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How Insurance Can Guaranty Your Child’s Future
By Sunday Ojeme
Experts in personal finance believe that insurance is a dependable route for
parents to plan their children’s future as the money back endowment plans, for
instance, tell the parent roughly how much he can expect and at what age the
money will be due.
Child insurance offers a lot of flexibility, which allows parents to select the
one that suits their needs the most.
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The money back plans are ideal for parents planning for life stage events like
child’s education, marriage or seed capital for a business opportunity. Ideally,
parents would have to set aside money separately for each event and plan their
finances accordingly. A money back insurance plan allows them to combine their
planning for all these events in a single avenue.
Money back insurance plans are essentially variants of endowment plans, which
give the insured a lump sum payment at maturity. While endowment plans also
serve the purpose of helping parents save for the child’s future, they are not
as flexible as money back plans.
Experts say, among a number of things, parents planning their children’s future
should have a distinct plan in place for each objective with the process
commencing by defining each objective that is to be accomplished.
Such objective can include education, marriage or accumulated seed capital for a
business activity that the child may undertake.
The next step should be to have a distinct plan in place for each objective and
to allocate resources accordingly. Given that the various objectives are likely
to fructify at distinct periods of time, it makes sense to have different plans
working for each objective.
If the child is five years old at present, his education portfolio might have a
10-year time frame, while the marriage portfolio could well have a 20-year time
frame.
Engaging the services of an expert and qualified financial planner helps in
drawing the investment plans, monitor the same and play a vital role in ensuring
that one achieves the stated objectives.
It is also advisable not to associate with advisors whose scope of activity is
restricted to delivering forms and collecting cheques.
It pays to be actively involved in the entire financial planning activity.
Regularly scrutinise the portfolios that your financial planner has helped you
build and find out if they are shaping up as expected.
Similarly, don’t hesitate to question the financial planner’s recommendations
and enquire as to why a given avenue should be chosen over another. Your
participation will not only ensure that you are unambiguously aware of how your
portfolio is progressing; it will also keep the financial planner on his toes.
- Culled From Punch
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