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Insurance for new parents

With the entry of a new born in the family, the responsibilities will also increase for the entire family members especially for the parents of the new kid. This will burden the bread winner financially in future. Planning beforehand will ease the financial burden. LIC has introduced children’s plan taking into consideration of children’s education and wedding requirements. Plans can be taken when the kid is just 10 days old, and maturity benefits will start from 18th age of the child.

Academic fees have sky rocketed by 500% in the last decade. Higher education has became a high income class affair. To counter this financial backlog, early insurance on children will provide relief.
Everyone wants their children to be well educated .Parents want their children to be engineers, doctors or CA’s. These are professional studies which need huge amounts. The fee will at least   triple in next 18 years based on inflation and country’s economic growth rate.


We will try to understand the costs involved in pursuing Engineering after 18 years.
Year: 2016
Engineering college fee: Rs.8 Lacs (IIT’s)

Considering inflation prices would raise minimum 3 times, which would result in hike of academic fees.
Based on these situations, it would as below.

Year : 2034
Engineering college fee: Rs.24 Lacs (IIT’s)
So, Rs. 24 Lacs needs to fulfill his dreams to study at premier institute like IIT or NIT.

To make it up for this situation, Sum assured of Rs.12 lacs need to be taken under children’s plans which will give returns in regular intervals from 18th year and maturity benefits will be provided at the end of policy term.

Children’s policies had an exceptional feature, “Premium waiver raider” by which premium payments will be waived off in case of parent’s demise. Policy benefits will be provided as usually to the child.

Premiums paid will be exempted under 80C, which can save you Rs.45,000 per year and the returns are exempted under 10(10(D)) which can save you minimum Rs. 2,50,000 at the maturity period.

Children’s plans will not only provide financial cushion for higher education, but also will help in tax savings at the same time. Returns from LIC policies are better than bank deposits taking tax into consideration .LIC products will have insurance as default, which will secure families from financial instabilities.

Insurance for Children

“Better late than never” suits perfectly for policies on children. Child policies have an entry age limit of 13 – 14 yrs based on company or policy. Child policies are targeted at providing funds for the higher education or marriage needs of the child. Life Insurance Corporation of India was the only insurance company till the year 2000, before the Indian government had opened insurance market for private players. This move has revolutionized the insurance industry, leading to the creation of customized child insurance products based on customer specific needs. FDI has opened the gates for innovation in insurance products which were successful in western countries. Most of the western world’s players had entered the local Indian market in collaboration with local players. These players introduced new products in the Indian insurance market.

                LIC had a standard format of paying premium for their products in tranches for 15+ years and the policy holder used to receive the lump sum maturity amount only at the time of policy maturity. These products have only life cover as their default feature. This structure has changed with the entry of private players.

                LIC has 2 products in its portfolio customized for child’s future needs. Jeevan Tarun and New Children Money Back plan are children specific plans with different premium payment periods and maturity periods. Jeevan Tarun has four different sub-options with in it and has a 5 year reduced premium payment term. In New Children Money Back policy, premium needs to be paid till the maturity period. Purchasing child policies at an earlier stage would help in accumulating a larger chunk of money with minimal spend from your budget every month.

                Child insurance has a value added, unique feature called the Premium waiver Benefit rider. This rider would be optional and can be opted by paying some additional premium in some of the products and it would be available by default in some of the policies. This rider would waive off the future premiums to be paid for the policy, in case the proposer (parent) expires before the policy gets matured. This would not be applicable to the other parent if the other parent is not the proposer.

                LIC’s Jeevan Tarun and New Children money back policy will provide financial security to children in case of parent’s death. The financial benefits will be provided when the children complete their 18th age. These benefits will be provided at regular intervals till they complete 25 years, so that their higher education and marriage needs are fulfilled. Considering the merits of child policies, these have an edge over the bank deposits, as these child insurance products provide almost equal returns compared to other investments and also provide secured career to the child even if the parent expires.

Five financial milestones in your children's life


Kids are expensive. But the good news is, you can budget for much of these initial cost if you plan properly. Here are five milestones in your kids’ life that you need to be prepared for. 

1.       SCHOOL

You’ve heard several jokes about this, but we cannot insist on the impact your child’s schooling will cost you, right from kindergarten to high school.

It’s not just the school fee that’s gonna take a toll on your wealth – it’s all the supplies like books, stationery and bags.

And so if you ever hear that you should start saving and querying for KG admissions while your wife is only pregnant, know that it’s not just a joke, but a deep practical crisis!

2.       POCKET MONEY PHASE

The biggest myth is that your child asks for pocket money only when they’re teens.

Wrong!!

It’s found that your child might expect you to give them some kind of allowance or the other right from the age of 10. But don’t cringe, and don’t be stingy.

Giving your child pocket money can teach him about handling money, but you need to be consistent with it and also monitor what they do with all the cash.

3.       COLLEGE

Although every parent likes to believe that their kid is a genius who will get into IITs and IIMs, it is hard truth that college will cost money. Tuition fee, hostel fee and what not!

Beginning to save for your child’s college when they’re still in diapers might sound silly, but given the cost of education, it really is never too early.  

4.       FIRST VEHICLE

Yes, it might have seemed like only yesterday that your little princess was wandering around the neighbourhood in her little bicycle with trainer wheels, but all of a sudden she’s now 17, and wants her own car or scooty!

Apart from the vehicle itself, getting the first wheels for your kid is a financial milestone cuz it’s going to be quite expensive, but there are the ongoing costs including gas, insurance, maintenance and the seemingly inevitable accident.

5.       FIRST JOB

When your child gets their first job, it’s more than just a source of income for them. Remember that it’s also a good way to learn how to work responsibly, how to get along with a variety of people and how to manage newfound wealth. 

If you help your children with a budget and savings plan, it might be a way to earn money that can get into a healthy financial plan for their future.

READ ALSO:  FINANCIAL MANAGEMENT FOR TEENS

READ ALSO: MAKING YOUR CHILDREN FINANCIALLY INTELLIGENT

Written By: BALAKARTHIGA.M

Child birth and Expenses


We’ve already talked about how much child rearing costs.

But what about childbirth? Are you prepared to face all the financial pressure that having a baby might put on you and your spouse? 

We’ve pooled in a few of the expenses that you must expect when you’re expecting.

PRE BIRTH 

When you discover that you’re going to have a baby – sure, you’ll be elated and happy. But as your bump grows, you’ll find that the medical bills that keep rolling in would grow too.

The prenatal hospital bill can vary quite radically – we can’t predict the exact figure as it might differ from person to person and region wise. The good news here is that if you’ve taken a health insurance that has maternity cover included, then you’re good to go. 

BIRTH

The hospital bills will take a toll on your pocket, the minute you get into labour to the time you have your baby – it is all being billed!

And if you are in for a C-section, consider the amount doubled. Make sure if you are planning on taking an insurance, it covers you properly. It is essential that you thoroughly understand your insurance carrier’s maternity coverage policy. 

And side note, don't stay too long at the hospital!

POST BIRTH

You’ll now be purchasing things like a changing table, a crib, clothing and those first few batches of diapers – and the odds.

The baby industry is perhaps one of the fastest growing, and with so many options and the fact that every decision you make might affect your child can be overwhelming as a new parent.

Well, don’t forget – if you carefully think through it and budget your purchases, all of your anxiety will be managed.

When you choose a hospital or a service, make sure that you stay clear headed in the process. Pregnancy and childbirth can be get quite sentimental, and blind your emotions. If you are not able to do it yourself, get the help of someone who can. Get guidance and advice from friends who’ve been through it, and learn from their experiences. Shop around, weigh all your alternatives and negotiate.

READ ALSO:  TAKING CHILD INSURANCES SERIOUSLY

READ ALSO: MAKING YOUR CHILDREN FINANCIALLY INTELLIGENT

 

Written By: BALAKARTHIGA.M

Take child insurance more seriously


The cost of child rearing is rising exponentially every year. If you chart out the expenses, you will be surprised at how expensive children are. From food, to education to their leisure activities and clothing. As much as it is true that as a parent you have always been careful and concerned about giving your child only the best –it is also true that raising a child can put strain on family finances.

New parents with a very young family need to be aware of all the benefits that a life insurance brings to you.

CASH VALUE

The policy's cash value can be accessed for your child in the future for such things as college tuition or the down payment on a home – the child receives amounts on a regular period, this way we can ensure that the needs of the children are taken care of.

Child insurance plan offers a lump-sum payment on the death of the parent, but the policy does not end. All future premiums are waived and the insurance company continues investing this money on behalf of the parent.

FUTURE VALUE

God forbid, your child develops a disability or chronic illness later in life, making it hard if not impossible to get life insurance when it's needed the most –is probably the biggest fright you’ll face as a parent. Buying permanent life insurance for your child can help ensure the availability of coverage later in life.

Buying the insurance when the child is younger can cut the cost significantly.

BEING PREPARED

Another of the most important feature that a child insurance gives is that it helps parents have a strict format into saving for their children’s future. A child insurance plan enforces a sense of discipline. Just the fact that you need to save a small amount every year for your son or daughter’s wellbeing can be quite motivating. 

In today’s economy it is not important to be financially sufficient for the present – it is also important that you are prepared for the future.

WRITTEN BY: BALAKARTHIGA.M