You ‘ll save a lot of money on charges paid in the child policies & over the years, you ‘ll be able to save a big corpus for your D’ter.

    Thanks

    Ashal

  5. VIGNESH BASKARAN says:

    Dear jenish

    No child plan and any other ulips.

    For child education and child marriage invest in mutual funds thru sip route + ppf +take a term plan for you

    Based on the risk profile u can choose ur funds which are in different category.

    Avoid other ULIPS and money back policy
    Regards
    Vignesh.

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