I have a 10-month-old daughter and I would like to take an insurance to meet the expenditures when she grows up. Can you please suggest a good insurance plan?
- Prathyusha Atluri
Life insurance is a financial instrument which is used to protect your financial dependents. In most of the child insurance policies, the life of the parent is insured with the child as the beneficiary. These are insurance plans that combine investment and insurance and are not ideal to build an investment corpus for your daughter to take care of her financial needs when she grows up, such as education or marriage. A better way out for you will be to take a term insurance plan for a sum that you think will be sufficient to meet your daughter's financial needs later in life and start investing regularly in a diversified equity mutual fund depending on your risk tolerance based on an appropriate asset allocation (mix of equity and fixed return instruments) from the Fund Select feature on our website. For instance, Rs 1,000 invested each month for the next 18 years earning an annualised 12 per cent return will accumulate Rs 7.65 lakh, to demonstrate the power of equity and systematic investing over such a long time.