Child education plans provide both life insurance and investment opportunities. This insurance allows the policyholder to protect their children’s future while also accumulating an investing corpus to meet the main milestones in a child’s life. The parent is the policy owner in the case of a child education plan, while the kid is the beneficiary.
If you are a worried parent, India’s rising expense of schooling may have already overwhelmed you. With rising inflation rates, it’s difficult to know how much to save for a child’s education, from preschool to primary school to higher education.
The need of the hour is for an insurance/investment alternative that is designed to build cash and enables tax-free withdrawals.
Amazing Benefits of A Child Education Plan
Aside from love, there is no more excellent gift to give your kid than a Child Education Plan. To help you understand, below are some of the benefits of acquiring a Child education plan:
1. Fulfilling the Dreams of Your Child
If you begin saving for your kid’s education now, the prices will be far higher when the time comes for your child to attend. If you have a child education plan in place, you won’t have to worry about your kid’s course of study.
Based on his interests and talents, he may choose from a choice of courses. He would be able to follow his aims and professional goals with the money promised by the child education insurance.
2. Maturity Benefit to Help Pay for College
As you can see, the cost of education is rising at a pace of 10%, which is much faster than the rate of inflation in the economy. A B.tech education now costs Rs. 2 lakhs, up from Rs. 90,000 before.
As a consequence, investing in the best saving plans that offer enough funds to support your kid in completing all of his educational milestones is a must.
3. Take Advantage of Income Tax Benefits
Section 80 C allows for a tax deduction for the premium paid on a child education plan up to a limit of Rs. 1.5 lakh per year. Section 10 of the Internal Revenue Code allows for tax breaks on the maturity amount (10D).
Aside from being an excellent investment strategy, these are the primary benefits that a Child education plan may bring.
4. Offers for Partial Withdrawals
You may withdraw money at any time throughout the policy’s term to finance a one-of-a-kind course your Child wants to take, such as learning an instrument or performing. Certain programs provide monthly payments to help you afford the expenses of improving your child’s abilities.
5. Options for Selecting Add-ons/Riders
Even if you have selected the best saving plans for your kid, it should be supplemented with rider benefits. You may choose a child education plan that includes a premium waiver if anything unfortunate happens to the policyholder during the policy term and extra rider benefits such as personal accident insurance rider benefit cover-up for serious accidental injuries and accidental deaths.
6. Availability of different types of child plans
There are two types of child education plans: unit-linked insurance plans (ULIPs) and endowment plans. Unit Linked Child Insurance Plans use market investments to help your money grow. Child ULIP plans may assist you in generating inflation-adjusted profits.
Because they are essentially saving devices, child endowment plans often give set guaranteed returns. You may choose based on your preferences and risk tolerance.
7. Choice of pay-out
Child insurance policies may provide you with two sorts of pay-out options: lump sum and recurring payments. A lump-sum payout provides you with a huge chunk of money all at once to meet key long-term ambitions for your kid, such as further education and marriage, both of which need a significant amount of money.
Regular payments guarantee that your child’s intermittent demands, such as enrollment fees for a new academic session, acquiring new skills, and so on, are met with ease.
Essential things to lookout prior to buying
Before purchasing a child education plan, it is important to consider the amount guaranteed. Education prices are fast-rising, and by the time your kid progresses from highschool to college, you will need a sizable sum of money. As a result, it is essential to choose a sum guaranteed that would financially support your child’s further education.
Also, check to determine whether the plan has a waiver of premium option, in which the life insurance company waives all future premiums in the event of the policyholder’s death during the policy term. Check the nature of the funds and comprehend the risks connected with them before selecting a Unit Linked Child Insurance Plan.
Before acquiring kid insurance, you should look at the company’s track record. Purchase the plan in the parent’s name rather than the kid’s since the youngster has no dependents in either event. However, if you want to buy the best one in the child’s name, check that it has a built-in provision of premium waiver in the event of the parent’s death.
This will shield your youngster from the burden of large premium payments, and he will continue to benefit from the plan.
Also, take a look at the plan’s tax advantages.
It is a fantastic financial planning tool for kid education/marriage/unexpected bills, and so on. It helps to satisfy the child’s financial necessities while also acting as a life insurance policy.
Wrapping It Up
Parenting comes with its own set of pleasures and obligations. Parenting successfully is not an easy endeavor but rather a difficult achievement. Parenting entails shaping your kid into a responsible individual with a promising future.
The finest present you can possibly offer your kid is a bright future, and in this day and age, a large part of your child’s security resides in early financial preparation. When the time comes, you recognise the need to be prudent and do your financial planning to determine your child’s requirements in terms of higher education, college fees, and housing, among other things. Investments must be made on time. Insurance firms such as Canara HSBC provide attractive child education plans to assist you with these investments.
As the cost of school continues to rise, it is critical to participate in savings programs that provide adequate cash to pay expenditures at significant educational milestones in his life. The returns should be adequate to meet your child’s future requirements even if you are not present. A child education plan includes life insurance as well as a maturity benefit.