Planning for Your First Child: A Simple Financial Guide

Among the most life-changing events in any individual’s life is the arrival of a child, or becoming a parent. Suddenly, you are responsible for a new member in your family and you have to provide entirely for their upbringing. It simply means that you are not only responsible for yourself, but also for the child, who, in turn, is completely dependent upon you. But a key aspect in having a child is the requirement and planning of finances. In fact with the manifold financial expenses in raising a child, you should save for your child, or have a viable child plan, right at the stage where you are planning for the child.

Cost involved in raising a child: According to estimates, the cost involved in raising children - from their infancy to becoming an adult - are quite high for an average family. While as an infant there is the cost of medicines and vaccines are unavoidable, once the child goes to school, you have to incur the cost of education and other related expenses. Once the child is a teenager, there is an increase in lifestyle expenses, and the question of the cost of higher education looms large. Meeting the cost of child’s life-stage goals such as marriage also becomes a financial goal for a parent

How does a ULIP child plan work?
 

• Fund value on maturity: Once you invest in a ULIP plan such as Promise4Growth Plus by Canara HSBC Life Insurance, you will receive the fund value on maturity of the policy. This fund can then be used to meet a wide variety of expenses for your child. As ULIPs invest in a wide variety of funds, you can choose the suitable fund to get the desired returns. Depending upon your investment strategy, you can choose to invest in various investment funds with equity exposure ranging from 0% to 100%.In equity investments, you can choose between small-cap, mid-cap and large-cap companies. What’s more you also have the option of fund switching, if a particular fund’s return is not up-to-the-mark.
  
• Death benefit in the case of any unfortunate eventuality: In the case of any unfortunate eventuality, the ULIP child plan provides the sum assured as death benefit. This ensures that the financial future of your child is secure even if you are not around. For instance, if a child is enrolled in a course at a prestigious university, then the education prospects will not suffer because of paucity of funds.
  
• Premium funding benefit: ULIPs also provide for the unique premium funding benefit. This means that in the case of the policyholder’s sudden demise, all future premiums are paid by the company. In other words, the policy continues, and on maturity, your child will receive the fund value. You can also opt for premium funding benefit for disability, where premiums will be waived-off in the case of your total and permanent disability.
  
  

Other benefits of ULIP child plan: Here is a list of other benefits that you get from a child based ULIP:

• Milestone withdrawal: What if you require funds immediately after your child has reached a certain milestone? This feature in the child plan enables you to fund for the higher education of your child. This benefit, however, is typically for policy terms of 15, 20 and 25 years. Depending upon the terms of the policy, you can withdraw a certain amount, and the remaining fund value will be provided on maturity.
  
• Tax benefits: You can save for your child and enjoy tax benefits as well. Premiums paid for availing the child plan based ULIPs are exempted from tax under Section 80C of the Income Tax Act.

Conclusion: 

Thus, if you are planning for a child, then start planning for its future by investing in child plans ULIPs. You must conduct a thorough market research before selecting to invest in a ULIP. Apart from the Promise4Growth Plus ULIP, a good option to consider investing in is the Guaranteed Savings Plan which provides an option to customize your savings horizon to suit your important financial goals, among other benefits.