Financial Planning for Your Child with Child Insurance Plan

According to a news report, the ASSOCHAM (Associated Chambers of Commerce and Industry in India) estimates that higher education costs have jumped a huge 120% during the last decade, and are expected to escalate even further in the upcoming years. This means that a higher education course which costs Rs. 10 lakhs today will cost upwards of Rs. 30 lakhs or even more after 20 years.

Therefore, unless you do careful financial planning for child's future, you could face an uphill task trying to pay for the future education of your child. You can consider investing in a child insurance plan which is a great tool for financial planning for child education.

Why take a child insurance plan?

As mentioned above, a child insurance plan is a great instrument that can help you in financial planning for child's future. The benefits of child insurance far outweigh any negatives or doubts you may have about the efficacy of these plans. These plans are designed to help you in meeting the higher education costs of your child.

In case you are unable to take out the funds required for your child's higher education; a child plan will come to your rescue. It will give you a much-needed breather so that you can use your income otherwise. Besides, a child insurance plan can also aid in financial planning for a child's education by providing a financial cushion against the unfortunate demise of his/her parent. In such a case, the insurer waives off the remaining premiums and the policy remains active which ensures secured future of the child.

Before investing in a child plan, make sure to calculate the required sum assured for your child by factoring in future inflation and potential costs of the course your child wishes to pursue. The power of compounding will help you to create a large corpus for the future of your child. Therefore, it is advisable to start investing in a child plan as soon as your child is born.

Other Child Financial Planning Options

Saving and investing regularly should form the crux of your financial planning for child's future. You might find it difficult to save money in the face of mounting living expenses, but a habit of disciplined savings will hold you and your loved ones in good stead for the future.

Along with your own savings, teach your child to save some amount from his/her pocket money every month. Encourage the savings habit in him/her and teach him/her about the value of responsible spending. You can deposit your child's savings in a savings bank account or open a PPF account in his/her name.

Other options that can help you in financial planning for child education include investing in gold ETFs, mutual funds using SIPs, and even short-term bonds.