It is imperative to plan for your child’s future and start apportioning funds through meticulous saving habits to create a corpus.
Delhi-based Meet (34) and Priyanka (32), both software professionals, were glued to their laptops working from home. Their eight-year old child Swasti, who was painting a flower, suddenly walks up to them and says, “I want to play drums”. Both were surprised and happy to know that their kid was so keen on developing her new-found interest. They looked at each other and wondered, “When and how our child developed liking for drums? What if she wants to become a drummer? Did we plan for this? What if this could turn into a long-term passion for her leading to a coveted new-age course in the Royal College of Music?”
Even though Meet and Priyanka have been saving for Swasti’s goals since the time she was born, the question here was whether they would be able to steer her new passion? How much money do they need to give the best to their child?
Every parent wishes to fulfil their child’s dreams of a perfect career, dream wedding, capital for business, love for music, sports and several other needs that children have from time to time. To say that life radically changes after the arrival of a baby is an underestimation, the real challenge begins when your child starts growing up and starts having plans of his/her own, just like Swasti. With falling rupee, rising crude oil prices, and dwindling markets uncertainty has increased and so has the dilemma for parents. In this era of competition and innovation, it becomes necessary to give your child the best guidance supported by a robust financial corpus.
How do I plan my child’s future without uncertainties? Is there any option of safeguarding my child’s goals without much investment? Would I be able to save enough? What happens to his/her dreams if anything unfortunate were to happen to me? Apprehensions about the future bothers us to an extent that we forget living in the present, especially for our kids.
Here are some questions to ask to plan better for a child’s future.
How much corpus do I need to support my child?
In order to plan better, one needs to know better. It is important to spend quality time with the child and understand his/her interest. This will not only help us know our child better but also help us plan better for their goals. One need to consider that nurturing the passion will incur recurring costs that can continue up to 15-20 years along with a lump sum corpus to financially support their milestone.
How do I build this corpus?
To start with, assess your income, savings pattern, evaluate current investments, assets, debt, liabilities, and your health condition. Once you are aware of the corpus required, calculate the fund you will require to secure your child’s future. You can opt for financial solutions which will help you to build a secured corpus in a staggered manner over a period.
How can a child insurance plan help?
A child life insurance plan is a one-stop-shop solution offering financial security and protection to your child’s future. It helps building a corpus to meet financial requirements at regular intervals for accomplishing various milestones in a child’s life. Such plans serve the dual purpose of insurance cum savings.
It offers some unique benefits like:
Cover protects your child’s dream even in your absence: While the child receives a corpus post the policy term is over, what makes such plans special is that in case of any unfortunate happening to the premium paying parent, death benefits are paid to the nominee and the rest of the premium is waived off. There is no lapse in the policy and the child gets the maturity amount at the end of the policy term.
Great gift for kids and grandkids: In case you want to leave a financial legacy to your child and grandchild, such life insurance policies can help you achieve the same.
When and why should you opt for a child plan?
As soon as your child comes to the world, it is prudent for you to start financial planning and purchase an insurance plan befitting the needs. A child insurance plan helps one save the desired sum for the kid’s future financial requirements, hedging all uncertainties.
It is imperative to plan for your child’s future and start apportioning funds through meticulous saving habits to create a corpus. It is equally important to relish every moment of your child’s desire and nurture his/her passion. Child insurance plans offer financial peace of mind so that you can focus on the child’s growing up years and not worry about the finances. When planned properly, these covers can help secure enough money for the kids to have a financially secure and better tomorrow. After all, nothing must come in the way of our children envisaging the future they deserve.
(By Anil Kumar Singh, Chief Actuarial Officer, Aditya Birla Sun Life Insurance)