Buying insurance policies!

Insurance
These are life insurance policies that you take in your name, but the child is the beneficiary. If the parent dies within the policy period, the child will get the 'sum assured' (amount due at the end of the policy); the remaining premiums get waived and the sum assured is paid a second time at the end of the policy term. The premium starts from Rs 6,000 onwards annually. You can opt to pay it yearly, half-yearly or even monthly. There's no risk of losing money. The premium amount and the money you get on maturity are non-taxable.

Choosing an insurance policy

• Take it in your name so that it can benefit your child in case something happens to you.
• You should have the flexibility to withdraw part of the sum assured. You should be able to change your plan.
• There should be add-on benefits. LIC and ICICI Prudential offer accidental death and disability benefit, while MetLife's MetBhavishya also gives critical illness benefit up to 10 illnesses.

You can opt for two schemes:
Bonusbased plans fetch lower rates of return (8-10 percent) but you're sure of the amount you will receive on maturity;

Unit-linked plans are riskier since the money is invested in the stock market. Investment advisers recommend these for the long term since emerging economies such as India will keep growing. These schemes give a return of 15-20 percent. Or try balanced unit-linked investments where your money is put into equity (high-risk stock market) and the debt market (low-risk investments such as bonds and government securities). A 60:40 ratio is ideal.

Get your policy through an investment consultant or CA (chartered accountant) who can track the stock market and fetch you better returns.

Companies that offer childcare insurance:
ICICI Prudential, MetLife, Life Insurance Corporation (LIC) of India, HDFC Standard Life, Tata AIG