Child Insurance — ULIP vs Traditional Plans
Child insurance products bundle protection + savings/investment. ULIPs invest in market-linked funds with a 5-year lock-in; traditional plans focus on guaranteed benefits with lower return potential.
They can include a waiver of premium on parent’s demise, keeping the child’s plan funded.
Compare total costs, flexibility, and expected returns versus a Term Insurance + MF do-it-yourself route.
Choose only if features justify costs and align with your discipline and risk tolerance.
Waiver benefitLock-inCosts matter
Ways to Invest
- ULIP (Child Plan): Market-linked; choose equity/debt funds; 5-year lock-in; evaluate allocation/admin/mortality charges.
- Traditional (Endowment/Money-back) Insurance plans.(example LIC): Guaranteed-oriented; bonuses depend on insurer performance; lower volatility but typically lower returns.
- DIY Alternative: High-cover term insurance + SIPs in mutual funds; usually lower cost and higher flexibility.
What to Check
- All charges (allocation, policy admin, fund management, mortality, surrender).
- Lock-in, surrender penalties, partial withdrawal rules.
- Fund choices (for ULIP) and historical consistency (for traditional).
- Claim settlement track record and policy servicing quality.
Education only; not investment advice. Please verify current rules, interest rates, and taxation before investing.