Insurance Blog

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.