Planning For Your Child? Start With Insurance

Financial planning for your child entails many steps. We outline the most important three.

 

Your child is the most important person in your life. Ever since they were born, they have been the focus of your universe. Their happiness and security are most important to you. To these ends, you decide to create a financial plan for your child.

But what should this plan comprise? We often envision having a lot of money at our disposal, which we can spend exclusively for our children. How can this wealth be created, and how long can it take to create it? More to the point, what are the steps in doing so?

We outline three important steps to take on board when you create a financial roadmap for your child’s future needs:

  1. Make a will: This is often the first – and most vital – step. The future is uncertain and life changes in the blink of an eye. As a parent, it is your responsibility to ensure that your child is brought up properly and that their education and upkeep is taken care of, even in your absence. Your will must clearly specify how your estate and assets will be sold to care for your child. A good lawyer can help you draw up the terms of the will specifying future child care. The will must clearly spell out terms of guardianship and how the sale of property and assets will be executed so as to benefit the child. It can also spell out how much money is to be spent on education and daily living expenses, and where the child will reside in the parents’ absence. Do ensure that you get two impartial witnesses who you can trust, and who will testify in court about the veracity of the will.
  1. Invest in a child plan: The best way to safeguard your child’s future education is by taking a child plan. Child plans in India are immensely popular because they protect the child’s future even in the absence of the parent. They provide a large corpus of money on maturity, which the child can use for higher education, or for any other personal purpose. The child plan also takes away some of the pressure of providing a quality education – educational costs are already prohibitive and climbing steadily every year.The best child plans in India offer valuable safeguards to ensure continuity of education and future prospects for your child, even in your absence.
  1. Save money for your child every month: Apart from investing in a child plan, it helps to have a ready fund of money that can be accessed at any time. It can be a simple savings bank account that you open in your child’s name, and in which you deposit savings every month. When it grows to a sufficiently large size, you can invest the money in short term deposits or a suitable long term investment such as PPF. The investment can accrue to a large sum of money for your child’s future use. You can leave instructions about the bank’s operations to be handed over to your child when they turn 18 years old, and if you are not there at the time to change your child’s status from minor to major. Your lawyer can also create a trust fund in your child’s name to be executed when they are 21 years old.





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