We are expecting our second child in December. I had taken an LIC Marriage Endowment policy for my first daughter and started a couple of SIPs for her, I do not wish to take a traditional policy for my next child. I feel if I put that amount in a SIP-STP combination and monitor it closely, I can get a much higher return in 15 year horizon. However, the only thing I am worried about is the life insurance for my new born. Is there a product (something like a Term insurance) that can be bought for a child?
- Vijay Gupta
We don't believe children need insurance cover. Insurance is meant to compensate the loss of income. Since children don't earn, you don't suffer any loss of income. Insurance can't compensate the emotional loss of losing children.
If you want to secure your daughter's life, you must buy an adequate life cover with a term insurance plan. Term insurance plans allow you to buy a very large life insurance cover by paying a small premium. Make sure that the life insurance cover is large enough to take care of the financial needs of your family when you are not around. The proceeds from the policy should be enough to take care of the financial needs of the family.
If you want to fund your child's higher education or marriage, choose one or two diversified equity schemes and start investing regularly in them.
Here is the list of our best diversified equity schemes.
This article was originally published on November 06, 2015.
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