ULIP Child Plan - Features & Benefits

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As a parent, being there for your child and enabling them to achieve their dreams, matters! That’s exactly what a good ULIP child investment plan does for you – provide the financial protection your child needs, with or without you being around. With a ULIPs at Bajaj Markets, enjoy benefits that include free life cover, tax exemption, and the liberty to invest in funds of choice.

A ULIP child plan ensures that inflation or unforeseen events do not hinder your child’s future. As a parent, being there for your child and encouraging them to achieve their dreams is what matters the most! That’s exactly what a good ULIP child investment plan does for you. It provides the financial protection that your child needs even in your absence.

The ULIP child plans available on Bajaj Markets are designed to specifically cater to your child’s education. In this child education plan, you get the dual benefit of saving and protection. You can invest in this policy based on your child’s educational needs, your financial capability, and other monetary goals, and use the funds through partial withdrawal. Moreover, you also enjoy ULIP tax benefits on such investments.

Rising Educational Costs

Propelled by inflation, educational costs in India are on the rise. Surveys reveal that by 2025 the cost of studying in an engineering college will be nothing less than 30 lakhs while getting an MBA degree will set one back by 50-60 lakhs. Moreover, with middle-class families spending 60% of their monthly earnings on educating their child/children, having a child investment plan in place is a necessity.

Dual Benefits under one plan

With ULIP plans, policyholders enjoy the benefits of an investment as well as an insurance plan. This child investment plans that you opt for provides the protection your child needs, more so in your absence. Even in the case of an eventuality, rest assured that your child’s future is taken care of with a good ULIP plan. 

Small Investments for Larger Returns

Though small in terms of amount, your regular investments when compounded will grow into a handsome amount upon maturity. This corpus of funds will help ease the financial burden when it comes to making university tuition fees and other charges involved when studying abroad.

Prevents one from falling into debt

Surveys conducted across the globe show there are more than 1 million students and their families debt with a staggering $1.56 trillion in student loan debt. Not only are ULIPs a great investment option but regular savings will prevent one from falling in to debt by option for loans with exorbitant interest rates. 

Tax Benefits

With ULIP tax benefits, it is the best investment option before one. Right from the initial investment until maturity, the Income Tax Act of 1961 has exempted ULIP plans under section 80C, 80CCC and 80CCD. Save now and secure a bright future for your child.

The following are some salient features of the ULIP child plans available on Bajaj Markets.

• Financial Security for Children

The policy can be taken either by parents or grandparents to secure the financial future of their children or grandchildren.

• Long-Term Investment

The term for a ULIP child plan is generally 10-25 years with a lock-in period of 5 years.

• Dual Benefits

Since this child plan is a ULIP investment, a part of the premium goes for life insurance coverage; the remaining amount is invested in market-linked funds.

• Dual Payouts

The policy offers two payouts:

• The Sum Assured is paid upon the death of the insured

• The fund value is paid upon the maturity of the policy

So, if the parent(s) dies or a critical illness renders him/her incompetent to provide financially for the child, the policy will:

• Pay the Sum Assured to the child nominee

• Waiver of future premiums

• Pay fund value upon maturity

• ULIP Tax Benefits

Besides securing your child’s financial future, the policy also offers ULIP tax benefits to the parent(s). They can claim tax deductions on the premium paid under Section 80C of the old income tax regime. The payout upon death/maturity is also tax-free under Section 10(10D) of the Income Tax Act, 1961.

A ULIP child plan is purchased with the long-term intention of securing your child’s financial future. The policy works similar to that of any ULIP investment. A part of the premium paid towards the child plan is used for life insurance cover and the remaining amount is invested in market-linked funds.

In case the insured (who is a parent or grandparent of the child) dies, the insurer pays the sum assured amount under the life insurance component of the policy. Upon maturity, the policy pays the fund value under the investment component. That way, the child receives two kinds of payouts, one in the event of their parent’s death and another after policy maturity.

When buying ULIP child plans with us at Bajaj Markets, check your eligibility beforehand. Also, ensure that you have the required documents handy.

As we know, the life insurance component of your ULIP child plan provides a predetermined sum assured to the beneficiaries after your death. However, the returns on the investment component can be tricky to calculate. To make the math simple, you can use the ULIP calculator available on Bajaj Markets.

The returns depend on the premium amount and tenure of your ULIP child plan. Follow the steps below to calculate the same.

1. Go to the ‘ULIP’ section on Bajaj Markets and choose the ULIP calculator.

2. Enter the premium amount and the frequency of payments (monthly, quarterly, annually, lump-sum).

3. Choose the tenure of your ULIP child plan.

4. Select the funds in which you want to invest your money (debt, equity, or hybrid)

5. Enter personal details like age, gender, medical records, etc.

6. Once you submit these details, the online ULIP calculator will estimate the returns accumulated over time.

    

Further, we have discussed in brief about child plans in India.

Child plans are designed to cover the financial future of your children, whether you are around to provide for them or not. In India, we’ve three types of child plans.

• ULIP Child Plans

ULIP child plans provide dual benefits. A part of the policy premium aims to protect your children like a standard child education plan while the remaining is invested in market-linked funds. Because of this, your child receives dual payouts, one in the event of your death and another on policy maturity.

• Child Savings Plans

Having a child savings plan eliminates the risk of market-linked investments. You either pay regular premiums or for a limited period to receive guaranteed payouts by the end of the policy term. These are further classified into two categories: 

1. Single-Premium Child Plan
2. Regular Premium Child Plan

Depending on your affordability and convenience, you can choose either of them.

• Traditional Child Endowment Plan

A child endowment plan is nothing but a traditional life insurance policy that offers security and savings to your children. The policy allows you to fulfil your child’s dream without having to face any financial setbacks. The premiums are invested in debt funds decided by the insurer. The maturity amount is determined based on the fund performance along with bonus payable (if any).

To understand how much you should invest in a child plan, it is imperative to know the importance of quality education for your children. Having a good educational background will allow your child to start a career and earn a livelihood for themselves in the future, thereby making them financially independent.

But before you decide the amount to invest in these policies, ask yourself the following questions:

• What are your future financial goals?

• What is your monthly income?

• What are your expenses?

• Do you have any savings?

• Do you have any insurance plans?

   

Answers to these questions will help you make an informed financial decision for your child’s future.

Child plans in India come with an intrinsic benefit known as waiver of premium (WoP). The benefit comes in handy if you (the parent) passes away due to an unfortunate turn of events. During such dreadful and emotional times, be rest assured that your child plan will remain active as the insurer covers the remaining premiums.