Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Invest

Insurance and Investment in one plan.

Kotak e-Term

Protect your family's financial future.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals.

Kotak T.U.L.I.P

A plan that works like a term plan, and Earns like ULIP Plan.

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family.

Kotak Assured Pension

A plan that offers immediate or deferred stream of income

Kotak Lifetime Income Plan

Retirement years are the golden years of life.

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

How Can ULIP Plan be as an Investment for Your Child

ULIPs can be an excellent investment option for parents who want to secure their child's future while also getting good returns on their investment.

  • 5,677 Views | Updated on: Jan 04, 2024

When you start exploring the investment options for your child in the market, you will find many options but plans like ULIP investment for education, ULIP investment as a child’s plan for higher education, Guaranteed Savings Plans, and traditional plans like Public Provident Fund, Sukanya Samriddhi Yojana, etc. are some of the most popular and best options that you have.

    Key takeaways

  • ULIP offers policyholders the benefit of insurance and the opportunity to invest in market-linked securities.
  • ULIP is a great option, as it has a lot to offer, even as a savings plan for your children.
  • When you are planning ULIP investment as a child’s plan for higher education of your child, you must know all the benefits associated with the plan.
  • When you start ULIP investment as a child’s plan for higher education of your child, then other than developing a habit of disciplined investment, you also learn how to stay invested for a minimum span of 5 years.
  • Investment plans for children can come in various forms, such as stocks, mutual funds, bonds, and education savings accounts.

Accumulating a corpus to ensure a safe and secure financial future for your child might be an arduous task, and indeed it is one of the tough ones when you talk about your role and responsibilities towards family. However, with proper financial planning, like opting for various investment plans that are designed specifically for such purposes, this should become easier for you and your child’s financial stability in the future.

Modern plans tend to have more benefits, and if managed correctly, they will certainly help you in reaching your financial goals within the desired time and then contribute additionally to your savings.

In this article, we will discuss the benefits of ULIP as an investment for children and how one can opt for ULIP investment as a child’s plan for higher education for their child, among other topics related to ULIP investments.

What is ULIP?

Unit Linked Insurance Plans, also known as ULIPs, are among the most popular and subscribed plans nowadays. They offer policyholders the benefit of insurance and the opportunity to invest in market-linked securities - thus, providing a great opportunity for the investors to have their life secured with insurance while remaining invested in the market to mint money as it grows.

Many people think that investment in the market is very risky. But, when you are investing in ULIP, you must understand that you are investing only a part of your premium for investment in the market-linked securities. Also, these securities have varied risk profiles, and you can opt for these as per your risk appetite. If you have a high-risk appetite and want a higher return in a short span, then you may opt for equities. However, if you like to invest your money more safely and make stable growth over time, then bonds may serve the right purpose for you.

ULIP Investment for Children

ULIP as a Child Plan

As a parent, one of the most important financial goals for you is to ensure that your child gets the best quality of education and that money is never an issue in their growth years.

However, choosing the right option from innumerable savings schemes available in India can be a hectic task and thus discouraging too. In such scenarios, ULIP is a great option, as it has a lot to offer, even as a savings plan for your children. Other than habituating you to follow an investment discipline, ULIPs also offer many other benefits that can be useful for you as a parent when investing in your child’s future.

Features of ULIP Investment for Children

When you are planning ULIP investment as a child’s plan for the higher education of your child, you must know all the benefits associated with the plan. This helps you understand how it is a much more feasible and better option compared to other market-linked products.

Here are the best features of a ULIP investment for children

Premium Amount Waiver

In case of an unfortunate demise of a ULIP policyholder, the nominee of the policy will receive the sum assured while the premium that is due will be paid by the life insurance company for the complete policy term.

This feature ensures that your child will not have to bear the extra monetary burden of paying a premium for the policy in case of your absence. Moreover, they will get the complete sum assured amount once the policy reaches maturity, ensuring that their financial needs for higher education are met as planned by you previously.

Investment Diversification

One of the golden rules of investment is diversification. ULIP offers you an inbuilt mechanism where you can diversify your investment into various market-linked securities like debts, equities, bonds, etc.

Additionally, the fund-switching option ensures that you can manipulate your portfolio as per market trends and needs to accelerate your investment growth.

Mid-Term to Long-Term Goal

When you start ULIP investment as a child’s plan for higher education of your child, then other than developing a habit of disciplined investment, you also learn how to stay invested for a minimum span of 5 years. This, other than helping you build a decent corpus for your child’s education, gives you a taste of the benefits of long-term investment for wealth creation. Additionally, if you want to withdraw the money invested in ULIP, you can withdraw it easily after the lock-in period of five years to meet any emergency requirement.

Partial Withdrawal

ULIPs allow partial withdrawal. So, if you require an emergency fund in between the investment period, then you can withdraw a partial amount as per policy guidelines and support your child financially as and when required.

Tax Exemption

The maturity benefits, and proceeds of the ULIP policies are tax-exempted as per Section 80C deductions, and thus, in addition to savings income tax for you, your child will receive a complete lump sum amount at the end of the policy term without any tax deductions.

What is the Best Investment Plan for a Child?

As a parent or guardian, ensuring your child’s future financial well-being is crucial. One of the most effective ways to secure their future is by investing in a well-thought-out investment plan. A well-structured investment plan can provide financial stability, help build wealth, and provide opportunities for your child’s education, career, and other life goals. But with numerous investment options available, what is the best investment plan for a child? But when it comes to the best investment plan for a child, the answer is simple - Unit-Linked Insurance Plans (ULIP)

Why is a Unit-Linked Insurance Plan Ideal for a Child’s Future?

ULIPs are investment-cum-insurance products that provide the dual benefit of insurance coverage and investment opportunities. They offer a unique combination of life insurance and investment options, making them an ideal choice for long-term financial planning, including securing your child’s future.

Is Investing in ULIPs a Smart Way to Save for a Child’s Future?

ULIPs are considered to be a popular choice for those looking to invest in their child’s future. However, before making any investment decisions, it is essential to understand the benefits and drawbacks of ULIPs. The benefits of ULIPs for children’s future are as follows.

Dual Purpose Investment

The insurance component of a ULIP ensures that in the event of an unfortunate incident, the child’s financial future is secured. Meanwhile, the investment component offers the opportunity to grow your money, ensuring that your child has a substantial corpus to rely on when they grow up.

Long-Term Savings

ULIPs offer a long-term investment horizon that can span over 10 to 20 years. This long-term approach provides ample time for the investment to grow and accumulate wealth. Over time, the power of compounding ensures that your money grows exponentially, providing a significant corpus when your child reaches the age of maturity.

Transparency

ULIPs offer complete transparency in terms of investment options and charges. All charges, including premium allocation charges, fund management charges, and mortality charges, are explicitly disclosed, enabling parents to make informed investment decisions. This transparency ensures that parents know exactly how their money is being invested and how much they are paying in charges, making ULIPs a trustworthy investment option.

Conclusion

So, ULIP investment as a child’s plan for higher education is a great way to accumulate a decent corpus for them. ULIPs not only ensure an investment to match the market inflation but also secure your child’s future by offering very beneficial life insurance protection for their financial future.

- 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

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C