Securing Your Child’s Dreams with ULIP for Child Education

Every parent wants to provide the best education to their children, for which a huge corpus of funds is required. When it comes to securing your child’s future, a ULIP-based child plan is considered to be a great option, as it helps secure your child’s financial future. ULIP-based child plans help in meeting future financial obligations, such as a child’s higher education, a child’s marriage, etc. If you want to go for an education plan, ULIP can be a good option, as it offers the dual benefits of insurance & investment.

What is ULIP?

ULIP is one of the types of life insurance & it includes a combination of two factors: insurance & investment. Unlike term insurance, ULIP offers a part of the premium to be paid towards life insurance & the rest towards investment. One can opt to invest in debt, equity, or both, depending upon the level of risk &your objectives, making it an ideal investment option. It provides a flexible option to switch between the funds anytime during the policy tenure. 

What is ULIP for Child education?

Unit Linked Insurance Plan offers dual benefits of insurance & investment available in the market. The corpus funds received at the time of maturity can be utilised towards the education-related expenditures. This plan offers financial security to the parents, further helping their children to pursue higher education. It helps to cover future education-related expenses when a child requires the funds, by providing financial support to the children, even after their parents’ sudden demise.

How Does a Child’s Education ULIP Work?

The Best Policy for children should offer a distinctive combination of insurance & investment, allowing you to secure the educational future of your child. Let us now understand how a ULIP child education plan works:

Step 1: Choose a ULIP from an insurance company that best aligns with the future educational objectives of your child.

Step 2: Choose a fund between debt, equity, or balanced funds depending on how much risk tolerance level you are willing to take to achieve growth.

Step 3: A part of the premium is allocated towards life insurance coverage, & the remaining is allocated towards market-linked funds.

Step 4: Next, the premium must be paid on a consistent basis on a monthly, quarterly, semi-annually or annual basis.

Step 5: Allow your funds to grow over the years due to them being linked to the market.

Step 6: You can even switch between the funds for better returns & to manage risk  levels.

Step 7: You will get the maturity benefit either in a lump sum or distributed over a specific tenure at the time of maturity of the plan.

Step 8: These funds can be used to cover the child’s educational expenses, such as school or college fees, tuition fees, & study abroad expenses, etc.

Salient Features of ULIP Plan for Child Education

Provided are the salient features of the ULIP plan for child education:

• Allows Partial Withdrawal

This plan allows an investor to withdraw funds partially once the lock-in period of 5 years has been completed. The funds withdrawn can be utilised for paying educational expenses, like school or coaching class fees & marriage-related expenditures. 

• Provides Rider Benefits

The additional riders help enhance the present plan by providing additional financial support to the child at an added cost.

1. Accidental Death Benefit (ADB) Rider:

Besides the life insurance coverage offered by the ULIP, this rider provides additional financial support to the beneficiaries in the unfortunate event of the sudden demise of the insured in an accident. 

1. Accidental Total or Partial Disability (ATPD) Benefit Rider:

In the event of total or partial disability occurring due to a fatal accident, this rider offers to pay a lump sum amount to the insured. This rider removes any financial stress, hence making dependent family members capable of meeting urgent expenditures.

1. Critical Illness (CI) Rider Benefit:

This rider offers an insured a lump sum payment of an amount to meet the treatment costs, eliminating the financial burden arising from the diagnosis of critical illnesses, if any.

• Flexibility on Choice of PT, PPT, & Premium Payment Frequency

This plan offers flexibility in terms of fulfilling the financial timelines of your child, such as your child’s higher education, by allowing you to choose the policy tenure & premium payment term. One can choose the premium payment frequency on a monthly, quarterly, half-yearly, yearly, or on lump-sum basis.

• Option to Safely Switch between Risk Portfolios

This plan allows switching between the funds during the year, allowing the investors to get higher benefits by switching from high-to-low-risk frequently & smoothly.

How to select the Right ULIP for Child Education?

Provided are the factors to be considered while choosing the right ULIP for child education:

• Investment Horizon

As the educational objectives are long-term, a ULIP Calculator would help assess the growth of investments over a period of 10-15 years. Investment horizon helps evaluate whether the growth over time aligns well with expected educational expenses or not.

• Risk Appetite

An investor having a high risk appetite to get higher returns can opt for equity funds. An investor looking for stable returns can opt for debt funds or balanced ULIPs.

• Charges

Review all the associated charges of ULIP, such as fund management fees, premium allocation charges, mortality fees, etc.

• Investment Flexibility

This plan should be flexible in terms of partial withdrawals, switching between the funds, & many more, etc., so that it directly offers a comprehensive benefit matching investment objectives.

• Evaluate Adequate Life Cover

Though this plan is sufficient to fulfil the requirement of the child’s education along with the financial needs of the family.

Conclusion

A ULIP for child education is a quite easy & simple way to safeguard the academic future of your child. This plan offers the combined benefit of life insurance & investment under one plan. It comes with features such as partial withdrawals, switching between the funds, and get flexibility to adjust the plan as per your requirements. Parents should hence start early, select an appropriate plan & allow funds to grow for your children.

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