Should you invest in ULIPs to save for your child's future?

ULIPs can help parents accumulate funds to secure their child’s future. These policies also provide insurance to ensure the financial protection of the kid.

In this article, we will explain why are ULIPs a good option to save for your child’s future.

Being a parent is one of the most important responsibilities. Hence, every parent wants to accumulate sufficient funds to ensure their child can fulfil their goals. Furthermore, as education is getting expensive every year, accumulating funds for it can be hard. However, an investment option for child can help parents save money for their kid’s future goals. One such plan is a ULIP.

What is a ULIP?

Unit linked insurance plans (ULIP) are a unique product as they provide benefits of insurance and investment. When an insured person purchases a ULIP, his/her premiums are allocated towards two different objectives.

One part of the premium is used for life cover. The insurer offers life cover for a specific duration. The other part of the premium is used to invest in instruments like equity and debt funds. The policyholder can choose the funds based on his/her risk appetite, investment goals, etc.

In case the policyholder dies during the tenure, the insurer can pay the sum assured to his/her family. Furthermore, the insured person can receive maturity benefits if he/she survives the term. It is recommended to buy ULIPs to meet long-term goals.

Why Parents Should Invest in ULIPs for their Child

Investing in a ULIP can help parents secure their child’s future. Let’s take a look at some of the benefits of ULIPs-

  • It Can Provide Financial Protection

One of the benefits of ULIPs is that they provide life cover. If the parent passes away during the tenure of the plan, then the insurer can offer the nominee with the sum assured. This sum assured can be used by the child to pay for education, meet his/her life goals, etc. Hence, a ULIP can ensure the financial security of the policyholder’s child.

  • It Can Help Pay for Child’s Education Costs

Every parent wants to ensure their child gets the education they want. However, education costs are rising significantly, and parents might find it difficult to pay for it. But a ULIP can help parents accumulate funds. As the policyholders’ money is invested in different instruments, their funds might increase substantially. Therefore, by investing for a long period, a policyholder can accumulate sufficient savings to pay for their child’s education.

  • It Can Help in Avoiding Debt

If a parent doesn’t invest in an education plan, then he/she might have to look for other ways like taking a loan. However, a parent can avoid taking a loan if he/she invests in a ULIP.

Choose ULIPs to Accumulate Funds

While ULIPs offer financial protection to the child in case the parent dies untimely, they can also help in accumulating funds for the kid’s future. Hence, it is recommended that parents purchase ULIPs to enable their children to achieve their goals.