Children are indeed a gift from god. Right from the time of their birth – and on most occasions, even before birth – parents have great aspirations for their future. Every parent wants to ensure their child receives the best education, gets the best medical treatments, and leads a happy and healthy life. Parents work tirelessly to care for and nurture their children in light of these excellent possibilities.
However – as is with most good things – these prospects have a substantial cost attached to them. Therefore, having a premeditated game plan becomes imperative when you are considering how to save tax while securing your child’s financial future. The money you invest in your child can serve the dual benefit of not only relieving you from the stress of colossal expenses in the future but also being able to save a reasonable amount on taxes.
While being a parent is a rewarding experience, it is also undeniably challenging and expensive. Bearing the entire responsibility for a child at a time when the costs of education seem to soar can become quite a stressor. To combat this stress, it is important to invest in tax-saving instruments that also secure the future of your child. Some other reasons why saving for your child’s financial future is important are:
Considering the aforementioned, investing in your child’s future is advocated for their financial wellbeing, and the sooner you intend to invest, the more rewarding it turns out to be. The younger your child is, the more they benefit from your investment and the more cost-efficient it is for you.
Section 80C of the Income Tax Act 1961, allows for the most efficient ways to save up on taxes by permitting a reduction in taxable income by making investments. As of today, when you opt for tax saving investments under 80C, you are eligible for a deduction of up to ₹1.5 Lakh per annum on suitable investments and specified expenses. We have enlisted tax-saving instruments under 80C to consider for your child’s bright future:
While equity investments have several benefits, keeping an eye out for market fluctuations is recommended, especially when you are closer to achieving your financial goals. When your target draws near, you might prefer to shift your returns from equity to debt to be on the safer side.
Acknowledging the changing financial needs, Tata AIA Life Insurance has designed various plans combining insurance with personalised needs. You can choose from term insurance plans, wealth generation solutions as well as savings-cum-insurance solutions.
Savings-based life insurance plans are one of the best financial instruments to save for your child's future while also ensuring life cover and tax benefits # . You can choose from guaranteed * returns or income plans, wherein you get a regular guaranteed * payout to take care of major expenses like higher education and your child's marriage.
A life insurance savings plan allows you to set aside money regularly to accumulate savings over time. Savings plans can be a good way to build a nest egg for your child's future needs, such as higher education, marriage, or buying a home. Depending on the specific plan, savings plans may offer guaranteed * returns, tax # benefits, and flexibility regarding contribution amounts and payment frequency.
Term plans can provide life insurance coverage to your child and secure their future with a payout benefit when you are not around. Term plans can help ensure that your child is financially protected in the event of your untimely death by providing a lump sum payout to your family if you pass away during the policy term. Term plans typically offer more coverage amounts than savings plans or ULIPs, and can be a good way to ensure that your child's future needs are taken care of in the event of your demise.
Lastly, a ULIP investment can be a good way to grow your funds over the long term while also protecting your child's future needs. You can choose from various funds under your policy that fit your risk profile and enable you to grow your wealth for your child's future goals. However, it's important to remember that ULIPs are subject to market risks and may not be suitable for everyone.
Your specific plan will depend on your financial goals, risk tolerance, and other factors.
To conclude before you narrow down on an investment plan to secure your child’s future, certain factors need to be taken into consideration, such as:
L&C/Advt/2023/Mar/0721