Why Investment Schemes With a Lock- in- Period Are Ideal For Child Education?

Raman and Riya were concerned about their son Jay’s future. They wanted to ensure that everything is well planned for their one-year-old son’s future. While they made sure his immediate needs are fulfilled, they simultaneously thought of having a financial plan for his educational goals.

Just like Raman and Riya, one of the major financial goals for most parents is to provide a sizable corpus for the higher education of their children. A disciplined form of investment will help them achieve this goal without any hindrance. When it comes to education, the cost of inflation is way higher than other industries. While making any investment you have to keep in mind the appropriate asset class which can help to overcome this inflation. With the current trend of inflation, assuming the cost of education for a professional course is Rs 10 Lakh today then after 15 to 20 years, it could go as high as 45 lakh.

One of the options could be unit linked insurance plans also known as ULIPs. ULIP is the best investment plan for long-term financial goals as it has a minimum lock-in period of 5 years. They provide an investor with the flexibility to invest in individual funds ranging from debt to equity funds.

The new age ULIP like Edelweiss Tokio Life Wealth Plus lets you switch between funds free of charge. It has high rated individual funds that can help you gain maximum benefits from the market’s performance. Edelweiss Tokio Life – Wealth Plus has no policy and administration charge which means 100% of the premium amount is allocated to the fund value. It is the only plan where the company also invests with the policyholder in the form of additional allocations which increases at regular intervals. The additional allocation increases every 5 years for the first five years it is 1% p.a. of the premium paid, from the sixth to the tenth year it is 3% p.a., followed by 5% p.a. from the eleventh to the fifteenth year and lastly 7% p.a. from the sixteenth till the twentieth year. This magical touch to your investment helps your money compound at a rate which can offer you maximum returns.

As a parent, one of the main features that can attract you is the rising star benefit where if in case an unfortunate event of death occurs to the policyholder then the nominee not only receives a lump sum amount but all the future premiums are invested in the fund value immediately. So, your child’s dream still remains intact and unshaken because of a financial aid.

When it comes to financial planning for child education, parents should choose investment schemes having a lock-in period, so that come what may, they cannot dip into the corpus meant for children’s future.

Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.