Future of your child depends on the current choices made

A comprehensive and judiciously done financial planning exercise has its own advantages as compared to the one done in an ado manner. So, why should financial planning for your child’s future be any different?

Here are ways you can ensure that your child’s future financial needs will be well taken care of while you can focus on the other facets of bringing up your child.

Set financial strategies as soon as the child is born: It is prudent to start planning early and take into account your future financial goals while taking the advantage of computing. This money invested in the early years will grow into a handsome lump sum amount for you to utilise fulfilling your child’s goals.

Choose the right financial instrument: There are innumerable investment options to protect your child’s future needs. It is hence advisable to first evaluate your family size, income profile, risk profile and future needs before selecting the apt financial instrument.

Plan for investment and protection: It is important to opt for a financial instrument which offers the dual benefit of investment and protection. Children specific life insurance plans offer assured payouts at regular intervals which safeguard various milestones in your child’s castle of dreams. Most of the child plans today offer pre-determined, periodic payouts as a prefixed percentage of the sum assured. Systematic planning while keeping the crucial milestones in mind will help you select the right plan, with the appropriate sum assured to have timely and desired payouts.

Waiver of Premium: Insurance is a must for the child if you are the breadwinner. It’s your duty to ensure that no compromises are made while building a future for your child. Towards this end, child insurance plans come with a benefit of ‘waiver of premium’. This benefit comes handy in case of premature demise of a parent. The feature waives off all the future premiums of the policy and the remaining dues are paid by the insurance company.

Benefits galore: Along with these series of benefits, while the money accumulated over a period of time can be used towards higher education, marriage or other financial needs, it can also be offered as collateral to avail loan. Since the policy has a surrender value it can be used as a collateral security to avail education loan where based on the value of the underlying fund, the loan amount may vary.

Good education, higher certification, grand marriage celebrations are all crucial goals in your child’s life, but they are expensive. But, you can afford all of this by prudent financial planning, one of the essential instruments being an adequate child insurance plan. Such plans take into account inflation offering a lump sum amount on maturity, thus reducing your financial burden to a great extent.

(The writer is Chief Actuarial Officer, Aditya Birla Sun Life Insurance)