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ULIPs Don’t Do Justice

In trying to balance investments with insurance, a ULIP does justice to neither of the two…

I have a one-year old son for whom I am planning to invest Rs 60,000 every year for the next 17 years. I have been advised to go for Birla Sun Life Classic Child plan Magnifier fund. Is it a good plan to invest in or are there better options available?
- Abhijit Kumar

BSLI Classic Child Plan is a unit-linked insurance plan which combines investments and insurance. In the process of balancing the two, it does justice to neither, which is why we feel insurance and investments should be separate. With additional financial responsibility, you should enhance your life insurance cover through a term insurance and consider investing in mutual funds to build a corpus for your son’s future financial needs. Considering you have time on your hand to build the corpus for your son’s future, we suggest you invest equally in a well diversified portfolio of five funds BNP Paribas Bond Regular, Fidelity Equity, HDFC Top 200, ICICI Prudential Dynamic and Reliance Equity Opportunities that collectively has 70 per cent equity allocation and is made of highly rated funds with proven track record and history. Invest regularly in these funds and assess its progress towards your financial goal while being adequately insured.

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