Planning your child’s future? Here are some things to keep in mind

By: |
July 09, 2016 4:07 PM

All parents wish the best for their kids. As soon as a baby is born, parents start planning for his or her future. At the centre of those plans tend to lie the thought of providing the child world class education.

With an inflationary trend in school fees, it has become a necessity to plan a child’s future education expenses. (Reuters)With an inflationary trend in school fees, it has become a necessity to plan a child’s future education expenses. (Reuters)

All parents wish the best for their kids. As soon as a baby is born, parents start planning for his or her future. At the centre of those plans tend to lie the thought of providing the child world class education.

With an inflationary trend in school fees, it has become a necessity to plan a child’s future education expenses. Kids growing up in the eighties and nineties spent anywhere from a few hundred to a few thousand rupees annually on school fee. Now, schools commonly charge upwards of a lakh every year, even for kindergarten education. This is why parents must start building a corpus to fund their child’s education.

The best way is to look at a child plan that suits your requirements. A few steps that can be taken to ensure a secure future are:

1. Calculate the amount required: The first step towards your goal is to set the approximate target value. Do not forget to calculate the effects of inflation while calculating funds needed in the future. Always make such estimates and plans around the future value of the child’s education costs, instead of the present values. In case you have some investments that you can use, be sure to calculate the future value of the investments. These simple steps will help you to set a target and the monthly savings you need to meet that.

2. Plan, plan, plan: Once the target amount required is decided, it’s time for planning and implementation. You will need to decide how much monthly savings you can do and how to invest it to get good returns. Always remember that longer the plan, better the return.

3. Assess your options: Once you have set investment targets, its time to look for good investment choices. Here comes the need for a good child plan. A child plan is an insurance cum investment plan that not only secures your child’s future financially but also protects your child in case of your unfortunate demise.

4. Opt for premium waiver benefit: In the event of the unfortunate demise of the insured (parent) during the insurance tenure, many insurance providers offer to waive off the premium. It helps to continue with the policy without any pressure on the family, including the child, to pay premiums regularly. Once the insurance matures, the child gets the full benefit that was promised at the start of the coverage. This feature is usually present in the child plans. In case it is not there, one should always opt for this benefit.

5. Opt for partial withdrawal: Emergencies can knock at your door anytime, so best be prepared to face them. The provision of partial withdrawal helps to withdraw from the child plan to meet such unforeseen expenses. It helps avoid any unwanted financial disturbance in the family due to such emergencies.

6. Read the terms and conditions carefully: Pay extra attention while going through the terms and conditions. The document should be scrutinised and understood thoroughly. It helps you to avoid any confusion at the time of maturity or any payout. It also helps you to compare benefits of different child plans available in the market.

7. Choose the appointee carefully: Death does not come with an invitation, and no amount of preparation can leave you ready for such an event. It is an inevitable truth of life. Hence it is very important to choose a trusted appointee—a person you can rely on; one who has a strong bond with your child. In the case of any unforeseen and unfortunate event, the claim amount is received by the appointee till the child is matured and can handle the funds on his or her own.
You can choose the best child plan for your family by following these few simple but crucial steps. Such an investment will be a financial guard to your child’s future.

The author is CEO, BankBazaar.com

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