We have a lot of financial goals in our lives, especially when we have a family. Many of these goals are born almost daily, a lot of them forgotten, but few goals change our lives for the better. Yet, few goals have the potential to define our future or if not ours at least our children’s.
Your child’s higher-education goal is one of those goals which can ensure a brighter future for him/her. While you are in the world for your family, you can look after these goals, but what happens in your absence? Unit Linked Insurance Plans can help.
Insurance is the only way to ensure your family’s important goals like higher-education for the child, are financially protected. Now you have two different solutions for this challenge:
Term insurance solution may sound simple and easy. But remember, that the goal might be 10-15 years away when you are buying the term insurance plan. So, it is unlikely that you can account for the inflation in the term plan. At best you can hope to secure the current cost of the goal with term insurance.
For example, if the current cost of your child’s higher education goal is Rs. 20 lakhs, 15 years from now it will be close to Rs. 50 lakhs. At the time of purchasing term cover, your eligibility will be counted based on your present income. This limit makes it difficult to account for all your goals’ future costs in your cover.
So, in a way term cover may not provide adequate financial protection for your financial goals. What about the second solution?
Securing your goals future cost needs more than just the life cover. First part is to ensure a separate investment plan for the goal. So that you have a dedicated and clear investment plan in execution.
For example, you will need to invest about Rs. 1.5 lakh every year to meet the goal of your child’s higher education 15 years from now. So, you can start a separate investment where you will invest only Rs. 1.5 lakhs every year.
This way you can track and readjust the investments to stay on course towards the Rs 50 lakhs goal.
The second benefit of investing separately for important goal is that you can insure each separately. For example, investing in ULIPs may allow you to insure the fund allocation for your child’s goal.
ULIPs like Invest 4G plan from Canara HSBC OBC Life offer dual insurance on your ULIP investment:
Thus, Invest 4G will make sure that your family not only receives a death claim but also stays free from the burden of funding the goal.
An Example: You start on your path to Rs. 50 lakhs corpus for your child’s education goal. Your annual investment in Invest 4G plan is Rs. 1.5 lakhs, which you will continue for the next 15 years. The ULIP will have a life cover of Rs. 15 lakhs (10 x of annual investment).
Unfortunately, in the 7th year, you pass away, leaving the goal halfway through. You have invested Rs. 7 lakhs so far.
Upon your demise, your family will file a death claim and receives the life cover amount Rs. 15 lakhs immediately. But the invested funds will continue to grow, and the insurer will continue investing on your behalf for the next eight years.
Thus, your funds not only keep growing but also receive fresh investments as you would have done if alive. The family will receive the maturity value of the funds at the time of intended maturity.
Secure All Important Goals
Not just the education goal, if you have any other financial goals as important as this, use a good ULIP plan to secure the goal for your family. Another important goal that you should consider is your retirement goal, especially if your spouse is financially dependent on you.
You would not want her to suffer due to inadequate retirement corpus in case of your early demise. Adding ULIP like Invest 4G to your retirement investment portfolio can ensure that she ends up with enough corpus despite any setback.
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