In today’s time, providing the best education to children is one of the top priorities of all parents. For middle-class Indian parents, these days, the skyrocketing cost of education is a matter of great concern and to cope with this, they need to start planning financially even before the child starts going to school.
While planning for your child’s higher education, it is necessary to keep in mind the interests and aspirations of your child as well. That is because the higher education fees vary depending on the chosen course of education.
There are various child plans that help you bear the cost of higher education of your child. They also ensure that the hard earned income of an individual, which he/she has invested for a brighter future of his/her child, becomes fruitful in future.
Benefit of Child Education Plan
The benefits of a child education plan are manifold. It provides flexibility to the policyholders to customize their plan according to their financial capability and future goals. Moreover, the premium rates may vary depending on the type of plan chosen by the customer. A child education plan provides money at specific intervals ensuring that the child’s needs are fulfilled even after the parent’s death.
Under child plan, a lump-sum amount is paid to the beneficiary in case of death of the policyholder. The benefits of the child plan do not end there, the plan waives off the entire future premium and the insurance company continues investing the money on behalf of the policyholder.
Nowadays, there is a wider range of child insurance policies available in the market as almost all insurance companies offer child insurance plans. While some are traditional plans, others are market-linked policies that allow the policyholders to invest in both equity and debt.
Another benefit that is included in a child plan is that the premium paid for the child plan is exempt from tax deduction under section 80C. Similarly, all the capital gains, maturity benefits and any other income from the plan is tax free under section 10 (10D) of the Income Tax Act. One can save bundles on taxes on the amount invested and benefits received under the child education policy. Besides this, one also gets an opportunity to reinvest the saved amount of the taxes on any other saving instruments.
Although these policies come at a very high cost as compared to the simple term insurance plan, the plan secures the future of the child so that he/she can get the best of everything. According to the insurance experts, a child plan is structured to meet the burgeoning needs of the child. A normal term insurance plan stops if the insured person dies, whereas the child plan continues to provide funding to the child in equal installments during the tenure of the policy.
Things You Should Consider before Purchasing a Child Insurance Plan
If an individual is planning to buy a child plan for his children, then it is advisable for them to calculate the required funds for the child’s education and marriage before zeroing in on a life insurance plan for children. With this add-on information, one can choose the most beneficial child plan and can easily decide on the related premium amounts and time period of the child plan.
Besides this, some of the child insurance plan also provides coverage for add-on benefits such as accidental death and disability cover, critical illness cover etc. To ensure the best education plan for the child, a person can compare child plans from different insurance companies on the basis of the premium and the maturity benefits offered by different child insurance plans.
While zeroing in on a child insurance plan, make sure that you buy the plan in the parents’ name instead of child’s name as the child anyways does not have any dependents. The other aspects that should be kept in mind are tax benefits, investment planning tools for child education, unforeseen expenses, marriage, etc.
Why should you invest in a Child Plan?
One of the major benefits of investing and planning in child education plan is that it protects you from the changeability of income flow. As it is said, make hay while the sun shines, it is wise to make investments when an individual is confident about the stability of their cash inflow. A child education plan efficiently helps you to make saving without affecting the lifestyle of your family.
Apart from this, spending some of your hard earned money in a child plan is a great way of saving every month and keeping aside some amount for your child’s future. As under these plans, a committed investment of a certain amount is needed, the person gets bound to save it. A child education plan specifically functions with a purpose of providing financial support to the child for education. On top of this, some of the plans also carry a bonus element, which proves to be very beneficial whenever there is the need to invoke the benefits of the plan.
As mentioned above, a child education plan comes with a high cost, but it helps the parents manage the higher education cost and other general expenses of the child’s future. The plan is customized keeping the burgeoning cost of education in mind and serves the purpose better than any other investment tools.
Facilitate your Future Plan
As an individual future stability depends on the long term wealth and asset creation the child’s education of an individual taken care by a prudent financial instrument can help you to plan better wealth accumulation and retirement. The more detailed planning on child education plan also helps you reform one’s own financial goal blueprints in a more successful manner.
For empowering the children with good education, a systematic planning for the child’s future is very essential and is a wise thing to do. In order to reap the maximum benefits, it is advisable to start as early as one can. Having a child education plan certainly creates a sustainable future for the child to bloom in.
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