Accumulating funds to secure your child’s future might sound like a daunting endeavour with the countless investment options available. However, when it comes to saving for financial goals, a ULIP plan (Unit Linked Insurance Plan) outshines other investments. A ULIP policy offers the dual benefit of investment and a life cover to ensure that your child can achieve their dreams even in your absence. A ULIP plan can help you build a corpus for your child’s education to help them achieve their aspirations. ULIP based child plans also come with the waiver of premium option to ensure financial security in the event of the policyholder’s sudden demise.
Numerous ULIP investment policies acknowledge financial goals for parents. To ensure you choose the best ULIP, it is important to undertake an analysis of the top performing ULIP funds. You can even compare different policies and calculate your ULIP plan returns by using a ULIP calculator.
What is a ULIP Policy?
A ULIP plan is a hybrid financial product that combines investments with a life cover. When you purchase a ULIP, you need to make regular premium payments. A part of this premium is used to provide a life insurance cover, and the balance is invested in funds that are either equity-oriented, debt-oriented or a combination of both. With an analysis of their financial commitments and risk portfolio, policyholders can choose how much amount should be invested and where. To maximise your ULIP plan returns, it is ideal to start early. A ULIP policy allows flexibility to switch between funds acknowledging changing financial needs at different stages of life.
One can also opt for whole life ULIP plans that are popular for their long-term benefits as the plan stays active for the duration of the policyholder’s life. Whole life ULIP plans guarantee death benefits, along with survival benefits and maturity benefit.
To ensure that you buy the best ULIP plan, it is important to undertake adequate research, compare policies, analyse the long- and short-term financial goals, and consider factors such as ULIP plan charges, to avoid unpleasant surprises in the future.
ULIP Investment as a Child Plan
Designing elaborate savings plan to secure your child’s future is the most crucial financial goal for a parent. Parents must think of their child’s educational aspirations, especially for funding their higher education. However, choosing from the plethora of saving schemes in India can be confusing and therefore discouraging. In such a scenario, the ULIP plan can be a great first step. ULIPs are essentially savings plan that helps instil the discipline of investment. As the most basic ULIP policy comes with a five-year lock-in period, ULIPs work progressively towards wealth creation.
ULIP investment is among the best saving scheme in India; however, their former practice of being opaque and costly discouraged investments in them. New-age ULIPs have come a long way since. They have now become an affordable investment with no premium allocation and policy administration ULIP plan charges. Additionally, policyholders can enjoy ULIP returns tax-free along with exemptions on premiums paid towards keeping the policy active, under Section 10(10D) and Section 80C, respectively, of the Indian Income Tax Act, 1961.
As the ULIP investment progressively keeps growing, it ensures that the child does not fall short of corpus to achieve their dreams. Planning ahead of time and investing in top performing ULIP funds in the long-term can minimise stress and help you spend quality time with your little one.
Benefits of ULIPs as a Child Plan
When it comes to planning a future for your child, you will want to ensure that you buy the best ULIP in India. There is often a misconception that the best ULIP will be expensive and will require a significant investment amount to be effective. However, to maximise your ULIP plan returns, you need not invest a large amount but start early with your investments. Additionally, the benefit of having ULIP returns tax-free is another feature that helps you save more and even gain more from your ULIP policy.
Several unique features make ULIPs the best savings plan to secure your child’s future:
- Waiver of Premium Benefit: In the case of the policyholder’s death, the sum assured is paid to the nominated beneficiary, while the due premium for the remaining policy term is paid by the insurance company.
- Investment in a Diverse Portfolio: ULIPs come with the ability to invest in a diverse portfolio and maximise your capital appreciation to build a bright future for your child. Additionally, the flexibility to switch between funds ensure that you are invested in top-performing ULIP funds. By indicating your investment preference, the option of auto fund rebalancing ensures that your investments are unaffected by market movements.
- Corpus for Child’s Education: As a ULIP plan is specifically designed to help achieve long-term financial goals, it can help you build a bright and fruitful future for your child without any stress or financial burden in the future.
- Partial Withdrawal: If you wish to encourage your child to pursue their talent and need some funds, the ULIP savings plan allows the option of partial withdrawal basis the policy terms.
ULIP-based child plans come with triple benefits: on the parent’s death, the future premiums are paid by the insurance company, a monthly income is provided to the family to fund the child’s education, and a lump sum amount is also paid to the family to meet the daily expenses. This has made ULIP a popular investment to secure the child’s future.
Edelweiss ULIP plan – Wealth Plus by Edelweiss Tokio Life Insurance helps you secure your child’s financial future. The plan comes with a host of benefits such as the ‘Rising Star’ benefit to ensure that your child achieves their dreams even in your absence, the ability to diversify investment strategies to maximise ULIP plan returns, and easy liquidity and top-up premium options to customise your investments.
Invest in your child’s future with ULIPs from Edelweiss Tokio Life Insurance now so that you can watch them achieve their dreams without worrying about the finances.
For more information, give us a call today!
Here is an example on how ULIP can be good option for your child’s future needs - https://www.edelweisstokio.in/blogs/investment-security/ulip-for-your-childs-future
Yashwant Naik - Lifestyle and BFSI Writer
Yashwant is a freelance content writer, interested in a wide range of spheres from yoga and personal finance to cooking. He is also an aspiring yoga enthusiast who is trying to find some balance and harmony in life through a healthy lifestyle.