Do you worry about fulfilling your son’s dream of becoming a doctor? Or wonder if you’ll be able to afford a perfect wedding for your little girl when she grows into a ung lady? These are surely common parental anxieties, but not at all misplaced. In the next 20 years inflationary pressures could send the cost of putting your child through medical college to a whopping Rs 24 lakh, up from about Rs 10 lakh today. A dream wedding for your daughter could also set you back by a pretty packet, assuming a moderate rate of inflation.

Clearly, providing for your children’s future requires disciplined saving and careful investment. Of the variety of financial products available, children’s insurance plans could well offer ideal solutions.

Advantages

Children's insurance plans, which life-policies are taken by parents with children as beneficiaries, offer a number of advantages:

Secure source of funds: The plans help in building a secure source of funds for a child’s long term needs and offer protection against financial risks.

High maturity benefits: Maturity benefits under children’s policies are higher than those from other investment avenues. Benefits may include additional bonuses or loyalty units given by insurance companies.

Customized solutions: The maturity period and investment value in a children’s plan can be chosen based on the specific needs of a child. The policies may include provisions for additional benefit riders, not available under other types of insurance schemes. For example with the Income Benefit rider, you can ensure a monthly income for your child till the maturity of the policy incase you are not around.

Tax benefits: Premiums paid under children’s insurance plans are eligible for tax benefits under Section 80 C of the Income Tax Act, 1961.

Easy Liquidity: Most plans offer easy liquidity through partial withdrawals.

A carefully chosen children’s insurance policy will secure your children’s dreams and their future.

Plan for your child's education

Plan for your child's wedding

What is it that you would like to do once you have retired? Take a world tour with your spouse, relax at a farmhouse with your grandchildren, work with an NGO to make a difference? Most of us have such visions of our retirement years. Unfortunately, not many of us have done any financial planning to support this vision. Today, 5 out of 6 people who are about to retire in the next ten years are not covered by any form of pension plans.

With rising inflation, medical costs, break-up of joint family systems and lack of social security system, it has become increasingly important for each individual to plan for his/her retirement well in advance. There is a ‘cost of delay’ in terms of increase in initial premiums required even if the pension planning is delayed by 5 years. For example, a 35-year-old man with a target retirement fund of Rs 50 lakh, wishing to retire at 60 years, has to start investing Rs 60,408 per annum. However, if he delays this by five years and starts investing at the age of 40, he will have to pay Rs 98,463 per annum for the same accumulated amount of Rs 50 lakh (increase of 63 per cent).

*Calculated at the growth rate of 10%

**Increase of 63% in annual premium if delayed by 5 years

There are four simple mantras that one needs to follow for retirement planning –

1) Start early – A delay of even 5 years can cost you Rs 38,055#

2) Plan adequately keeping in mind that inflation will devalue your savings. For example, the value Rs 100 today will only remain Rs 38 after twenty years, (assuming an annual inflation of 5%)

3) Consult a financial planner or you could log onto http://www.six-steps.in/

4) Regularly track and review your retirement plan and don’t delve into your retirement savings unless it is an emergency

Most insurance companies offer pension plans to help one plan for retirement years. Besides regular income on retirement, one can also avail of tax benefits up to Rs 1 lakh under section 80C and Section 10 (10A) (3) of the Income Tax Act, 1961.

Plan your retirement

Income tax, insurance and you

Watching taxes drain away your hard earned income is quite a painful sight. With a limited ability to control necessary expenditure, efficient tax planning should surely be a priority on your ‘to-do’ list. Insurance plays an important role in helping you reduce your tax burden.

Below is an indicator of how much tax you are liable to pay, depending upon your age, gender and income slab.

*If the taxable income exceeds Rs 10 lakh, a further surcharge of 10 per cent is applicable on the taxable income. An education cess of 2 per cent and higher education cess of 1 per cent is also payable on taxable income (including surcharge if any).

Efficient tax planning lets you take more of your hard earned income home. Let’s see how.

Consider Mr. Gupta is a 25 year old MNC executive with an annual salary of Rs 4 lakh. He invests Rs 60,000 in a 3-year fixed deposit and Rs 40,000 in equities. His tax liability will be

Had Mr. Gupta opted for an insurance policy instead, he would have not only protected himself and his family against financial contingencies, but would have also saved on taxes. Here’s how.

Mr. Gupta will end up saving Rs 10,300 by opting for an insurance policy. Moreover, had he invested in a unit linked plan, he could have still earned market linked returns.

Clearly, a few wise investment decisions can ensure that you get the true worth of your money.

Use our Tax calculator