When you are about to buy unit linked insurance plans (Ulips) from life insurance companies for your child’s higher education and marriage, don’t forget to take these 4 steps.

Account for inflation

A higher education course costing Rs 10 lakh today will cost Rs 24 lakh in 15 years, if costs go up 6% every year. You need to factor in inflation when arriving at your savings target.

Opt for a term depending on when you need money

Figure out when you will need the money for your child and choose the Ulip term accordingly. If your daughter is five and you expect her marriage to be at age 25, opt for a 20-year term

Calculate the regular investment amount

To save Rs 25 lakh in 15 years, you need to invest about Rs 6,275 per month, assuming 8% annual growth for your money. You can with a smaller amount and increase it over time through top-up feature as your pay increases.

Choose the right benefit payout option

Choose between lump sums and instalments for the payout of benefits depending on your need. For instance, a lump sum might work for your child’s wedding but instalments might work better for higher education.

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