Parenting is not easy, especially when it comes to meet the ever-increasing demands of the child. As your child grows, his or her expenses will rise, as education is costly. Besides this, the cost of pursuing a hobby like learning music or getting coaching for a specific sport can hurt your pocket. Thus, raising a child is an expensive affair.
Poor finance or shortage of funds should not impede your child’s ambitions. Therefore, it becomes essential for you to save wisely for your child’s monetary well-being. You need to be careful about investing in financial instruments to help you meet the cost of education and finance their wedding. If your child wants to pursue his or her Master’s degree abroad, the shortage of funds should not cause a hurdle. Thus, it is necessary to invest in the right financial products to generate enough corpus to meet the child’s financial requirements. Unit-Linked Insurance Plans (ULIPs) have emerged as one of the best wealth creation tools available in the market today.
ULIPs offers dual benefits of insurance and investment under a single plan. With ULIP insurance, you can secure the financial future of your dependents and grow your wealth over time. Here is why ULIP is a useful investment avenue to protect your child’s future.
- Helps to meet the soaring expenses of education
Today, the cost of education, particularly higher education, is sky-rocketing and affecting the parents’ pockets. Therefore, it is advisable to start investing early in ULIP, as it can help you build a substantial corpus by the time the child becomes eligible for higher studies. It will be a wise idea to stay invested in ULIPs with a long-term perspective of minimum 10 to 15 years, as your funds can grow exponentially via compounding. Besides this, by investing in the equity market, you can reap higher returns in the long run.
- Encourages a habit of saving
Fulfilling your child’s daily requirements and other wishes like taking them on a vacation can cost you heavily, and you may be unable to save enough money. ULIPs have a mandatory lock-in period of five years. Consequently, this instrument inculcates a practice of saving. Moreover, ULIPs let you withdraw funds partially after the five-year compulsory tenure concludes, if you have any financial emergencies. So, these savings and investments prove handy when you need funds for your child’s education and development.
- Reduces the dependency on loans
Many parents who have not planned their investments early may have to take an education loan to fund their child’s higher education. These loans come with high interest rates. Therefore, it is recommended to invest a part of your income in ULIP at an early stage of life. Doing this can help you yield better returns in the long run. It will ensure that your child can follow his or her dream, and you stay away from the burden of debt.
- Safeguards the child’s financial requirements in your absence
ULIP insurance guarantees your child’s financial stability if anything untoward happens to you. It will provide your family members with the death benefit, which will ensure that your child’s goals are transformed into reality.
Numerous insurance companies offer ULIPs for children, which can make it difficult for you to make the correct choice. So, you can seek the help of a ULIP plan calculator to compare the various aspects of the policy and choose the one that can meet your monetary needs.