Should I Buy ULIP For My Child's Future?

Every parent hopes to secure their child's future. We all seek a decent investment strategy that will deliver excellent returns when required, whether it is for college or marriage. Every parent's aim is to offer their child the best. And in order to make their fantasy come true, they investigate all options. Now, let us tell you that there is a way to ensure the future of your child. And a child insurance plan is just what you need to meet these requirements. The plan allows you to invest in your child's future while also ensuring that the promised corpus will be paid out even if one of the parents dies young.

A unit-linked insurance policy (ULIP) is a market-linked product that combines investment and insurance into one comprehensive plan. ULIP, a capital market-linked plan, gives investors the option of investing in either equities or debt, depending on their risk tolerance. As a result, ULIP is a viable option for safeguarding your child's future.

Should I Buy ULIP For My Child's Future?

Below are a few reasons you must buy ULIP for your child’s future:

1. Premium Waiver Benefit

Another characteristic of a kid insurance policy is those premium waivers are available if the insured passes away within a certain time frame. In this case, the beneficiary will receive the sum assured, while the insurance company will pay the premiums for the remainder of the period. The maturity amount will be provided as specified in the policy document at the end of the policy term. If the plan does not include a premium waiver, a premium waiver rider needs are purchased.

2. Riders

You can add specific riders to your life insurance policy to get a lot more out of it. Critical sickness, premium waiver, and accidental death or disability are the three primary types of riders available. The premium waiver may already be tied to your insurance, so double-check the paperwork. The critical illness rider covers a set of designated critical illnesses, whereas the accidental death and disability riders pay the additional sum assured in the event of an unfortunate accident that results in the policyholder's partial or complete disability or death.

3. Premiums

Premiums are paid in one lump payment at the beginning of the insurance period. You can pay it on a regular basis or for a specific amount of time. The majority of life insurers provide premium payment alternatives like quarterly, half-yearly, monthly, and yearly. The sum insured is determined by the premium amount you choose. The sum promised is the amount that will be paid out in the event of an investor's untimely death. The sum assured should almost always be greater than ten times the policyholder's current gross income. 

4. Maturity

The maturity amount should be determined with a long-term perspective in mind. If your child is eight years old and his policy matures in ten years, you must consider inflation and interest rates. However, if you don't take these considerations into account, the funds you get may fall short of your needs in the near future. Furthermore, single premium policies may not give adequate maturity features and advantages, therefore we recommend that you thoroughly review the policy before applying for it.

5. Policy Tenure

Intended primarily for children aged 18 to 24. From birth, until the child reaches a predetermined age, tenures can be chosen here. At the time of policy maturity, the insured must be under 70 years old.

Conclusion

Now is the time to examine what a child ULIP is all about. A kid ULIP is essentially a Unit Linked Insurance Plan into which you put money to help protect your child's financial future. You must plan for a number of milestones in your child's life. Their schooling, college education, wedding, and possibly even their own goals of starting a business from the bottom up are all important milestones that can only be realized with careful financial planning.

With a child ULIP in place, you can arrange your investments so that you get the policy's benefits around the time your child reaches a critical life milestone.

Also read - Ways In Which ULIPs Are Different Than Fixed Deposits

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.