Khota Paisa

Update : Which Child Plan? A Comparison of ULIP based Child Plans

Posted in Child Insurance by khotapaisa on July 17, 2009

Last time I did a comparative study of ULIP based child plan I considered only three plans. I got a lot of response asking me to consider other plans in market as well. So, I started a comparative study of all child plans I could come across. Well, a lot of things have changed since my last analysis.
Here is the result of my analysis. The calculations are based on annual premium of 25000/- for 18 years. For plan which don’t have 18 years policy period, the fund value is adjusted to 18 years.

Though the three child plans analysed in the last post remain competitive, we have a new entry in top three.

child plan new

Note :
This analysis only shows the cost of the ULIP plan. While selecting a ULIP, you should also consider various other aspects like insurance plan features, fund performance etc.

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How To Plan Your Child’s Education?

Posted in Child Insurance by khotapaisa on June 6, 2009

When I was doing my child’s education planning, I did a lot of reading only to realise that there was no clearcut answer. After a lot of calculations & analysis, I settled for a combo of Child ULIP and PPF. Why? Well let me explain it to you.

The idea behind child education planning is that we look for ways to invest money which cover all the following three requirements.

– Insurance (make sure child gets money no matter what)                                        

– Return (ensure that the investment grows well)                                                          

– Minimal risk (Take minimum risk in investment)                                          

Clearly, no single investment avenue can provide all the three. So you can  choose three instruments and combine them to get your child education portfolio. The first requirement will be met by buying a child insurance plan. The second one can be met by investing in equity or preferably mutual fund(s) while the third one can be met by investing money in a debt instrument. Since child education is requires long term investment planning, what better than the good old PPF.  To make it simpler you can combine the first two into a ULIP based child plan. Now the portfolio consists of –

ULIP based child education plan
– PPF

Since both the investments are preferred for a minimum duration of 10 years(ppf for 16 years), this portfolio is recommended to people with kids younger than ~8 years.
As an example, a monthly investment of Rs.7500 (5000 in ULIP & 2500 in PPF) should give you a corpus of about 35Lacs after 16 years.

Which Child Plan? A Comparison of ULIP based Child Plans

Posted in Child Insurance by khotapaisa on May 26, 2009

Child ULIP is an attractive investment option for child education planning. Here I am posting a comparative analysis of few selected child ULIP plan available in market. After going through a big list of child ULIP plans available in market, I selected the following three for comparative analysis.
– SBI Child ULIP Plan
– ICICI Smart Kid
– HDFC Young Star Plus
The reason for selecting these three is comparatively low overall ULIP charges. I am, though, not suggesting that there are no better plans available in market.
The best way to compare ULIP is to compare the maturity fund value at 6% return. On this criteria, SBI Child ULIP stands taller than any other plan. Though, the illustration given on SBI website seems to be incorrect. Another comparison criteria for ULIPs is the fund performance. On this criteria, both HDFC and ICICI plans score good. I couldnot get any info on SBI ULIP’s fund performance.
The indicative fund value for these plans stands as –
Premium – 50,000/- per annum
Return – 10%
SBI Child ULIP Plan : 16,00,000/-
HDFC Young Star Plus : 15,60,000/-
ICICI Smart Kid : 15,90,000/-
Overall, ICICI smart Kid is my choice.

Note:
 – All the calculation is based on information given on respective company’s
website.
– The calculations don’t take mortality charges into account.

P.S:
I have an updated comparative analysis posted here.