What Are The Investment And Insurance Options For Parents?

Being a parent of a newborn child adds up to the responsibilities both general as well as financial. Even before the child is born, parents start managing savings from all directions in the form of fixed assets, mutual funds, general insurance, and health benefits from employers. However, expenses rise immediately without notice and tackling this instant increase of expenses are a mammoth task if there is no strategic planning devised beforehand.

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7.7 Crore

Registered Consumer

Insurance Partners

4.2 Crore

Policies Sold

Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

As parents of a newborn child are usually thrilled to have a new addition to their family, they end up purchasing new items for the child’s requirements whose shelf life would not be more than few days or weeks as children grow up very fast. These small elements add up to a volume of expenses unexpectedly and are difficult to keep a track as well. Spending increase and savings reduce eventually, leading to breaking of other savings in the form of bonds to meet the day-to-day requirements.

Therefore, to start with, parents must ensure that they are covered well in terms of life insurance so that in case of an emergency, the current expenses are being met smoothly and additional expenses are well covered.

Here are 7 important child investment options that a new parent can consider:

Add your child as a nominee to the financial products that one owns. It also includes fixed assets where your baby can be a nominee and can grow up and benefit in the future.
Add critical illness cover in the insurance plan and increase current health insurance premium.
Additional expenses like school fees, books, stationery, and other requirements can be well covered by choosing options like savings in the form of recurring deposits, initiating a debt fund like an SIP.
Buy a child plan to secure their future in the long term.
Invest in term insurance and ensure that your family is looked after under all sorts of mishaps.
One more option that parents must ensure to do is to open up a savings account in the baby’s name in their bank where one can put all the gift money given by friends and other family members into savings for the child’s future use. This will enable parents to withdraw any expense of their child from his or her savings account and meet other future expenses that come up during the child’s growing age.
Public Provident Funds (PPFs) and Provident Funds (PFs) are another source of savings that can be opened up in the child’s name as long-term investment plans. This will benefit the parents as well as the baby as working parents can save on taxes (through rebates given by the government) and the baby can use these funds in his or her higher education and/or as required in future. Equity shares, equity funds, and mutual funds are also other investment options that can be considered while saving for a newborn child’s future. Also, beware of the various gimmicks of advisers who sell plans of complex nature with low return policies for your child.

It is highly recommended to read the policy terms and conditions very carefully in your offer document before finalizing on anything as you may want to look into your payment methods, options, any penalties in case of slippage of payments, recurring interests, and benefits with market rate policies of your saving plans. It will ensure a proper strategic planning of your source of funds, payments and their return on investments (ROIs) for your child’s future.

The joy of parenthood also comes with a bag of responsibilities towards the newborn member of the family. The commencement of each phase of the baby’s growth increases these responsibilities by multiple times. Therefore, new parents must do their part by refraining from reckless spending, making a list of the financial responsibilities and goals and making proper investments and savings accordingly.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-12-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).