In ULIP plans, the investment risk in the investment portfolio is borne by the policyholder.

Investing in a child insurance plan might not seem like a good idea because a child does not have financial value (there is no insurable interest) nor are there any liabilities or dependents. However, there is a misconception that the child’s life is to be insured.

The truth is that in a child plan, the parent is the life assured while the child is the nominee! A child plan is a popular financial vehicle to build a corpus for your child. It takes into account the various milestones in your child’s future for which a substantial amount of money might be needed.

As a parent, you want to shield your child from any difficulty and plan for a rainy day. Along with your responsibility, educating your child about basic money matters can help them a lot.

In fact, teaching your kid the basics of finance is the best thing you can do for their future. Introduce them to the power of compounding. Encourage them to start saving early in life, as it gives more time for the money to grow.

In the pursuit of professional excellence, higher education from a reputed foreign university can be highly beneficial. It can provide your child with great academic exposure and help build a competitive advantage. However, foreign education is expensive!

By the time your child knocks on the university doors, costs would have shot up several times. To provide for this future expense, you must start early and plan well. Here are some tips:

Mumbai based Ashok Dave (35) and his wife Sayali (33) are a working couple. They are savings for various life goals including higher education for their 3 year old daughter.

However, they are in a fix. Higher education is expensive and the costs are rising at 10 to 12 per cent a year. Foreign education can cost much more. For example, a two-year MBA program in India costs roughly Rs. 10 lakh a year right now. In 17 years, the cost of this course would be Rs. 23 lakhs (at a 5% inflation). While they are mindful about this fact, and are investing and saving regularly, they know that their plan will not hold well if either of the parent is no more.

This is where a child education plan is useful. Since it is an insurance plus investment plan it helps you secure your child’s education, even if you are no longer there. It enables parents to save and invest regularly and build a corpus that can support their child during his/ her higher education.

The good part about a child insurance plan, compared to a term insurance plan, is that it offers a lump-sum payment on the death of the policyholder, but the policy does not end. Like other money-back insurance plans, Child plans are of two types:

1.A Non - Participating Unit Linked Insurance Plan (those that invest in the equity/ debt market)

2.A Savings - Non Linked Participating Insurance Plan (those that do not invest in the market)

The aim of saving now is to improve your lifestyle in the future, including multiple financial goals. The complexity of imagining and investing in multiple goals forces many investors to only give up on planning and only invest in safe instruments where they can be sure of growth. However, this growth may be too little help towards your long-term goals, like kid's education. Education goals for young children are quite complicated to plan because of the following:

1. You may not know their area of interest and future career choices.

2. The cost of building a career in the future may change a lot.

The only option you have is to prepare for the best possible path. Thus, your investment choices change. The investment options you must use should:

1. Offer better growth for an extended period of investment.

2. Should offer automatic balancing or switch options.

3. Should safeguard the goal if anything happens to you.

Fortunately, Axis Max Life's Child Insurance plan offers all these features. The only concern is how you can efficiently use the plan to achieve your child's goal. Here is a simple step by step process you can follow to prepare your money to meet your child's ambitions: