Every parent wants to provide the best education to their children, for which a huge corpus of funds is required. When it comes to securing your child’s future, a child plan is considered to be a great option, as it helps secure your child’s financial future. Child insurance plan is considered to be insurance cum investment plans that helps securing the financial future of a child to meet the needs such as child education, marriage, etc.
Child plans help you invest your hard earned money and grow it into a significant wealth to secure your child’s future. These plans are a combination of investment and insurance for your child, which allows you to save for the future requirements of your children. You should start investing early to accumulate a significant corpus for your child ensuring the availability of funds when the need arises. You can use these funds for higher education, marriage, and much more.
Now that we understood the basics of child plans, let us have a look at the types of child plans in India:
Types of Child Plans in India
- Child ULIP Plans
The child ULIP plans come with dual benefits of insurance & investment. Under the child ULIP, one part of the premium is allocated towards the insurance, & the other part is allocated towards the market-related investments.
- Child Savings Plans
These plans are somewhat similar to endowment plans, which offer insurance coverage &a savings component.Under this plan, the funds are invested in debt securities such as government bonds, fixed deposits, etc. The funds are allowed to grow at a steady rate, & at the time of maturity, the guaranteed & non-guaranteed returns are paid to the insured.
What is a Child Plan Calculator?
A child plan calculator is an online tool that provides parents with an estimate of the amount that would be required to fulfil their child’s future financial obligations.Though everyone knows that the funds should be invested for a longer period to get maximum benefits, it becomes difficult to analyse whether the amount invested would be adequate or not.
Hence, a child plan calculator resolves such a problem by providing an estimate of the funds required to be invested, taking the inflation factor into account.
Benefits of a Child Plan Calculator
Provided are the benefits of a child plan calculator:
- It helps in estimating the amount of funds required to be invested, taking all factors into consideration.
- It allows flexibility in building a plan, i.e. you can customise the plan as per your child’s future financial requirements.
- It helps in making comparisons of different investment options available & selecting one depending on the financial objectives & risk tolerance level.
- It helps solve complex calculations & saves time.
- It also lets you evaluate the performance & progress of investments you have made.
How to Use a Child Plan Calculator?
Provided are the steps to use a child education plan calculator:
Step 1:Click the tab “Calculators”, & then choose “Child Plan Calculator”.
Step 2:Provide your child’s name & the amount that is to be saved to achieve the educational goals of your children.
Step 3:The calculator will show the estimated amount that should be invested, depending on the amount that is required at the completion of the policy tenure.
Step 4:Then you are required to provide the time required for the accumulation of the fund.
Step 5:The duration for which the amount remains invested, i.e. investment horizon, is quite important. This is because the longer the investment is made, the more money grows.
Step 6: The child plan education calculator takes into account the inflation rate before making a projection about the investment amount required to achieve the financial objectives. Provide the inflation rate that will range between 3% & 8%.
Step 7: Select the expected rate of return depending on the type of plan, which ranges between 6% & 15%.
Step 8: Click the tab “Next”, & the calculator will provide you with the amount that is to be invested on a monthly basis to accumulate funds for a certain period.
Importance of using the Child Plan Calculator
Provided are the reasons one should consider a child plan calculator:
- Helps fulfil specific goals
To meet the future financial needs of your child in terms of higher education or willingness to study abroad, one requires a plan & a definite amount.
To achieve this objective, the child plan calculator can be used, which allows evaluation &analysis of the amount of investment required.
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Helps plan the monthly finances
One should make a proper evaluation of how much funding would be required & plan the budget.
To achieve this objective, a child plan calculator will help you plan the funds & manage the budget to fulfil the family’s requirements.
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Inflation check
As the inflation rate decreases, the maturity benefits that are required to be invested increase. Hence, to estimate the funds required, a calculator is a must that takes into consideration certain factors, such as inflation, age of the policyholder, annual income, etc.
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Facilitates informed decision-making
There are multiple investment options available from which you have to select an appropriate plan depending upon your financial objectives & risk tolerance level.
Hence, to make an informed decision, a child plan calculator can be used, which will help determine the type & amount of investments to be made.\
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Helps track progress
A child plan calculator can be used to evaluate the performance & progress of the investments made over a period of time in terms of the accomplishment of financial objectives.
Conclusion
Rising education costs should not be a reason for your children to drop their dreams. A child plan calculator will help you make an informed & disciplined decision while choosing one. A child plan calculator helps in evaluating the amount of funds required to be invested, helps in customising the plan, & saves time. It allows you to track the progress of your funds in terms of the achievement of financial objectives.
