ULIPs and mutual funds are two popular yet distinct investment avenues, each coming with its unique set of benefits and drawbacks. Know which one is better for your individual needs and preferences.
Plan Your Child Future
Although parents do their best to provide their children with the best education and upbringing, the best resources themselves come at a cost. As a parent, one may certainly wish to ensure that their kids have all the required financial support even in their absence.
To ensure that your child has access to the required education and other resources even in the face of an adverse situation, you can turn to specific child investment plans. Often called child education plans, they can take off the burden of financial planning for your child from your back.
Let’s check out what these child education insurance plans are all about, the available types, conditions, and more.
The term ‘child plan’ is broadly used to refer to insurance-cum-investment plans designed to provide a secured financial corpus for your child’s future. You can pay premiums and build up a corpus for your child’s higher education, marriage, and other such requirements.
What separates these child education insurance plans from regular investment plans is that they also offer life insurance coverage with premium waiver benefits. Thus, the policy remains unaffected even in case of the demise of the parent during the policy tenure. In such a case, the premiums for the child investment plans are waived and the plan continues to create a corpus for the child’s future to pay a benefit upon maturity.
Discussed below are some of the salient features of the best child plans in the UAE –
The premium waiver benefit is available with most child investment plans, which can waive the premiums in case the parent passes away during the tenure of the policy. However, if the benefit is not inbuilt, you can always opt for it as an optional rider.
The parent’s life is usually insured under such plans
Owing to the number of options available, you can choose a suitable sum assured, tenure, and premium payment frequency based on your requirements and financial planning
Most child investment plans in UAE come with certain benefits like the ones discussed below -
Child investment plans offer a perfect blend of savings and insurance coverage in a single plan. The life insurance cover helps in planning for unforeseen emergencies and pays a benefit to compensate for the financial loss suffered due to the premature demise of the parent, if applicable.
The savings element, on the other hand, helps in accumulating a corpus for your child’s future requirements. Such combined offerings make these plans some of the best investment plans for a child’s future.
The premium waiver benefit, as mentioned earlier, is what sets these child investment plans apart from other investment avenues. In case the parent passes away during the tenure of the policy, the coverage is continued as the insurer continues to pay the premium on the parent’s behalf for the rest of the tenure.
The availability of different types of child plans can give you the flexibility of choosing the policy that best matches your requirements. You can avail of numerous options while choosing the sum assured, policy tenure, premium payment tenure and frequency, and the choice of add-ons.
In the case of child ULIPs (Unit Linked Insurance Plans), you can also get the flexibility of managing your investment per your strategy. With such child investment plans, you can make partial withdrawals and even change the investment funds during the policy tenure.
Child education insurance plans are available under different categories, with each one being able to provide good returns. Endowment child plans, for instance, usually offer additional bonuses on the sum assured. This bonus accumulates through the policy term and enhances the death or maturity benefits.
In the case of unit-linked child plans, you can invest your premium in market-linked securities. These securities have the potential to deliver attractive returns on your investments. Moreover, the returns are inflation-adjusted, which ensures that the corpus proves optimal in the future when the expenses inflate considerably.
Child investment plans are often considered financial assets of your portfolio by several banks and loan providers. In such a case, you can pledge these assets as collateral and secure a loan.
Based on the type of investment and premium payment mode, we can primarily categorise the child investment plans across 4 different types as discussed below –
As the name may suggest, a single premium child plan is a child investment plan in which the premium for the plan is to be paid in a single lump sum amount. With these plans requiring only a single investment, you can easily make a lump sum payment once and enjoy insurance protection as well as the creation of a corpus throughout the policy tenure.
Regular premium child investment plans have similar features as their single-premium counterparts, with the difference being the mode of premium. These plans allow the policyholder to pay the premium regularly at their convenience. So if you have this type of child investment plan, you would be able to select the frequency of the payment of the premium, whether monthly, half-yearly, quarterly, or annual basis.
Keep in mind that some providers also offer limited premium payment options, where you pay premiums for a limited tenure while the policy runs way beyond that.
Child endowment plans can help in creating a guaranteed corpus for your family and may also offer bonus additions to build a good corpus. With these child investment plans, an individual can receive guaranteed benefits on premature death or maturity.
Child Unit Linked Insurance Plans (ULIPs) invest in market-linked securities so that your premium grows in tandem with the financial markets. This has the potential to generate high returns that can also beat inflation. The high returns here can ensure a high corpus creation so that your child has adequate funds for their requirements.
With child investment plans, you can safeguard your child’s future as well as child education planning even amidst the uncertainties of life. This is because these child education insurance plans offer various benefits over regular investment plans such as waiver of premium, insurance and investment in one place, and more.
Another great aspect of these plans is that they can offer a sizeable corpus for your child’s future financial requirements, with these plans offering guaranteed corpus as well as market-linked investments (depending on your choice). So if you are on the lookout for the best saving plan for child in the UAE, you can easily turn to these child investment plans and fulfil the dual goal of income protection and child planning.
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