Here's How a Child Education Plan Can Help You Secure a Lucrative Future for Your Childby Radha Lakshmi Blogger
Here's How a Child Education Plan Can Help You Secure a Lucrative Future for Your Child
The moment you hold your child for the first time is something a parent can never forget. In this stage, a person realizes that they are no longer living just for themselves but also responsible for another life. So, you try your best to provide them with the best resources. There is no other significant gift you can give your children other than a secure future. The key to that future is good education.
Although education is a major priority for parents, the education costs come with several concerns. You will need to set aside a large portion of your savings to provide the best education to your child. That’s why you should start investing in suitable insurance plans.
A child insurance plan not only safeguards your child’s future but also takes care of your finances. And in the sad case of mortality, you will be leaving a lump sum amount of money for your child’s education and other needs. Read on, to know every detail about a child plan for education and how it will secure your child’s future.
What is Child Education Plan?
A child education plan is a type of insurance that helps you to protect your savings while also securing the future of your child. You can invest your savings and use them subsequently for your child’s higher education. You can invest in these plans either in parts or once at all as premium payments. And you have to pay insurance plan premiums for a specific duration as per the plan you choose. You can also pay it once, monthly, half-yearly, yearly, or multi-yearly. And when the policy term ends, you receive a lump-sum amount which is also called Maturity Benefit.
In case of any tragic event with the policyholder or payer during the policy term, the life cover amount goes to the nominee. So, one can even use your existing policy as a child plan, by keeping their children as the nominee. Also, the remaining premium will be waivered-off by the insurance company to avoid financial burdens on the child and bereaved family.
Why Child Education Plan Is Important?
All parents want to provide the best of everything to their children. They always make sure that all their child’s needs meet with zero compromises. But considering the ever-rising inflation rates and education expenses can take a toll on the family budget. This is where a child plan for education comes into the picture. If you invest in a child education plan, you will have enough funds to take care of future expenses related to your children. This is because a child education plan offers life coverage insurance along with the maturity benefits to make sure your child’s future is secure.
One constant worry is also about what if something unfortunate happens to you and you are no longer around to support the needs of your child. In these cases, the policy returns are sufficient to take care of your family. So, if you want to rest assured during and after your life, a child plan for education is the way to go.
How to Choose the Best Child Plan for Education?
Many different insurance companies offer several child education plans. So, finding a better plan can be a tedious job, as it is necessary to compare the policies for their pros and cons. There are some important points that you should consider while choosing such plans. Here are some tips which will help you choose the best child education plan.
• Estimate the cost which you will need for your child education
• Plan the amount of savings you will need for the major occasions in your child's life
• The child plan you choose must provide you with the best maturity amount for the lowest possible premium amount
• Start your investment in an education plan at an early age
• Before buying any plan, compare the plans for premiums, benefits, maturity returns, and coverage
• Check the tax benefits in premiums payments
• Verify the simplicity of payment and claim procedures
Benefits Of Child Education Plan
Education determines the kind of life your child will lead in the future. So, every parent places a high value on education. Good and quality education comes at an expensive cost. When your child reaches the late teenage, you may have to pay for their costly studies in school and college expenses. A child education plan will make it easy for you to invest, grow and provide for your child’s goals without adversely affecting your own finance. Here are some of the benefits of buying a child education plan.
Fulfilling Your Child’s Dreams Through Education
If you start investing in your child’s education early, you will receive a substantially greater cost when your child reaches the age of higher studies. You will not have to worry about higher tuition and amenities required for studies if you have a child education plan in place. With the guaranteed return of money by the child education insurance, your child can choose and pursue any courses based on their abilities and interests.
High Maturity Benefits
With a child plan for education, you will get a lump sum amount at the time of maturity of your policy, which is higher than most other investment plans. You can use this money not only for education but also for other important events like marriage, buying property, investment for a business, starting a family, etc. As you can see, the expenses of livelihood materials keep increasing day by day. And if you don't have a higher return from long-term investment, inflation can substantially decrease the value of your money. So, it is advisable to invest in a child education plan that provides sufficient finances for your child's future milestones, without the effects of inflation.
Several Tax Benefits
Under Section 80 C of the Indian Income Tax Act of 1961, you will get tax deductions for the premium paid on a child education plan. Section 10 of the same act provides tax benefits on the entire maturity amount. It is one of the most beneficial advantages of a child plan for education as the entire money will go to your family without any tax deductions. However, tax laws are subject to change from time to time.
Flexibility for Partial Withdrawals
You also get the facility to withdraw money throughout the policy’s term to support your child or your family in an emergency. These partial withdrawals come at zero or low-interest rates depending on the insurer.
Selection of Add-ons
With add-ons, you will get other advantages like health cover, accident cover, group policy, premium waiver, etc. For example, when you are a single-earning member of the family and purchase an education plan for your child, you can get the facility of premium waiver if something happens to you. Although you buy the best savings plan for your child, you should always look for the group policy add-on. Group policy will allow you to add all your children to the same plan. Please note that riders are not mandatory and are available at an additional cost.
How Much Should You Invest in a Child Plan for Education?
Education is the key to a bright future. No matter which stream or career your child chooses, it is important for you to ensure that they go to a good school and college. Education does not only open the realms of a financially secure life, but also it helps a child to develop an open mind and live a more mentally and physically balanced life.
Before you invest in a child education plan, it is vital to understand the growing expenses of the education system, and then start investing in it. The cost of education is rising day by day, so you need the capable investment to counter such expenses.
Frequently Asked Questions
What happens to the future premiums of the child education plan in case of the policy payer's demise?
There is a benefit of a premium waiver in a child education plan. In case of the sad demise of the policy payer, then the insurance company will waive off future premiums. It will also provide the options to choose between receiving the maturity amount immediately or at the pre-decided term maturity. But in case the child is a minor the insurance policy will automatically go with the latter option. So, it will allow the policy to continue even in case of any unfortunate event and ensure that the child’s future is financially safe.
Which is the best time to buy a child plan for education?
The financial experts recommend investing in a child's education plan as soon as the child is born. You can increase the return amount with longer investment durations. It is because most plans use compound interest to calculate the maturity interest. So, it is always beneficial for the child if parents buy plans sooner.
Which documents will you require for buying a child plan for education?
You will need the following documents of your child when you purchase a child education plan.
• Age proof
• Identity proof
• Address proof
• Proposal form
• Income proof of Parent
• Other documents requested by the insurance company
How can the policyholder check the policy status?
If you want to check the policy status, then you contact the insurance provider online or offline. Nowadays, most insurers have e-portals or mobile applications to receive detailed information about the policy. You can use those to check your policy status. One can register themselves in these and use the login credentials to perform various activities, like purchasing policies, premium payments, and raising a claim.
Educating your child well is one of the most important duties of a parent. Every parent should know that education is imperative to secure their child’s future. Before preparing a financial plan, you must evaluate your child's education expenses based on the present situation and projected inflation. And investing in child plan for education as early as possible, you can create an adequate corpus to fulfil your child’s dreams and ambitions. A child plan for education offers you a guaranteed income plan, in which you will receive guaranteed payment depending on your child’s education milestones.
Created on Apr 18th 2022 08:27. Viewed 76 times.