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Which are the Best ULIP Plans in India for Children?

Considering the rising cost of living and the vast array of investment possibilities available, gathering the necessary funds may seem like a daunting task. When saving for financial objectives, a ULIP plan (Unit Linked Insurance Plan) excels over other as

  • 6,445 Views | Updated on: Jan 10, 2024

A ULIP in India provides both investment and life insurance, ensuring that your child can fulfil their aspirations even without you being there. You can create a corpus for your child’s education with the aid of a ULIP plan, enabling them to pursue their goals. To ensure financial security in the event of the policyholder’s unexpected death, a few ULIP child plans also offer the waiver of the premium option.

Securing your child’s future is your primary concern as a parent. Given the exponential increase in the cost of living and financial requirements with time, you are deeply vested in finding the right solution for securing your children’s financial needs.

ULIP child plan is a financial tool that can help eliminate this woe. When you opt for a ULIP for a child plan in India, you ensure they benefit from life insurance and the financial market. This will help you keep up with market inflation and simultaneously support them in fulfilling their dreams of future education or other essential requirements.
This article will highlight identifying the best ULIP plans in India for children. And we will also highlight the benefits of the ULIP child plan in India and why you should opt for the child ULIP plan.

Also, since so many financial tools are available in the market, choosing the right one for your child’s future is tricky. Moreover, as you are unaware of the future and the kind of financial requirements that might occur to fulfil their needs, it is essential to make the right choice to serve your child’s future goals in their most crucial time.

Why do we need a ULIP for a child?

ULIP child plan in India is a financial tool that supports your child with a life insurance cover in case of any unfortunate event. It ensures their basic needs are served before they are old enough to take responsibility. By investing in the best ULIP plan in India for your child’s future, you provide for their cost of living, including education and other basic needs.

How to identify the best ULIP plan for children?

Choosing the best ULIP plan in India for your child can be tricky. The market’s various types of ULIP plans in India significantly differ in their policy guidelines and offerings. But, more or less, most of them give you a vivid portfolio of funds to choose from. Still, you also have to check their performance in the past and consider other factors like additional charges and the cost of switching funds, among many other factors. Some of the major factors to consider are as follows.

Decide Insurance Objectives

Before choosing a ULIP plan, one should decide what their insurance goals are. In the case of a young person, both current and future family needs must be taken into account because the insurance coverage must be sufficient if the insured suffers a loss. The number of children one intends to have, or family planning, is a crucial factor. It is critical to realise that ULIPs are long-term investment vehicles. To get the most out of an investment in a unit-linked insurance plan, one should be clear about both the investing and insurance objectives.

Analysis of Personal Investment Goals

Every investor must first evaluate their long-term financial goals before selecting a ULIP plan. A ULIP must be chosen that aligns with both the investment horizon and the investment objectives.

Compare ULIPs

To choose the ideal plan for a person’s specific needs, a thorough comparison is necessary. Online insurance comparison websites are one of the options for conducting the comparison, in addition to the conventional offline method. The websites rank and compare ULIP plans in India from various insurance firms based on factors including sum assured value, policy duration, and other fees, highlighting the significant variations between ULIP plans.

Decide Investment Goals

Investment objectives are crucial. Before choosing these objectives, one should give it enough time and think. Investment objectives can range from having a corpus for the children’s future higher education needs to having sizable cash for the child’s marriage. Additionally, one of them can be having the required money to fulfil your post-retirement commitments. One’s investment goals should be accorded the utmost attention. Once these objectives have been established, one can search for ULIPs with advantages that sufficiently achieve the objectives.

Top features of the best ULIP child plans in India

As stated above, picking the best ULIP plan in India for a child from a pack of multiple ULIP plans in India for children can be challenging for parents. However, some of the top features you must look for while picking up a ULIP for a child are:

1.Joint life cover

2.Death and maturity benefit the beneficiary

3.Tax exemption on premium payment and maturity benefits

4.Diverse fund options (portfolio) to choose from

5.Multiple free fund switching and minimal switching cost post utilization of free ones

6.Auto rebalancing

7.Loyalty bonuses and other bonuses, etc.

Benefits of ULIP for Children’s future

You’ll want to make sure that you purchase the greatest ULIP available in India when it comes to planning the future of your child. It’s a common misperception that the finest ULIPs will be pricey and necessitate a substantial financial commitment to be successful. To maximise your ULIP plan profits, you don’t need to invest a lot of money, but rather, you should start investing as soon as possible.

Through the force of compounding, which occurs when the profits from your assets are reinvested to generate additional returns, it can considerably aid in the growth of your corpus. This can be very advantageous, especially if your investing horizon is quite long. Having ULIP returns tax-free is another advantage that enables you to increase your savings and maximise your returns.

Some of the major benefits of ULIP as a child insurance plan are as follows:

Investment in a diversified portfolio

With ULIPs, you can invest in a varied portfolio and take full advantage of capital growth to secure a prosperous future for your child. You are guaranteed to be invested in top-performing ULIP funds thanks to the freedom to switch between funds. The auto fund rebalancing option ensures that your investments are protected from market fluctuations by considering your preferred investment strategy.

Waiver of Premium Benefit

In the case of the policyholder’s demise, the sum assured is given to the nominee. At the same time, the insurance company pays the premium for the remaining policy term.

Corpus of Child’s education

An ULIP can help secure the future of the policyholder’s children without taking stress or burden. As it is built to achieve long-term financial goals. Thus, creating a corpus for the child’s education.

Partial Withdrawal

The ULIP savings plan gives you the option of partial withdrawal based on the terms of the policy if you want to support your child in developing their talent but need some money. Following the completion of the required 5-year lock-in period, these withdrawals are permitted.

Conclusion

As a parent, you should go through deep research and read the ULIP policy guidelines carefully before opting for a policy from an insurer and check all the costs and benefits involved. The features mentioned earlier are the must-haves in child best ULIP plans in India to be considered the best ULIP child plan in India.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

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.

Amit Raje
Reviewed By :
Prasad Pimple

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

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