Why you shouldn’t combine insurance coverage with funding whereas investing for lady youngster?
I’m 34 years previous working with Private sector. I’ve a 3 yr previous daughter. I’m planning to put money into a Child Plan of an insurance coverage firm, the place the cash is paid again in installments at completely different dates to care for her schooling and marriage wants. Please advise whether or not I can buy the kid plan if not please recommend me the place ought to I make investments the cash?.
Answer: As a prudent private monetary precept one ought to by no means combine insurance coverage and funding wants by shopping for single product to care for each such wants. I’d not advise you to purchase any insurance coverage plan as an funding choice in your daughter’s schooling and marriage targets, as these insurance coverage merchandise are loaded with excessive irrecoverable fees. Just as a result of a product has “youngster” phrase in its identify doesn’t imply that it’s a appropriate product in your youngster. Instead I’d recommend you to purchase sufficient time period life insurance coverage, ideally on-line and put money into mutual funds via month-to-month SIPs in fairness mutual funds. As far as the quantity of life insurance coverage cowl wanted for this objective is worried you’ll have to estimate your future purpose worth on the time of her schooling and marriage after taking into consideration inflation.
Taking into consideration the truth that your purpose is no less than 15-18 years away, you need to make investments month-to-month via SIP route in nifty 50 or Sensex fund. If you aren’t comfy investing in fairness, you possibly can open an account below Sukanya Samriddhi Scheme within the identify of your daughter which affords you greater price of curiosity and tax advantages too below part 80C.
The time period plan will care for her schooling and marriage wants in case you aren’t round. The mixture of time period plan and month-to-month SIP/deposit in Sukanya Samriddhi Scheme will definitely beat the quantity which you’d get below any youngster plan. Consult a Certified Financial Planner to construct a correct monetary plan for all of your targets.
(Balwant Jain is a tax and funding professional and could be reached on jainbalwant@gmail.com and @jainbalwant on his twitter deal with)
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