help create a corpus for crucial stages in the child’s life
A child insurance plan combine the features of investment and insurance so that you are able to generate a corpus that is big enough for meeting the expenses related to your children's education or marriage. A child plan not only helps you accumulate sufficient funds for your children, but also protect them from ill-fated financial consequences which may occur due to eventualities such as untimely demise of a parent.
But before investing for your child, you need to be prepared with a few basic things that will help you plan better.
The three most important events in a child’s life are college education, post-graduation studies and marriage. You will not like to compromise on either of these aspects. So, even before you decide how much you need to save, as a first step try and predict the timing of these events to understand how many years you have in hand from now till then
The best way to predict the financial savings required to meet the cost associated with these milestones is to benchmark it to the current cost. Find out how much it costs for a child to complete his first degree. The cost should not only include the university fees but also other associated costs like hostel fees. As a ballpark figure, you can expect to spend anywhere between 5 to 10 lakhs on this.
A post-graduation degree is no longer an option, but it is a necessity. Hence, if you want to assure a decent career for your child, also budget for the costs associated with a post graduation degree. The cost of post-graduation studies is usually quite high and it is even higher if you want your child to study abroad. It can cost anything between 5 lakhs to 30 lakhs.
Finally, you also have to take care of the cost of marriage, before you expect your child to independently handle his finances. A decent marriage would cost you anywhere between 7 lakhs to 20 lakhs, depending upon where you live and your personal ambitions and desires.
Once you have the cost figures in the current context ready, you may index it with the Inflation rate to arrive at the financial outlay that would be required in the future.
There are many variants in a child plan and also there are Riders which you may need to choose from. Depending upon how your needs and affordability stack up against the benefits offered in a child plan, choose the child plan that offers the best fit. You can compare child plans online and choose the one that helps you reach the financial goals at the lowest Premium costs. These days, it is even possible to buy online child plan at the click of a button.