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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
ULIPs for child education are a strategic financial tool that blends investment growth with life insurance, specifically designed to fund your child's future academic aspirations. They facilitate disciplined wealth creation, building a dedicated corpus for higher education expenses. Moreover, the insurance component ensures that, even in your absence, your child's educational goals are financially protected, thereby directly supporting their uninterrupted learning and future opportunities.
A ULIP Child Education Plan is a tailored financial product that combines two key elements, investment and life insurance, with the specific goal of funding your child’s future education. In this plan, you pay regular premiums. A portion of your premium is allocated towards providing life insurance coverage. The remaining portion is invested in market-linked funds of your choice, such as equity funds. The value of your investments can grow over the policy term, depending on the performance of these funds.
Over the years, your investments aim to build a significant sum of money, often called a ‘corpus’. This corpus becomes available at policy maturity, which can further be used for your child’s education. The plan helps you systematically save and grow money.
The best ULIP plan for child should offer a unique combination of investment and insurance features tailored specifically for securing your child’s educational future. Let us understand how a ULIP plan for child education works in a simple and structured way:
ULIP plans tailored for child education come with a range of features designed to meet the specific needs of parents and ensure the financial well-being of their children. The key features of ULIP plans for child education are:
One of the standout features of ULIP plans for child education is the option for partial withdrawal after the completion of the lock-in period. This feature allows parents to access a portion of the accumulated corpus to meet urgent financial needs without surrendering the entire policy. This feature is particularly beneficial when you need funds for specific educational expenses, such as school fees, coaching classes, or extracurricular activities. It ensures liquidity without compromising the overall investment.
ULIP plans for child education often come with rider benefits that enhance the overall coverage and protection offered by the policy. Common riders include an accidental death benefit, a critical illness rider, waiver of premium riders, and a hospital cash benefit, among others. These riders provide additional financial security to the family in the event of unfortunate circumstances, ensuring that the child’s educational goals are not compromised.
ULIP Plans for Child Education give you the freedom to choose how long you want the plan to run (Policy Term or PT) and how long you wish to pay the premiums (Premium Payment Term or PPT). You can also pick how often you want to pay, monthly, quarterly, half-yearly, yearly, or even in one go. This flexibility makes it easier to plan your finances around your child’s education milestones.
ULIP plans for child education provide investors with the option to allocate their funds across different risk portfolios based on their risk tolerance and investment objectives. These portfolios typically range from equity-oriented aggressive funds to debt-oriented conservative funds. The flexibility to switch between risk portfolios allows investors to adjust their investment strategy in response to changing market conditions.
Investing in a ULIP for your child’s education is not just a savings plan; it is a strategic move that offers a comprehensive approach to securing their academic future. Here is how a ULIP can be uniquely beneficial:
With ULIP, regular premium payments are channeled into market-linked investments, with the aim of growing steadily over the long term. This systematic approach allows you to cultivate a substantial education corpus, brick by brick, ensuring that when the time comes for higher studies, you have a ready fund to draw upon.
The cost of education often rises over the years due to inflation. ULIPs, particularly those with equity fund options, offer the potential for returns that can outpace inflation. This helps ensure that the money you save today will still be sufficient to cover future education expenses, protecting your child’s aspirations from the rising cost of education.
While the primary goal of a child ULIP is education funding, many plans offer partial withdrawal options after a specific lock-in period. In unforeseen medical emergencies, this liquidity can provide financial assistance to avail urgent medical treatment.
As your ULIP policy matures and accumulates value, it can become a tangible asset. Many financial institutions accept ULIP policies as collateral for securing loans, providing an added layer of financial assistance.
ULIPs offer attractive tax advantages under the Indian Income Tax Act. Premiums paid can qualify for deductions under Section 80C for up to ₹1.5 lakh annually, reducing your taxable income. Furthermore, the maturity proceeds are often tax-exempt under Section 10(10D). You can also get tax exemption for a duration of 8 years on the interest paid for education loans.
ULIPs offer a unique blend of investment and insurance features, making them an attractive option for building a robust education fund. Here is a comprehensive guide to help you choose the perfect ULIP for child education:
Consider your investment horizon, i.e., the timeframe until your child will need the funds for their education. If you have a longer investment horizon, you may opt for equity-oriented ULIPs that offer the potential for higher returns over the long term.
Assess your risk appetite and tolerance for market fluctuations when selecting a ULIP for your child’s education. If you are comfortable with taking on higher levels of risk in exchange for potentially higher returns, equity-oriented ULIPs may be suitable for you. On the other hand, if you prefer stability and capital protection, debt-oriented or balanced ULIPs with lower exposure to equities may be more appropriate.
Understand the various charges associated with ULIPs, including premium allocation charges, policy administration charges, fund management charges, mortality charges, and surrender charges. Compare the charges across different ULIPs to ensure that they are reasonable and transparent. Look for a ULIP for child education with competitive charges that will not eat into your investment returns significantly over time.
Evaluate the investment flexibility offered by the ULIP for child education, including the availability of different fund options, the ability to switch between funds, and the option for partial withdrawals. Choose a plan that provides a diverse range of fund options to suit your investment goals and risk profile.
When choosing, carefully assess the life insurance component of the ULIP. This protection must be sufficient to comprehensively fund your child’s complete educational path and support ongoing family needs, should you unfortunately no longer be there to provide.
With their unique blend of investment growth and insurance coverage, ULIPs offer a comprehensive solution to meet the rising costs of education. Let us see how ULIPs assist in child education planning:
By setting specific goals and timelines for their child’s education, parents can tailor their ULIP investment to accumulate the necessary funds over the desired period. This disciplined approach ensures that parents have a structured plan in place to meet their child’s educational expenses when the time comes.
Flexibility is a hallmark feature of ULIP for child education, offering parents the freedom to adapt their investment strategy to changing circumstances. Parents can choose the premium payment term, premium payment frequency, and policy term that best suit their financial situation and educational goals. ULIPs provide the flexibility to switch between investment funds based on market conditions and risk preferences.
ULIP for child education provides insurance coverage alongside investment opportunities, safeguarding the child’s educational future in the event of unforeseen circumstances. In the unfortunate event of the policyholder’s demise or disability, the insurance component of the ULIP ensures that the child’s education goals are not compromised.
Investing in ULIP for child education offers attractive tax benefits for parents. Premiums paid towards ULIPs are eligible for tax deductions under Section 80C of the Income Tax Act, reducing the taxable income of the policyholder. Additionally, the maturity proceeds or death benefit received from the ULIP are generally tax-free under Section 10(10D), subject to certain conditions.
ULIP for child education often comes with optional riders, such as the waiver of premium rider, which ensures that the policy continues even if the policyholder is unable to pay future premiums due to disability or critical illness. This rider ensures that the child’s education goals remain unaffected, providing continuity in the investment and insurance coverage.
Investing in a ULIP for child education is a strategic move to secure your child’s academic future. These plans offer a blend of investment growth and life insurance protection, ensuring that your child’s education is financially safeguarded under all circumstances. With features like partial withdrawals, fund switching, and tax benefits, ULIPs provide the flexibility and security every parent seeks. So, start early, choose wisely, and watch your investment grow alongside your child!
1
A ULIP plan helps you build a dedicated fund for your child’s future education needs while also offering life insurance. It ensures that even if something unexpected happens to you, your child’s dreams will not be put on hold. It is like having a safety net with a savings plan built in.
2
Yes, ULIPs are good for child education as they offer investment growth, insurance coverage, and tax benefits, making them a comprehensive financial tool. You can choose where your money goes—equity, debt, or both, and adjust as your goals change.
3
No, there are typically no restrictions on using the funds from a ULIP for child education. The accumulated corpus can be withdrawn partially or fully to cover educational expenses after the lock-in period (generally 5 years).
4
A ULIP for child education differs from other plans by offering both investment growth and insurance coverage in a single product, providing comprehensive financial protection and wealth accumulation.
5
ULIPs let you invest regularly over time, and with the power of compounding, your money grows. You can choose higher-growth funds when your child is young and switch to safer ones as the goal gets closer. Some plans even waive off future premiums if something happens to you.
6
Yes, you can extend the policy term and make changes to the investment strategy of a ULIP for child education to align with evolving education goals. ULIPs offer flexibility to adapt to changing circumstances and requirements.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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