The child insurance plan is the best way to save for the long-term needs of children
I have two sons aged 6 and 8 years. I have bought an LIC policy each to finance the higher studies and other future expenses of my sons. I intend to save some money every year to generate a good lump sum amount. Should I go for a mutual fund policy, a children’s plan or some other long-term scheme?
Binay Kumar Shukla, Kanpur
It is encouraging to note your concern to save for your children’s future education. You still have some time to save and invest towards this financial goal to accumulate the necessary corpus. The child insurance plans help you save for the long-term needs of children like education.
The policy works in such a manner that in case of the demise of the parent, the future premiums on the policy are absolved by the insurer and the child receives the monies when the policy matures, which is mostly timed with the age when they are about to enter college. The money keeps growing and is given to the nominee once the policy matures.
No other financial instrument guarantees money to the child at a particular age. Instruments like the public provident fund, mutual funds, shares, gold and real estate are self-funded in nature. The investor needs to be alive to make money grow through these instruments. Only a child insurance plan is not subject to the possibility of the objective of the parent being jeopardised by early death. Even if you are saving or investing in mutual funds or other similar products for growth, do not compromise on a child insurance policy to make sure money is provided for when it is necessary.